Earlier this year, the UK hosted COP26 – an annual United Nations climate change summit. While the progress of COP26 will be primarily determined by environmental targets such as reaching zero carbon emissions or removing public subsidies for fossil fuels, its success will also be determined by social factors such as tackling inequality and prioritising people’s wellbeing.
I feel very confidently that the way employers manage their relationships with their workforce and the way they promote and deliver wellbeing can be key to becoming more sustainable. There are very strong links between wellbeing, sustainability, and economic prosperity. But looking after people, their mental health, their financial stability, and ensuring work is a force for good are often missed from conversations about sustainability.
Social issues are now influencing employer decisions
One of the most overlooked areas of Environment, Social and Governance (ESG) issues, is the plight of people and how we, as employers, take better care of our people to benefit them, our workplace, and our communities. The events of 2020 prompted many to cry out for more equality, a fairer society, and better care for each other and the planet. As a result, we can see that social issues are now influencing employer decisions.
As always, what happens in society also tends to play out in the workplace, and Benefex’s own research into the role of the reward director saw employee wellbeing, diversity, and inclusion and sustainability take the top spots when it came to employers’ biggest concerns. This has meant that the ‘S’ in ESG has gained far more currency and stepped forward as the letter that had previously taken a back seat to environmental issues.
But it appears that the ‘Social’ side of ESG is proving difficult for many organisations and investors to grasp – especially at a time when societal and consumer demand is saying they must act more quickly to support their people. The ‘S’ refers to several ways an organisation creates more people centred strategies, but for the purpose of this article I’m going to focus on just a few:
- How we build more motivated, productive, and skilled cultures
- How we manage relationships with our people
- How we look after the health and happiness of our people
- How we ensure we include, not exclude, people from our organisation
- How we support the lives of the people we employ
Changing attitudes to employee wellbeing
For years now, employers have grown increasingly concerned with the growing mental health pandemic that has seen so many of their people and their work affected. But poor employee wellbeing is now grabbing the attention of shareholders and investors (as well as consumers) as they realise how important the wellbeing of people is to organisational success.
Harvard Law reported in late 2020 that employee wellbeing was starting to gain interest from those in the field of ESG investing. In early 2021, 94% of the top 600 investors in the US said that how an organisation treats its people was now something they wanted to see evidence for before they will invest.
This is just the start of what will become mandatory ESG reporting very soon. The International Financial Reporting Standards body are looking to create an International Sustainability Standards Board, which will bring in mandatory, consistent, and internationally recognised ESG reporting for big businesses (alongside their financial reporting requirements). So, the ‘S’ in ESG will certainly be getting a much closer look from shareholders and investors very soon.
Moving away from do no harm to do better
What all of this means is that to be successful, organisations must move away from just ensuring they don’t compromise the good wellbeing of their people through the work they do, but ensure they proactively care and look after their wellbeing.
If organisations want to truly invest in the resilience of their businesses, they must invest in the resilience of their people by addressing critical issues that affect their wellbeing, their communities, their financial stability, and their personal development. As organisations look ahead to grapple with their new roles and responsibilities in building a culture centred around wellbeing, they must strive to give all employees the opportunity to live the healthiest lives possible.
Back in early 2019 I hosted a roundtable with some large UK employers to discuss the role the treatment of their employees will play in sustainability. For many employers at the time, their ESG focus was entirely on environmental factors like reducing carbon emissions. Fast forward through a global pandemic and it’s fair to say that their focus has evolved significantly. But data from Ethos ESG indicates that only 12% of S&P Global companies have a “very positive” or ‘A’ rating on how they support employee mental health. Around 60% have a ‘C’ or below rating. In Europe only 18% of the Euronext 100 received an ‘A’ rating.
People Are Your Future
The pandemic taught us that the adaptability and the empathy of the people working in our organisations is an incredibly valuable force. For the first time ever, employees are officially more vital to the success of an organisation than ANY other stakeholder. A few months ago Edelmann surveyed 17,000 across 14 countries and 40% of those surveyed now rank employees as the group most important to the success of a company, while just 12% said the same about shareholders.
Businesses will need to step up and help tackle systemic challenges that impact employee wellbeing such as structural racism, misogyny, low wages, and mental health. The most talented and sought-after employees have already identified that they want to work for an employer that supports and takes care of them. Anyone working in or around the HR function must respond by making sure employee wellbeing and the benefits that support it become a pivotal part of the employee experience and more importantly, their ESG strategy.
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