Double Materiality and its Growing Impact on Hiring

Organizations are increasingly expected to balance financial performance with their environmental, social, and governance (ESG) responsibilities. The concept of double materiality has become a critical framework for understanding how a company’s activities, risks, and opportunities influence both its financial outcomes and its broader environmental and social impact. This dual focus is not only transforming how businesses operate but also how they attract and retain top talent.

As companies navigate the evolving expectations of stakeholders—investors, employees, and consumers—the impact of double materiality on recruitment has become even more significant. Firms are increasingly seeking professionals who can integrate both financial goals and sustainability considerations into their business models. At Selby Jennings, we’ve observed firsthand how the demand for professionals with expertise in sustainable finance, ESG strategies, and impact investing is growing. Companies that prioritize double materiality are better positioned to attract and retain top talent that shares their commitment to sustainability and long-term success.

What is double materiality?

Double materiality is a concept that evaluates a company’s performance from two key perspectives:

• Financial materiality (Outside-In): This aspect examines how external factors, such as climate change, resource depletion, or labor rights, affect a company’s financial performance. For example, rising energy costs due to stricter environmental regulations, or reputational damage resulting from poor labor practices, can directly impact an organization’s profitability and stock market performance.
• Environmental and social materiality (Inside-Out): This dimension looks at how a company's activities impact the environment and society. This includes its carbon footprint, its supply chain practices, its approach to diversity and inclusion, and its efforts to address social inequalities. Essentially, this approach recognizes that companies have a responsibility to mitigate their negative impacts on the planet and the communities in which they operate.

Together, these two dimensions of materiality create a more holistic view of a company's long-term sustainability, guiding both operational decisions and investment strategies.

How double materiality is shaping recruitment

The growing awareness of ESG factors among both companies and job seekers has fundamentally changed the recruitment landscape. Organizations are increasingly looking for candidates who not only possess the technical skills required for their roles but also demonstrate an understanding of and commitment to sustainability. This trend is particularly evident in industries such as financial services, energy, technology, and consumer goods, where companies are more attuned to the need for responsible governance and sustainable business practices.

At Selby Jennings, we’ve seen a marked increase in the demand for professionals with experience in sustainable finance, impact investing, and corporate social responsibility (CSR). Professionals are no longer simply looking for attractive compensation packages or career advancement; they want to work for companies that align with their personal values and contribute positively to the world. This has led to a shift in how companies approach recruitment.

Attracting purpose-driven talent

One of the key benefits of embracing double materiality is its ability to attract purpose-driven talent. Many professionals, particularly younger generations such as millennials and Gen Z, are deeply concerned with the environmental and social impacts of their work. They want to be part of organizations that make a real difference in the world.

Financial institutions, for example, are increasingly focusing on green finance, ESG investments, and social impact initiatives. These efforts are not only helping to reduce global carbon emissions but also providing investment opportunities that align with the values of socially-conscious investors. At Selby Jennings, we've seen growing demand for candidates specializing in sustainable investment, green bonds, and renewable energy projects. 

JPMorgan Chase, a major financial institution, has made significant strides in adopting ESG principles. Through initiatives like their $2.5 trillion commitment to sustainable development and inclusive finance, they’ve positioned themselves as an attractive employer for individuals passionate about integrating environmental sustainability into business practices. 

Strengthening company culture through ESG integration

Incorporating double materiality goes beyond just attracting new talent—it builds company culture focused on sustainability and social responsibility. As organizations embrace ESG reporting and take meaningful steps to address climate change, inequality, and governance issues, they naturally attract employees who share those values. 

We’ve seen that hiring processes are increasingly focused on candidates who fit within this culture of sustainability. Organizations are not only seeking skills and experience but also individuals who can contribute to their ESG agendas. This cultural alignment is crucial, particularly in industries where a firm’s reputation is closely linked to its commitment to social and environmental causes. 

BlackRock, one of the world’s largest investment management firms, has made ESG integration a central part of its investment strategy. The firm’s CEO, Larry Fink, has consistently highlighted the importance of sustainability and the role of business in driving global progress. For professionals in finance, working for an organization that champions these values can provide a sense of purpose that goes beyond financial success.

The growing demand for ESG expertise

With the rise of sustainable finance, impact investing, and ESG integration, there is a growing need for professionals well-versed in these areas. At Selby Jennings, we've seen a surge in recruitment efforts for ESG specialists, sustainable finance experts, and compliance officers who understand environmental and social risks. This is a response to regulatory pressures and stakeholder expectations for transparency and accountability. 

As companies incorporate ESG metrics into governance frameworks, they require professionals who can interpret these metrics and apply them to business strategies. This includes roles in corporate social responsibility (CSR), sustainability management, and data analysis focused on sustainability performance. Professionals who can navigate the complex regulatory landscape surrounding ESG disclosures, such as the EU Taxonomy and Sustainable Finance Disclosure Regulation (SFDR), are in high demand. 

Double materiality is reshaping how businesses operate, manage risk, and hire talent. By considering both financial and environmental/social impacts, companies can attract professionals driven by purpose, build strong organizational cultures, and achieve long-term success. For organizations that want to lead in sustainable business practices, embracing double materiality is essential.