Mind the gap: meeting investor expectations on mental health

With 15%[1] of the world’s working population estimated to experience a mental disorder at any given time, and mental ill-health now becoming one of the most common causes of work-limiting conditions (aged 44 and below[2]), it is unsurprising that investors, alongside ratings agencies, are placing more emphasis on analysing what companies are doing to support workforce mental wellbeing.

What are investors and ratings agencies are looking for in disclosures?

Owing to the financial and non-financial impacts mental health can have on companies, investors are increasingly viewing mental health as a critical element of a company’s ESG performance. Investors and ratings agencies have evolved their approach to mental health by incorporating it into ESG frameworks. The recently published CCLA Corporate Mental Health Benchmark is a good example of this evolution. The benchmark is the culmination of a joint project between the CCLA and Chronos Sustainability, with support from an expert panel, which has been designed as a tool for investors to assess and monitor companies on their mental wellbeing efforts, while also holding them accountable to claims.

Investors and analysts are looking for companies to show exactly how they are monitoring, embedding and improving employee wellbeing, going beyond ‘boilerplate’ statements across communications. The benchmark highlighted that while 93% of UK companies stated mental health was a priority for them, less than half equip line managers with the necessary mental health training to monitor wellbeing. Investors are calling for companies to look beyond boilerplate commitments and produce concrete targets for things such as manager training on mental health to illustrate a commitment to supporting employee wellbeing.

Alongside this, the study found that only a third of UK companies are using employee feedback to inform their mental wellbeing programmes. Investors are looking to understand exactly how companies are actively engaging with and listening to their employees on a regular basis to ensure wellbeing programmes are fit for purpose.

Looking to the future of reporting, we are seeing more and more human-related issues being integrated into regulation. The ISSB has announced that it will integrate disclosures on risks and opportunities related to human capital into its next round of research to develop its next standards. The recent formation of the TISFD also signals an intention to place greater scrutiny on human-related issues. It could be suggested that mental health along with other human-related issues will become the ‘norm for reporting’, with investors’ expectations only expected to grow in the near future.

How should companies respond?

With investor expectations around mental health only expected to grow, based on its research, the CCLA has encouraged companies to consider the following actions[3]:

1. Acknowledge workplace mental health as an important consideration for the business

1. 1. Our recommendation: Embed your commitment to mental health as a core narrative, ensuring it is strategically highlighted across all reporting channels and digital touchpoints to demonstrate leadership and accountability. Our team can support you in embedding mental health as part of your board oversight, ensuring alignment with ESG priorities and leadership accountability to investors.

2. Signal board and senior management commitment to promoting mental health in the workplace, and encourage a culture of openness on mental health

1. 1. Our recommendation: Showcase leadership commitment by detailing board-level discussions and decisions on mental health in governance disclosures. Highlight how mental health is integrated into the organisation’s culture strategy, workforce engagement mechanisms and leadership accountability frameworks.
   2. Examples of good reporting: Legal and General signalled its commitment to ensuring a culture of positive mental wellbeing in its 2023 Annual Report [4] disclosures by including a short statement on the importance of mental health in the CEO’s statement as well as including the promotion of mental wellbeing in customers in one of its six strategic pillars.

3. Publish a commitment to workplace mental health in a policy statement together with a description of the scope of commitment and governance practices that will ensure the policy is effectively monitored

1. 1. Our recommendation: Include detail on your mental health commitments, including information on the adoption rates of mental health initiatives, their outcomes, and any measurable impacts on the workforce, such as reductions in absenteeism or improvements in employee engagement.
   2. Examples of good reporting: First Group publishes both a standalone ‘dignity at work’ [5] policy and an ‘equal opportunities and diversity policy’[6], both of which clearly state the group’s position on ensuring all colleagues are treated fairly and with respect. Both policies also clearly set out the board’s responsibilities in fostering an inclusive and safe working environment for all colleagues.

4. Set objectives and targets to improve workplace mental health

1. 1. Our recommendation: Ensure objectives are measurable, quantifiable and suitably stretching, so that progress can be regularly reported upon, for example, training 80% of line managers in mental health by year end or reducing work-related mental health absences by 15% within three years.
   2. Examples of good reporting: In its 2023 Sustainability and Society Report [7], Sage clearly reports upon its mental health-related goals and targets and progress made. Targets include rolling out its Colleague Assistant Programme to all countries by 2024, and doubling the number of ‘Healthy Mind’ Coaches by 2025.

5. Report annually on progress against the company’s mental health policy and objectives

1. 1. Our recommendation: Include associated disclosures across the reporting suite and ensure transparency by sharing successes alongside challenges, supported by data and real-world examples, such as testimonials or case studies of employees benefiting from mental health initiatives. Our team can support you with mapping key disclosures across your reporting suite and maximising their impact.

Discover how Luminous can help you integrate mental health into your corporate communications and investor engagement strategy. Contact us today to explore tailored solutions to meet evolving investor expectations.

[1] https://ghdx.healthdata.org/gbd-2019

[2] https://www.mentalhealth.org.uk/explore-mental-health/statistics/mental-health-work-statistics#:~:text=Mental%20ill%20health%20is%20now,has%20more%20than%20quadrupled4.

[3] https://www.ccla.co.uk/documents/global-investor-statement-workplace-mental-health/download?inline

[4] https://group.legalandgeneral.com/media/o4harb42/legal-and-general-2023_annual-report-and-accounts.pdf

[5] https://www.firstgroupplc.com/~/media/Files/F/Firstgroup-Plc/Responsibilty%20Reports/policies/firstgroup-dignityat-work-policy.pdf

[6] https://www.firstgroupplc.com/~/media/Files/F/Firstgroup-Plc/Responsibilty%20Reports/policies/firstgroup-equal-opps-diversity-policy.pdf

[7] https://www.sage.com/en-gb/company/sustainability-and-society/#reports