ESG and employee mental health: Worker well-being becomes investor concern

As corporations enhance their efforts around environmental, social and governance issues, the S in ESG – the human impact of business activities – is increasingly starting to include how employers are impacting workers’ mental health and well-being.

So says Paula Allen, senior vice president and global leader, research and total wellbeing at LifeWorks, a provider of digital and in-person wellbeing solutions based in Toronto. Allen discusses the growing importance of mental health in conversations around ESG, why boards and investors are pushing businesses to take into account the wellbeing of their employees – and take-aways for HR leaders to prepare for this new reality in the post-pandemic world.

BenefitsPRO: Please talk about the growing importance of mental health in conversations around ESG.

Paula Allen: For years we’ve had really strong data which shows that when an organization supports the mental health and well-being of their people, it makes a difference in company performance, including stock performance. But sometimes it takes a while for employers to realize that paying attention to workers’ mental health is important – and then during the pandemic employers woke up to this in a huge way.

Even intuitively, managers knew nobody was going to get through this if people weren’t in a good place. So now, more organizations are focusing on the well-being of their people. Indeed, a recent Deloitte Fortune CEO survey found that virtually all now say that there needs to be an increased focus on well-being in the workplace to continue well beyond the pandemic. Or else, their organizations simply won’t have the innovation, creativity, problem-solving and customer service levels they need to succeed.

How are boards and investors pushing businesses to take into account the wellbeing of their employees?

The entities that are developing ESG reporting frameworks, including the World Economic Forum, the Global Reporting Initiative and the Sustainability Accounting Standards Board, are looking at formalizing guidance around disclosures related to mental health and worker well-being because it is financially material to the sustainability of a business.

It was investors who brought this issue to the attention of ESG framework providers, because while it’s a non-balance sheet factor, they realize worker well-being is still an important factor in company performance. At one end of the spectrum, a company’s performance thrives when there’s a healthy workplace environment and at the other end of the spectrum when there’s a toxic environment, the fallout damage is that nobody wants to touch them with a 10-foot pole.

Some companies are now including in their ESG disclosures to investors how they are handling mental health and worker well-being. These companies know that detailing their efforts in this area is important not only for the investor community, but also to attract and retain key talent.

What are the take-aways for human resource leaders?

ESG reporting on the M – mental health – is going to come. It’s not commonplace right now, but HR leaders and businesses should prepare for the eventual requirements to disclose what they are doing to enhance mental health and worker well-being.

But for now, the most important thing is to do the right thing for their workers, as their vulnerability from the pandemic will continue to last for quite some time. Focusing on the well-being of people really does make a difference to their sense of belonging and also their productivity at work. The good thing is that supporting employee mental health does not need to be onerous.

Here are some key things that employers should do:

– Support a sense of belonging: Accept people for who they are and engage them respectfully.

– Show recognition: People need to feel that their efforts matter and are appreciated.

– Create a psychologically safe culture: No one should be belittled in any manner for sharing their thoughts.

– Provide mental health resources: Consider implementing an employee assistance program or increasing the promotion of the one you have. EAP offers confidential mental health and support 365/24/7 for employees and their families.

– Support managers: Mental health in the workplace is often available at a modest cost through your EAP. Consultations for managers are typically no cost through EAPs to managers in dealing with challenges behavioral and emotional issues in real time.