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Mental Health Benchmark For Investors

By Team Maanch  |  
May 3, 2023  |  
6 minutes read

A Conversation With Amy Browne

As investors, we want the businesses in which we invest to be successful, and a successful business must ensure the well-being of its workforce. In this discussion with Amy Browne, Stewardship Lead at CCLA, we learn more about their groundbreaking mental health benchmark and hear about why and how investors can prioritise engagement around mental health.

1. Tell us about your career in stewardship and your typical workday.

With a background in managing funds primarily for charities, my stewardship career began three years ago when I joined CCLA. Throughout my journey, ethical investing has been a recurring theme, focusing on what actions can be taken with invested companies once ownership is established. Most of my typical day revolves around stewardship work – which can be really varied, we identify major risks and build engagements around them, and this dialogue with portfolio companies can take many forms too.

An exciting piece of work that I have been focussing on is creating a benchmark for others to follow on mental health engagement, it has really taken off!

2. What led CCLA to choose mental health as an engagement theme?

The decision to choose mental health stemmed from the alignment of the human and financial aspects. Mental health affects individuals on a personal level while also having a significant impact on company productivity and financial performance. According to research, globally, mental ill health results in the loss of 24 work days for every person affected, and companies lose an average of £1,652 per private sector employee annually. Deloitte research also shows that there is an average return of £5.30 for every £1 spent on mental health interventions.

Moreover, 76% of companies have developed multiple workplace initiatives aimed at raising awareness of mental health in the workplace, and 91% provide employees with access to mental health services. Much of this has been in response to heightened need and psychological distress during the pandemic. However, while 93% of the companies acknowledge workplace mental health as an important business issue, only 34% publish formal objectives and targets, highlighting that many have not yet translated their policy commitments into action. Just 11% disclose any related key performance indicators. We believe that engaging in mental health, which of course has a social impact, also has a great investment case as it can lead to cost savings, reduced turnover, increased profitability, and potentially a stronger share price.

3. How do you benchmark mental health and what metrics do you use to assess companies?

Last year, CCLA introduced two benchmarks – a UK 100 benchmark and a Global 100 benchmark – and evaluated 195 companies against 27 assessment criteria grouped into four sections.

  • Management commitment and policy, which includes assessing if the company has a mental health policy or equivalent available to the public, and if there is a statement by the CEO on the website recognising mental health as an important business risk.
  • Governance and management, assessing whether there is a responsible individual or committee ensuring the implementation of mental health policies.
  • Leadership and innovation, which evaluates the extent to which the company contributes to thought leadership within and outside its industry.
  • Performance reporting and impact, is the least mature but most interesting, evaluating whether the company sets targets and reports on its performance on mental health, such as training all line managers in mental health or increasing the uptake of employee assistance programs

4. How would you describe the CCLA mental health benchmark?

It’s a tool that takes a ‘management systems framework’ approach, intended for investors to use for making informed investment decisions and engaging companies to improve their practices.

Unlike larger investment firms like BlackRock, CCLA generally owns less than 1% of companies, making it harder to influence them directly. Therefore, CCLA adopts a systemic level approach to bring about industry change. An excellent example of this is NatWest, who contacted us after reviewing our report and discovered they were not performing as well as their rivals in the mental health benchmark. Such discussions can prompt positive peer pressure and motivate other companies to improve their mental health practices.

5. How do you manage and report your engagement and stewardship efforts? Are there any tools you use to comply with current regulations?

We use a basic CRM system to record engagements and spreadsheets to consolidate data. However, it becomes challenging to report on engagements that go beyond our portfolio. Additionally, reporting at a fund level is encouraged. Our reporting is primarily qualitative, and there is a need to enhance data visualisation techniques to make the information more meaningful.

6.  Do you foresee a shift towards improved collaboration between companies and investors to achieve sustainable objectives?

The success of benchmarks such as CCLA’s is attributed to the coalition of 44 signatories with $8.5 trillion in assets under management. This is just one example of collaboration where investors are coming together to strengthen our voices when engaging companies on sustainable practices. While some investors initially hesitated to support such initiatives, they quickly realised that we need to come together to focus on creating positive changes in the world.

Building a strong relationship with companies is crucial for effective collaboration, and trust is the cornerstone of such a relationship. Therefore, independent organisations like ShareAction play a significant role in fostering a collaborative and constructive relationship with companies.

7. What are the key factors that can help drive collaboration forward?

I believe that there is significant value in approaching a company with a cohesive and joined-up request for a specific goal.

8. Your final thoughts

In my view, we are at a critical juncture in the world of sustainable finance, given the multitude of complex factors at play. The cultural wars unfolding in the US with anti-ESG bills, efforts to address greenwashing, and geopolitical upheavals in China and Russia – all have significant implications on sustainability.

I anticipate that sustainable finance will look vastly different in three years compared to now, and I’m particularly interested in seeing how the UK’s SDR develops.

Maanch Engagement Tracker – Simplifying Stewardship

In response to these complex and evolving challenges in responsible investing, we have developed the Maanch Engagement Tracker, a tool that allows you to easily and effectively capture every engagement with your portfolio companies. Uncover its wealth of benefits that can revolutionise the way you manage your portfolio engagements, here.

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