Companies and organisations are realising how important an effective commitment to ESG (Environmental, Social and Governance) matters is, and how measuring and demonstrating their commitments can affect the success of their businesses in the market. These issues are increasingly felt to be relevant for investors, shareholders, customers and employees. The ‘social’ in ESG includes a concern for the issue of people’s wellbeing, including at the workplace.
The ‘social’ aspect of ESG is causing a change in perspective when it comes to occupational health and safety. For a long time, OH&S has been seen by employers as a cost resulting from the need to comply with certain legal provisions, principally to avoid sanctions and exclude the employer’s liability in case of accidents at work. Today, companies and other business organisations are waking up to the importance of managing OH&S in a proactive and socially oriented way.
The pandemic highlighted the significance of implementing safety measures at the workplace as an essential prerequisite to companies conducting business. Further, the management of OH&S has, for a long time, failed to properly take account of employees’ mental as well as their physical health and safety. Employee wellbeing has been found to be a key determinant of the success of the business, in terms of productivity and efficiency, the image and reputation of the company, employee retention and the attraction of talented workers.
Surveys and studies have shown that when employees feel good, they perform better. There are lower rates of absenteeism and companies grow faster. When employees are happy and identify with a company’s values (e.g. sustainability or environmental and social responsibility) they do not seek other employment. On the other hand, companies that are not committed on ESG matters and do not work to support employee wellbeing record higher turnover and bear additional, wasted costs in training new hires. Companies which do not implement measures to protect employee wellbeing also risk more mistakes being made at work, which may result in more accidents.
When companies manage occupational health and safety with ESG in mind, the positive effects can be seen from the outside, too. The implementation of ESG-oriented OH&S policies can lead to improved reputation in the relevant consumer market. In choosing which products or services to purchase, customers increasingly consider whether or not a company operates sustainably, is socially committed, and if it takes care of the health and safety of its employees.
Implementing an ESG-oriented H&S policy can also lead to improved reputation in the financial markets. Investors increasingly want to invest in companies committed on ESG matters, because ESG-oriented businesses are considered to be more resilient and less volatile in the medium-to-long term.
More and more companies are deciding to implement welfare systems and to offer their employees services to support them on issues such as healthcare and prevention—both physical and mental—including for relatives. Allowing remote working, introducing flexible working hours or, again, introducing a shorter work week may also have a positive impact on employee well-being and mental health. Companies that are unsure how to proceed could conduct internal surveys to assess their employees’ needs.
For all of these reasons, an ESG-oriented approach to the management of occupational health and safety is worth considering, and may even bring economic advantages. This way of managing occupational health and safety is starting to be seen as an opportunity rather than a mere cost and companies should take the opportunity to make all their stakeholders (employees, investors and customers) aware of their commitments in a genuine and transparent manner, by publishing real, objective and measurable data. If done properly, this can be expected to provide a reputational boost, benefits from the perspective of shareholders, investors and customers, and benefits in terms of attracting and retaining engaged employees.
Authors: Stefano de Luca Tamajo, Vanessa Forcolin (Toffoletto De Luca Tamajo, Italy)
Find out how ESG issues are shaping policy and practice in other areas of employment law