As we emerge from the biggest public health crisis in a generation, there is another, less tangible crisis looming: mental health deterioration. Featured in the World Economic Forum’s Global Risks Report for the first time in 2021, and elevated in import for 2022, this crisis is one that we cannot ignore.
Mental ill-health is a material concern to investors. Employers are losing billions of pounds because employees are less productive, off sick or leaving work all together (Stevenson, D. and Farmer, P. (2017), ibid.). The cost amounts to an average of £1,652 per employee in the private sector. This is for every employee, not only those who are ill. Sickness absence, combined with ‘presenteeism’, staff turnover, and ‘leaveism’ all contribute to this cost.
As investors, we want the companies in which we invest to be successful. We believe that the stark human and economic costs associated with poor mental health represent a substantial obstacle to this success. Pushing for progress and investment in workplace mental health is both a moral and economic imperative.
Engaging on mental health
We began our mental health engagement programme in early 2019. Using the recommendations of the government commissioned Thriving at Work review, we engaged with 11 investee companies on their approach to workplace mental health. In 2020, during the first UK lockdown, we learned that the daily wellbeing cost to adults amounted to £2.25 billion. Or £43 per adult per day.
In April 2020, we built a £2.2 trillion coalition of investors and wrote on their behalf to the CEO of every FTSE 100 company. The letter urged employers to take steps to protect the mental health of their 2.7 million employees during the pandemic. 74 responded. While we were encouraged in ways, there was little commonality of approach, not much reporting, and a broad lack of commitment by senior leaders.
CCLA Corporate Mental Health Benchmark
We have spent the past 18 months building and piloting a new investor tool, designed to measure and assess large, listed companies on their approach to workplace mental health. We are delighted to have the backing of the authors of Thriving at Work, Paul Farmer (CEO, Mind) and Lord Dennis Stevenson. Also on our Advisory Panel are representatives from the Principles for Responsible Investment and BT, giving us valuable insight into the corporate world.
The benchmark is designed as an investor tool. It takes a ‘management systems framework’ approach, allowing us to evaluate the scope of leadership commitments, related policies, and workplace programmes in place at large businesses. The method will ensure that we pay particular attention to the internal governance conditions necessary for changing and shaping corporate actions on workplace mental health.
The UK pilot, published in December 2021, assessed the 30 largest UK listed companies on their mental health disclosures: 30 assessment criteria across four areas. The results showed an astonishing spread of scores which we have published on our website.
Through 2022 we will publish two discrete benchmarks: a ‘UK 100’ and ‘Global 100’. We have notified the UK companies of their upcoming assessments and are already seeing our labours bear fruit. There is no shortage of willingness from companies to improve in this area. Missing is a clear framework for them to follow, and an assertive call to arms from investors. CCLA aims to fill this void.
Amy Browne is stewardship lead at CCLA Investment Management
Related articles
