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Putting the wellbeing of employees into the ‘S’ of your ESG strategy

Putting the wellbeing of employees into the ‘S’ of your ESG strategy
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Today MindForward Alliance launches a new proposition paper ‘Putting the wellbeing of employees into the ‘S’ of your ESG strategy’.

The wellbeing of your people drives the wellbeing of your business

The pandemic has shifted the relative weight of understanding and responsibility of wellbeing from the individual to the business, where responsibility is now shared. Business leaders now recognise the hard facts that mental wellbeing must be a core part of a responsible business. Because without it, performance and the bottom line of the business are impacted.

In addition, investors, especially asset managers, are beginning to recognise that positive staff wellbeing is one of the key forward indicators of business performance. They are looking for action on wellbeing as they assess risk, look to predict future cashflows in businesses and the cost of capital along with the traditional P&L and balance sheet.

As a result, investor demands, and regulatory requirements of non-financial reporting are growing. There is an increasingly strong expectation that companies should identify and report on key ESG metrics.

Mental health and wellbeing should form the foundation of ‘S’ within ESG

However, to date it has not been clear for businesses or their stakeholders how mental health and wellbeing fits into an ESG strategy and what activities can be measured for reporting.

In our paper  we propose that mental health and wellbeing of employees should form the measurable foundation of the ‘S’ within ESG. We believe this needs to underpin the success of business strategy which then enables other layers of ‘S’ activity and initiatives to be developed. This proposition takes wellbeing out of health and safety, where many businesses currently place it. Instead, employee wellbeing is positioned as an overarching output from a range of component parts such as belonging, trust and inclusion.

To support businesses operationalise wellbeing as a foundation of the ‘S’, our paper explores the evidence base of the key component parts/levers of wellbeing. We demonstrate that these levers can be managed and measured, and a wellbeing strategy can be developed to improve them. We believe that in doing so, businesses will be able to drive improved wellbeing amongst colleagues and build wellbeing capital. Building wellbeing capital enables businesses to deploy it as social capital and ultimately invest in their wider social impact.

By becoming clear on the key component parts of employee wellbeing, employers can create a wellbeing indicator for their business. In time, this will enable businesses and their stakeholders to undertake correlational analysis between financial performance and employee wellbeing. We conclude that putting wellbeing on your board agenda as the critical foundation for building ‘S’ within ESG makes sound business performance and sound financial sense.

Download: Putting the wellbeing of employees into the ‘S’ of your ESG strategy