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How employee health and well-being fit into the ESG wheelhouse

The workforce of the future has identified a culture of health as a key factor in career decisions, and investors are increasingly aware that good health is smart business.

balance
Baskul

While the last decade has proven to be a reckoning of sorts for corporate attitudes toward environmental, social and governance (ESG) imperatives, employee health and wellness has been chronically overlooked as a key ESG concern. If organizations 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 health, communities, economic stability, education and social identity.

For more than a decade, we’ve known that a healthier workforce is a more productive workforce. Studies have shown that, for every dollar saved in direct health care costs, employers receive an extra $2.30 in improved performance and productivity. In 2020, companies with the highest workforce treatment scores in Just Capital’s rankings outperformed the Russell 1000 by 4.7 percent.

Even before the pandemic, the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) recognized the workplace as a means to create health. According to "Happiness at Work" by Jessica Pryce-Jones, the average American spends 90,000 hours at work over their lifetime, and the culture and environment in which this work takes place — whether at the job site, in an office, outside or a remote location — offers a powerful lever for promoting and sustaining population health.

One of the easiest ways to understand workforce health and well-being is to examine the private sector’s role in addressing the social determinants of health (SDoH), the economic and social conditions that influence individual and group differences in health status.

If we can so clearly connect employee health and well-being to corporate ESG, why did it take until the pandemic for many companies to consider this a 'hot' ESG topic?

It’s easy to see how workplaces can affect or influence SDoH, and companies can address each of these through thoughtful policies, procedures, programs and resources:

  • Health and health care: Do employees and dependents have access to affordable healthcare benefits? Is dental and vision included? Does the company offer an employee assistance program? How robust are parental leave policies? Is management supportive of work/life balance? Is the work environment tobacco-free?
  • Neighborhood and built environment: Do the location, structure, features and operations of the workplace support a healthy and safe environment? Are there procedures in place to prevent workplace injuries? Are physical movement and ergonomics prioritized? Is there good ventilation with access to fresh air and clean water? Are there environmental sustainability efforts?
  • Economic stability: Does the company have a stable workforce and do employees feel a sense of job security? Is pay fair and equitable regardless of race, ethnicity or gender? Are there onboarding orientations and developmental plans in place for employees to learn new skills and grow? Are there adequate opportunities for mentorship and advancement? Does the company offer a savings plan or 401K? Are financial literacy programs available?
  • Education: Does the company offer educational assistance such as tuition reimbursement, college planning or support for external training or certification courses? Are there academic affiliations and internship opportunities? Are there retraining and reskilling programs for mothers or other employees returning to work after an absence?
  • Social and community context: Are there affinity groups that employees may join to share experiences and best practices, volunteer together or gather for social engagement? Do employees feel a sense of belonging? Does the company measure employee engagement and management support? Is there engagement with local community programs? Are there efforts to diversify the hiring pipeline and succession plans?

Other factors that affect health outcomes include social marginalization and healthcare inequities, which we’ve seen recently play out through instances of racial injustice and pandemic-related health disparities, for example. Employers are encouraged to examine the health of their workforce through a comprehensive diversity, equity and inclusion (DEI) lens to address health inequities among their employees and those working in their supply chains.

All this begs the question: If we can so clearly connect employee health and well-being to corporate ESG, why did it take until the pandemic for many companies to consider this a "hot" ESG topic?

Simply put, the pandemic’s impacts on workers were so varied and deep, it became impossible for the world of work at large to ignore concerns about employee health any longer.

Many workers suffer chronic diseases that cost employers up to $1.1 trillion per year, including those that can be addressed by preventative activities such as eating healthier, getting enough sleep and increasing physical activity. But COVID-19 not only added many additional stressors to employees’ plates, it also placed additional restrictions upon their ability to combat them.

Workers accustomed to daily commutes and office life found themselves setting up temporary (or not so temporary) workstations at the dining room table, where they combated isolation, longer hours and poorer communication with teams and clients. Essential employees had to put aside fears of disease spread as they worked in areas that potentially increased their risk of COVID-19 exposure. And across industries, sectors and positions, employees worried about job security, financial impacts, childcare, housing, education and more.

Most employers did a remarkable job mobilizing resources and responding to the threat of COVID-19 in the workplace, putting into place safety protocols and risk mitigation measures. In doing so, each corporation became intentionally engaged in the health and safety of their workforce — more so than ever before. This activation of the private sector is an opportunity to sustain health and well-being efforts beyond COVID-19 and promote workforces that thrive.

Furthermore, the pandemic has underscored the inextricable link between health and business performance and forced the corporate world to reexamine how we define and approach health and well-being. Many companies have long acknowledged that doing good is good for business, but COVID-19 and all its labor complications — from mental health crises to shrinking talent pools — have put ESG front and center for the many organizations concerned with their people’s health and well-being (and in turn, the health and well-being of their respective businesses).

Despite the time it’s taken for many companies to arrive at this realization, employers are on the cusp of activating on their ESG and employee health epiphanies: While slowed by the Delta variant, we’ve seen glimpses of how the pandemic is changing their thinking on employee health and well-being. When offices rolled out initial return-to-work plans this spring and summer, we saw organizations embrace hybrid schedules and remote work, alternate work locations, new technology investments to facilitate better collaboration and physical changes to office workspaces designed with health and safety in mind, to name a few.

These tactics will all positively contribute to employees’ control over their workdays, their ability to cultivate and maintain positive workplace relationships and better balance family and work commitments.

As companies look ahead to grapple with their new role and subsequent responsibilities in building a culture of health, they must continually strive to give all employees the opportunity to live the healthiest life possible, beyond work-life balance and workday structure. To do this, businesses will need to step up and help tackle systemic challenges such as structural racism, lack of living wages, mental health and the increasing prevalence of chronic conditions

Every company has a "health footprint," and frameworks are useful in understanding the broad influence that an organization may have knowingly or unknowing on health and well-being. In 2019, the Robert Wood Johnson Foundation introduced the evidence-based and multi-stakeholder-developed Culture of Health for Business Framework (COH4B) to encourage companies to embrace a broad view of health and wellbeing through a set of 16 practices.

These practices cut across four areas of business: strategic (building a health culture); policies and benefits (paid family and medical leave), workforce and operations (pay practices, occupational health and safety); and community (environmental impacts, community involvement). This framework highlights several issues increasingly important in ESG strategy and metrics based on the GRI Standards, which companies can use in ESG reporting. Gauging corporate progress on health and well-being will be under increasing scrutiny going forward, and companies will need to embrace a broad set of metrics in the current operating environment.

The workforce of the future has identified a culture of health as a key factor in career decisions, and investors are increasingly aware that good health is smart business. Leaders need to respond to these calls by being deliberate in their intent to contribute to a healthier workforce. By embracing employee health and well-being as a pivotal piece of ESG strategy, organizations will be better able to create a resilient, agile workforce that’s well-positioned for the future.

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