Boosting the S in ESG

Today is International Workers’ Memorial Day, a date to remember workers who have been killed, disabled, injured, or made unwell by their work. In 2020, it’s a date that has even greater significance. Sadly, many healthcare workers have lost their lives to Covid-19 as they seek to protect us from the virus. Workers in other sectors, who don’t have the option of working from home, have also been hard hit: transport, food processing, retail and so on. Many of these workers were modestly paid. The least we can do is take a minute to remember them.
Often the ESG world has seemed to overlook the treatment of workers, focusing much more on the E and the G. But perhaps things are finally starting to change. Two recent pieces, from opposite sides of the world, give us some optimism.
In the UK, Policy Lead for Investment & Stewardship Caroline Escott at the Pensions and Lifetime Savings Association has reminded investors of the importance of the ’social’ in environment, social and governance investing. Escott says: ’It is one thing for a company to discuss its pioneering approach towards flexible working, health and safety or mental health in its Annual Report, but quite another to put this successfully into practice under immense financial stress and uncertainty. It is more vital than ever that equity – and corporate bond – holders understand and assess the attitude and behaviour of investee companies towards their workforces.’ The PLSA has called on investors to revisit companies’ fair pay practices; capital structure and allocation to ensure government bailouts are used to support long-term success; and health and safety policies.
The same message is coming from the other side of the globe. Katie Hepworth, Director of Workers’ Rights at the Australasian Centre for Corporate Responsibility (ACCR), says the coronavirus pandemic has revealed the vulnerability of certain workers. However, Hepworth goes one stage further and says the way in which workers have been treated during the crisis highlight ’race and gender divisions that run through the workforce, with female and/or migrant workers more likely to be exposed to the virus through their essential — but low paid — work in nursing, aged care, childcare, cleaning and horticulture’.
In a bid to minimise the devastating impact on the most vulnerable workers across the world, the ACCR developed a set of principles to guide investor engagement during the Covid crisis. Like the PLSA, ACCR expects shareholders to hold companies to account in their use of any public funds loaned or given to keep them afloat, but the Centre also says workers must have ’an active role in the design, implementation and monitoring of a company’s Covid-19 response’. It also says companies must ensure that all workers have access to health care, irrespective of health insurance or visa status. Finally, companies must take responsibility for their indirect workforce and suppliers in developing their Covid response.
Our expectation is that this may be the moment at which the S in ESG finally gets the attention it deserves, and with it the importance of treating workers fairly. For our part, we have recently appointed our own Labour Specialist, Alice Martin, to focus on workforce issues, and we’ve been talking with workers and their representatives in a number of different sectors and countries in order to ensure our engagement assists those most at risk.
As the world slowly emerges from this dreadful pandemic we’re committed to ensuring that a heightened focus on workplace rights and standards is part of the reconstruction.

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