The acronym ESG has brought a bold dash of green to the corporate world in the past few years, galvanising business efforts to make a positive difference on environmental, social and governance matters.
It has arguably become a slightly more grey area in recent times, however, with the collective ambition to create a better world coming up against practical and ideological challenges, and the debate becoming increasingly polarised.
Part of ESG’s current problem could be attributed to the fact it is such a broad term, which can make it difficult to define. Also, despite being in use for around two decades, it remains a relatively new concept, meaning companies are still getting to grips with exactly what it means as well as where they should apply focus in each of the three constituent areas, and how corporate performance in these areas should be measured.
Pushing employee wellbeing to the fore
When it comes to addressing the ‘S’ of social responsibility, for example, there is evidence of a changing approach among business leaders. While it has typically been associated with doing social good in the world through charitable giving and developing community links, one survey has found the majority (57%) of leaders want more attention within this strand of ESG activity to be paid to employee wellbeing. This ranked above priorities such as diversity (37%), inclusion (34%) and community involvement (26%).
At the same time, however, the report’s authors also highlight that just four in ten businesses are currently considering culture, purpose and employee experience as part of their ESG strategy, which points to a potential disconnect between a commitment to employee wellbeing and the delivery of strategies that truly address the issue.
This has led some to argue that the wellbeing conversation must evolve from ‘fixing’ individual workers to fixing the fundamentals of work itself by creating positive environments and supporting empowered employees. In this scenario, personal healthcare benefits and tools such as wellbeing apps form part of an integrated approach.
Currently, there are indications that levels of self-reported wellbeing among employees are low. Research into the topic from management consultancy Deloitte found that physical, mental, financial and social wellbeing all either worsened or stayed the same for the majority of workers in 2023 when compared with the previous year.
Worryingly, more senior team members did not think this was the case, with a clear majority of C-suite executives suggesting that the wellbeing of employees across the same four measures had actually improved.
The benefits of boosting worker wellbeing
But there are strong incentives for leaders to get a better handle on the true wellbeing of staff. Beyond the benefits felt by individual workers, there is also growing recognition that positive wellbeing can be an indicator of business health while, conversely, poor wellbeing impacts on productivity, performance and the bottom line.
Expectations are only likely to increase in relation to how companies are monitoring, measuring and managing this risk. There is also potential for greater emphasis to be placed on public disclosure of metrics relating to worker wellbeing, and for ESG to provide a framework for these efforts.
It is estimated that only half of companies currently report the wellbeing metrics they measure, but the drive to increase levels of accountability and transparency is generally welcomed. Indeed, almost three-quarters (72%) of respondents to Deloitte’s Wellbeing at Work survey said they support the idea that executive bonuses should be tied to wellbeing metrics. An even higher proportion (78%) went further, saying that failing to maintain wellbeing at acceptable levels should precipitate change in an organisation’s leadership.
Benefits: A key part of the puzzle
Where there is support among C-suite executives, it is rooted in an acceptance that committing to targets and continuous improvement in the area of wellbeing can build trust among the existing workforce while also helping build the company’s appeal as an employer of choice.
At ground level, employee benefits are a key part of this complex puzzle, providing workers with valuable support for their physical, mental and financial wellbeing, whether in the form of private medical insurance, group protection policies or other measures that support the all-round welfare of workers.
Magnifying the issue of worker wellbeing through the lens of ESG not only enables workers to perform in their roles but also allows them to feel empowered to make a positive change in the wider world.
Despite current challenges around ESG, it is encouraging that a clear majority of UK CEOs (79%) remain committed to embedding ESG into their existing operations and long-term plans. It looks increasingly likely this will incorporate a focus on the health of employee communities as a springboard to supporting positive change in society more widely.
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