ESG And The Energy Workforce Of The Future

By Aparajita Datta, Gail Buttorff, Pablo Pinto and Ramanan Krishnamoorti

Young Texans who aspire to have careers in the energy industry are paying close attention to the future of energy results from a recent survey by the University of Houston’s Hobby School of Public Affairs and UH Energy confirm that they have been paying close attention. Not only do companies face pressure from the government and investors to eliminate greenhouse gas emissions, their pool of future workers is asking too.

The Inflation Reduction Act will spend $374 billion for decarbonization, clean energy, infrastructure, climate resilience, and energy justice and equity over the next decade. The government’s response to voters comes at the heels of how companies have attempted to meet the demands of investors and stakeholders in the last few years. Today, more than 4,800 global companies that represent approximately $100 trillion in assets have prescribed and committed to the UN’s Principles for Responsible Investment to include environmental, social and governance (ESG) criteria into investment practices.

In the survey of over 1000 UH students, we found that they believe the energy industry must prioritize ESG stewardship. ESG stewardship emerged as the most important attribute (47%) when considering an employment offer, even ahead of the starting salary (31%) and the energy vertical (21%).

The survey found that the students pursuing a future career in the energy industry are twice as likely to prefer working for a renewable energy company that is recognized as being an ESG leader and are willing to take a lower salary than working for an oil drilling company that is criticized for not meeting ESG standards[i]. The respondents considered ESG strategies across a range of efforts like ethical standards for products, services, marketing, procurement and supply chains, representation of minorities, environmental footprint management, and GHG reduction as important or very important in influencing their employment choice.

In contrast, the two issues least instrumental in shaping their choices were the company’s recycling standards and policies, and the disclosure of the board’s oversight of ESG issues, targets and goals. While we found the low priority for recycling surprising, the opinion of UH students matches their counterparts across the nation. Other studies have found that younger generations feel the least confident among all age groups in knowing how to recycle or where to find advice on recycling, while many are skeptical about its efficacy and impact.

The responses also highlighted that the younger workforce cares more about whether companies are prioritizing ESG goals, rather than how the company’s leadership tracks materiality and impact, and whether and how they disclose this information to the public.

Meeting industry-defined ESG standards is becoming table stakes for companies to attract investment and young talent. At the same time, the lack of transparency in measurement, reporting and benchmarking that create market-wide inconsistencies and challenge reliability has undercut ESG reporting. Nevertheless, our survey reveals that unlike recycling, students are not disillusioned by or disconnected from ESG.

Students also believe that their peers are as concerned as they are about the state of the environment[ii]. Consequently, university campuses are where students will be most likely to demonstrate their support for ESG-related issues and seek more information. For energy companies wanting to attract and retain young talent, it is essential to reinforce the message that they share the same concern and values as the students and their peers. Moreover, how this information is communicated will be key for workforce development.

The price of energy, its reliability and energy security are kitchen-table issues. Conversations about these topics must steer away from being presented as an unresolvable policy conundrum that redirects responsibility, or as whipsaw debates. This is a transformational opportunity to simplify and untangle the elite discourse that has lacked transparency, confused and contaminated how we think about climate change and its modeling, energy production and use, and the issues at the intersection of climate and energy, including ESG.

_{[i] The students were twice as willing to take an employment opportunity with a renewable energy company that is recognized for being an ESG leader at an annual salary of $75,000 than an oil drilling company that is criticized for not meeting ESG standards but offering a higher salary of $85,000. The preference for an employment opportunity with a natural gas company that is recognized as an ESG leader and offering $85,000 is only slightly higher than a renewable energy company that is an ESG leader and offering an annual salary of $80,000.}

_{[ii] 38.6% of the students are very or extremely concerned about the state of the environment and 32.5% believe that other UH students are very or extremely concerned about the state of the environment, compared to 26.7% for friends and 15.6% for their family. In contrast, the largest share believes that Texans (23%), in general, and whites in Texas (18%), respectively, do not care at all about the state of the environment.}

Aparajita Datta is a Research Scholar at UH Energy and a Ph.D. student in the Department of Political Science studying public policy and international relations. Her research is focused on policy diffusion and feedback analyses to improve energy equity and justice for low-income communities in the U.S. Aparajita holds a bachelor’s degree in computer science and engineering from the University of Petroleum and Energy Studies, India; and master’s degrees in energy management, and public policy from the University of Houston.

Gail Buttorff is an Instructional Assistant Professor, Hobby School of Public Affairs and the Director of the Survey Research Institute.

Pablo M. Pinto is an Associate Professor and Director of the Center for Public Policy at the University of Houston’s Hobby School of Public Affairs, and the co-editor of the journal Economics & Politics. Pinto is a UH Energy Faculty Fellow, a non-resident Scholar in the Latin America Initiative of the Baker Institute at Rice University, and adjunct research scholar for the Saltzman Institute of War and Peace Studies at Columbia University. Pinto’s areas of expertise are international and comparative political economy, comparative politics, and quantitative methods. Pinto holds an M.A. from Aoyama Gakuin University in Japan, and a Ph.D. in Political Science and International Affairs from the University of California, San Diego. He received a Law Degree from Universidad Nacional de La Plata, Argentina. Prior to joining the University of Houston in 2014, Pinto was a member of the faculty of Columbia University. He taught at the Escuela Nacional de Gobierno in his native Argentina, and the Universidad Nacional de La Plata, where he founded and directed the Department for Asia-Pacific Studies. He also worked as Chief Counsel for Toyota Argentina.

Ramanan Krishnamoorti is the Vice President for Energy and Innovation at the University of Houston. Prior to his current position, Krishnamoorti served as interim vice president for research and technology transfer for UH and the UH System. During his tenure at the university, he has served as chair of the UH Cullen College of Engineering’s chemical and biomolecular engineering department, associate dean of research for engineering, professor of chemical and biomolecular engineering with affiliated appointments as professor of petroleum engineering and professor of chemistry. Dr. Krishnamoorti obtained his bachelor’s degree in chemical engineering from the Indian Institute of Technology Madras and doctoral degree in chemical engineering from Princeton University in 1994.

UH Energy is the University of Houston’s hub for energy education, research and technology incubation, working to shape the energy future and forge new business approaches in the energy industry.