The Impact of Perceived Environmental, Social and Governance (ESG) on Employee Retention in the IT-BPM Sector in Cebu City

This study investigates the impact of employees’ perceptions of their organization’s environment, social practices, and governance (ESG) on their likelihood of remaining employed with the company. This study applied social identity and job embeddedness theories to examine the impact of ESG perceptions on employee retention. A structured survey using a Likert scale was used to collect the data from 382 employees in the growing information technology and business process management sector of Cebu City. Ordinal logistic regression was utilized to analyze the relationship of the variables gathered. Based on the empirical results, employee retention is positively and significantly impacted by employees’ perception of the environmental (odds ratio = 1.482, p < 0.000) and social initiatives (odds ratio = 2.693, p < 0.000); however, the governance dimension (odds ratio = 0.795, p < 0.114) does not have the same impact. Practical insights from this study can be used to create employee retention strategies, such as implementing measures to mitigate climate change, increase energy efficiency, reduce pollution, adopt green human resource management practices, safeguard human rights in workplaces, provide clear healthcare benefits, address consumer issues, and foster community development. The results indicate that sustainable and responsible practices are not only relevant to customers but also integral to retaining employees. This study contributes to the growing recognition of the beneficial effects of ESG factors on employee retention.