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Elevating Health Within the ESG Framework
Investing in health and well-being at work doesn't just benefit individuals, it's also good for the bottom line.
By Matthew Trowbridge, MD, MPH, Chief Medical Officer, International WELL Building Institute
Businesses that prioritize health and safety are the ones positioned to succeed
Sometimes it takes a global crisis to inspire a widespread shift in ideology and set the world on a new path. Today, that catastrophe is the Covid-19 pandemic, which has proven to be far more than a health emergency: it triggered a global economic recession, illuminated the fragility of our educational and public health infrastructures and spotlighted longstanding systemic inequities. It's laid bare just how closely intertwined human health is to the global economy.
From challenges, however, also come new opportunities – namely, a chance to build back better. And for corporations, it's emphasized the need to prioritize the physical and mental health of employees. After all, in an economy in which knowledge work, service and experience are increasingly driving profit, people are an organization's most valuable assets. And you can't run a successful business over the long term if your people aren't healthy or they don't feel safe or supported.
"The Covid-19 pandemic provides dramatic evidence that public health and social justice issues are arguably the material issues for investors to consider," says Dr. Matthew Trowbridge, chief medical officer at the International WELL Building Institute and associate professor of Emergency Medicine at the University of Virginia School of Medicine. "Companies that demonstrate innovation and competence on managing the health, wellbeing and equity impacts of their physical spaces as well as their policies and operational protocols, have a greater chance for leadership."
Elevating health within the ESG framework
The International WELL Building Institute's (IWBI) mission is to transform human health and wellbeing with its people-first approach to buildings, organizations and communities. IWBI's WELL Building Standard (WELL), a resource launched in 2014, is a performance-based system for measuring, verifying and monitoring features of buildings that impact the health and wellbeing of people who live and work in them. Companies all over the world – accounting for more than 2bn square feet of space across virtually every building typology – have used WELL offerings to create spaces that prioritize employee wellbeing. Strategies are grounded in 10 concepts that the science says can affect human health – air, water, sound, thermal comfort, light, materials, community, nourishment, movement and mind.
The organization works closely with companies and stakeholders in an effort to advance the conversation on how investing in health as part of the larger environmental, social and governance (ESG) movement can give organizations a competitive advantage.
ESG investing has been gaining momentum in recent years as investors begin to demand more accountability from corporations around these key areas. Data shows that younger demographics, including 70% of millennials, make investment decisions increasingly based on sustainability factors, for example. However, investments in health, which is encompassed within ESG's social pillar, have been historically underrepresented across the ESG landscape.
But that's starting to change as more data emerges about the materiality of health to organizations, public health advocates like Trowbridge believe. Indeed, research has shown that when companies invest in the wellbeing of their employees, they often experience lower turnover and burnout, not to mention greater productivity and engagement, which is imperative to the bottom line. Working while sick, meanwhile, costs the national economy an estimated $234 billion a year in today's dollars in lost productivity, according to the Journal of Occupational and Environmental Medicine. There's also the chance that employees who go to work sick will endanger the health and productivity of others – a risk we've become ultra-aware of during the last year.
The ramifications of replacing an employee can be costly as well. According to the Work Institute, every departure costs about $15,000 or about a third of that worker's annual earnings in expenses for things like recruiting, background checks and temp workers. Companies also end up paying in reduced productivity, the time it takes to interview new candidates and of course, lost knowledge.
The path to investing for health
On a larger scale, Covid-19 has already demonstrated the cost of insufficient investment in core public health infrastructure, Trowbridge says. For example, he argued, "decades of reduced investment in institutions like the Centers for Disease Control and Prevention in the US left us very vulnerable."
That said, traditional public health institutions often do not have the leverage or capacity to drive system-level changes necessary to improve global public health, explained Trowbridge. As such, it's going to take the engagement of institutional investors – banks, credit unions, insurance companies that provide capital to businesses – in order to successfully address global health and social justice issues. "We need institutional investors to demand the same type of transparency, innovation and accountability about the health, social, economic impacts they are increasingly demanding around aspects of environmental sustainability," he says.
As the economy and financial markets continue to recover, the corporations that will be well-positioned to weather the profound impact will be the ones who are committed to cultivating resilience among their workforce and prioritizing health – whether it's providing mental health resources and paid sick leave or taking measures to improve indoor air quality within buildings. In other words, the corporations that will succeed are the ones that put their people first.