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The S in ESG: The Social Impact of Mental Health Investments

Environmental, Social, and Governance (ESG) investing has historically focused on the ‘E’ in ESG, environmental sustainability. 2020 brought a significant shift in ESG investment trends, partially due to the ongoing impact of COVID-19. Emerging trends highlight sustainable social investing—the ‘S’ in ESG. Social investment criteria that dictate ESG ratings consist of people-related elements, such as issues that impact employees, supply chains, human rights, public stance on social justice issues, and communities.

While being green and addressing environmental issues remain advantageous for ESG investing, social sustainability has quickly become a crucial part of a good ESG strategy in 2021.

This shift to social investing has not been subtle. In September of 2020, Principles for Responsible Investment (PRI) surveyed their signatories on ESG and COVID-19. The survey illustrated the rising importance of social issues among respondents that had previously not been on their radar. 71% of respondents indicated that the pandemic changed their perspectives on investment decisions related to social issues and human capital in the ESG space.

If you are looking to improve the social aspect of your ESG report, one place to consider investing is in mental health programs for your employees.  A holistic mental health program tailored to your employees' needs can positively impact their work, personal lives, and make a difference in the communities that your businesses operate.

Unique Employee Social and Mental Health Challenges Post-Pandemic

It’s no surprise that there has been an increase in mental health concerns among Americans. After more than a year of a global pandemic, racial injustices, and major civil and political unrest, people are understandably stressed and anxious. But that’s just on a macro-level. On a personal level, each of us has experienced unique challenges in the last year, whether it was the adjustment to remote work, having children school from home, or even experiencing a loss related to COVID-19.

These recent challenges have led to a mental health crisis in the U.S. In a recent CDC report, which surveyed adults across the country in late June of 2020, 31% of respondents reported symptoms of anxiety or depression, 13% reported having started or increased substance use, 26% reported stress-related symptoms, and 11% reported having serious thoughts of suicide in the past 30 days. For context, each of these rates is three to four times higher than what was reported in 2019.

The State of Workplace Mental Health & ESG Investing Trends

The rise in mental health concerns has not just impacted our personal lives. A May 2021 study found that 85% of workers reported that the workplace itself affects their mental health and wellbeing.  Employees continue to experience mental health issues even as rates of COVID-19 decrease and stress from work is a significant contributor.

So what does this have to do with Social ESG Investing? A lot. A December 2020 report from Harvard Law School's Forum on Corporate Governance, Workplace Wellness and Employee Mental Health—An Emerging Investor Priority, noted that the subject of Employee Mental Health was gaining traction in the ESG investing space. The report argued that more immediately, the ongoing effects of COVID-19 highlighted the importance of mental health to institutional investors.

Integrating a mental health program into the social aspect of ESG reporting allows organizations to do two things: improve their ESG rating while addressing the needs of their people. The return on investment has been significant, according to that same Harvard report, with most reporting between a 3:1 and 5:1 return. The best part is that the investment in your people can also improve absenteeism, productivity, and retention. 

In Good Company: Recent Investments in Mental Health  

Major U.S. corporations are making significant investments in mental health as part of their 2021 ESG investment strategy, including Uber, Spotify, and Etsy. Deloitte reported a 5:1 ROI since the 2017 launch of their Mental Health at Work program in their January 2021 report, Mental Health and Employers: Refreshing the Case for Investment. Deloitte was able to effectively track their investment by measuring their outcomes against survey results measuring employee mental health. 

In March, Bank of America announced a 1.25 billion expanded investment into providing diverse and inclusive mental health programming across their organization. Sheri B Bronstein, Bank of America's Chief Human Resources Officer, announced the decision to expand the company's wellness programs "to help teammates access enhanced resources and we need to continue to adapt and respond quickly to address the unique mental health needs of diverse workforces."

While these companies are reaping the benefits of their mental health investments in the form of ESG improvements, many organizations don’t know exactly where to start. We believe that a good place to start is with the investment itself: your people.

Strategic Social ESG Investments: Working the Crowd

While the impacts of COVID are being felt across the entire world, it’s essential to have a complete picture of your employees’ concerns before making a social investment in mental health programs for your ESG reporting.

Without an understanding of your employees’ concerns, it can lead to a misaligned investment in mental health programming and ultimately impact your ROI. By proactively listening to your employees and providing them with a platform to voice their concerns, you’ll be able to drive more positive social outcomes—happier, healthier employees and communities.

If you’re interested in understanding the mental and behavioral health concerns of your employees, our team developed a survey to gather insights and identify gaps, in order to deliver engaging programming related to the topics reported by your workforce. From there, you’ll be able to implement tools and training specifically addressing the mental health stressors your organization is facing.

Being an early adopter of social ESG investing is a competitive advantage and will have a positive impact on your marketplace. Especially when it comes to recruiting high-demand talent and retaining high-performing employees. If you’re considering a social investment in employee mental health, we can help you get started. Our behavioral health experts can capture the needs of your people so that your program is relevant, targeted, and effective. If you want to learn more about our strategic approach to employee mental health, reach out here

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