ESG engagement and workforce wellbeing

A plethora of studies show that in supporting employee health and happiness, businesses can improve their bottom line. More than illness and injury reduction, and traditional health and safety programmes, the pandemic has highlighted the importance of physical and mental ‘wellness’, teaching corporate leaders to recognise and value the people that make up their workforce.

Following on from our blog on human capital, we will explore the benefits of good workplace wellbeing, and discuss how asset managers can assess and engage with clients to create a thriving workplace culture that delivers.

ESG risk

There are a number of reasons why workforce health and wellbeing should be a priority for businesses. Poor corporate occupational health and safety (OHS) policies and practices can lead to injuries, illnesses and even fatalities. Downtime, damaged equipment and poor productivity are just some of the negative impacts of failure in this area. All represent significant reputational risk and financial liability to companies and their investors. 

Aside from the legal obligations businesses have to their employees, there are clear moral imperatives to ensure staff are healthy and happy. Research suggests that for every dollar invested in employee wellbeing programmes, businesses see a return of $1.50. 

A culture of health and wellbeing can be a major differentiator when it comes to attracting the best employees. A workforce that is engaged and supported will be more productive, and less likely to leave. 

As society increasingly focuses on sustainability and responsible corporate practice, workplace culture is a key reputational consideration. Findings from a Deloitte study revealed that millennials feel very little sense of loyalty to employers who only prioritise financial return above workers, society, and the environment.

In fact there are now calls for an ‘H’ to be added to the ‘ESG’ formula. The movement is proving to advance corporate sustainable thinking; imagine if public health was up there as a primary focus too!

What gets measured gets done

Fund managers should assess a company’s commitment to the health, safety, and well-being of their workforce when evaluating investments. After all, if an organisation excels in this aspect of management, it is likely performance will be strong in other critical areas.

Though key metrics for different sectors are likely to vary greatly, by capturing quantitative metrics for the impacts in each sector, companies can be encouraged to do better. Decision making approaches, employee engagement surveys, flexible working policies and the culture of health in the work environment may be useful starting points.

In addition, mental health metrics, strategies, and solutions demonstrate deeper consideration into wellbeing impact. Supporting neurodiverse talent in the workplace is likely to be a growing trend in the ESG sphere.

By engaging with companies on ESG issues, asset managers can encourage companies to focus on the ‘triple bottom line’ of people, planet and profit.  A company that is responsive to the well-being of all three will be more resilient and have a better chance of long-term success.

Reach out to start this important conversation with SI Engage. Our all-in-one data capturing system will streamline engagements with your portfolio companies for clarity, cohesion and change.

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