How can businesses put wellbeing into the ‘S’ of ESG?
Environmental, social and governance (ESG) criteria is now a popular way for investors to evaluate companies they might want to invest in and to avoid those which may pose a greater financial risk. The social element considers how a company manages its relationship with employees, suppliers, customers and local communities.
On 28 September 2021 the Business Leaders Council webinar looked at how to identify workplace tools that prioritise a healthy mindset and improve wellbeing.
Jessica Attard – Head of Food and Health at ShareAction
Tina Woods – Social Entrepreneur and System Architect in Preventative Health, Healthy Longevity and Open Health Data/AI
John Godfrey – Corporate Affairs Director at Legal & General
The webinar was chaired by Jan-Emmanuel De Neve, Associate Professor of Economics and Strategy at the Saïd Business School, University of Oxford who summarises the discussion that took place…
Covid-19 has put a real spotlight on the ‘S’ in ESG (Environmental, Social and Governance criteria) – the exponential growth of ESG impact statements, indices, and funds speaks for itself. The question we need to ask is how can wellbeing metrics best fit into this evolution towards stakeholder capitalism and how it can improve workplace wellbeing in turn?
Why does employee wellbeing matter?
Employee wellbeing matters because how our lives at work are going is critical to how we feel our lives in general are going. We spend a lot of our time at work, so if businesses are caring entities then investing in employee wellbeing should be a no brainer. There are well established reasons for why it’s not just the right thing to do but also the clever move to invest in employee wellbeing:
- Productivity. When mental ill health costs the economy upwards of £35 billion per year, businesses can play a powerful role in extending the healthy life expectancy of the nation. Our research found that being in a better mood does not raise productivity for tasks like order taking but it does for tasks that require social and emotional intelligence, like trying to retain a disgruntled customer for example.
- Attract and retain talent. Great places to work will attract more talent and retain it for longer. Hastee’s workplace wellbeing study found that companies that focus on the wellbeing of their employees attract more talent. The bottom line impact of this cannot be overestimated – retaining talent for 7 years rather than 4 makes a huge difference.
- The way businesses treat employees is starting to matter to the rest of the world, and investors in particular are increasingly moving away from businesses that do not perform well on ESG. Research from Share Action found that the actions of companies and their investors can undermine health. By investing in companies that look after the health of their employees, investors can contribute to a healthier society, and in doing so, improve the resilience and returns of their investments.
At the moment, the S in ESG is woefully under measured and not very aspirational. It currently considers whether there is child labour in the supply chain, the number of worker fatalities, and so on. But we can and should do much better on this front.
A problem for measuring employee wellbeing is of course that you need comparable data. Up until recently we didn’t have much more to go on other than Glassdoor. But big improvements are being made on this front:
- The Wellbeing Research Centre, are working with Indeed to develop the world’s largest study on employee wellbeing, with over 6 million crowdsourced responses and comparable data for all publicly listed companies in the US.
- The What Works Centre for Wellbeing has developed a workplace wellbeing questionnaire and a wellbeing snapshot survey, so that employers can gauge the wellbeing of their employees and benchmark the results.
So the time is ripe for filling in the data gaps on Social impact and also to make sure good quality metrics on workplace wellbeing can start infiltrating ESG indices and policies.
Being employed is one of the most positive factors for our wellbeing. There is already evidence that a good wage and job design that gives us satisfaction and autonomy, rather than ‘sticking plaster initiatives’ are really important.
The What Works Centre for Wellbeing has published this guidance for better workplace wellbeing to help employers plan and carry out evidence-informed programmes and activities to improve wellbeing in the workplace.
The Wellbeing Research Centre is currently in the process of bringing together a coalition of companies to make a concerted push on this front by launching the World Wellbeing Movement.