Photo Credit: Chor Sokunthea - World Bank
This has been a year of unprecedented challenges and valuable business learnings. The COVID-19 pandemic response brought business as usual to a halt. But companies with existing progressive measures for employee welfare such as flexitime or remote working options were best prepared to deal with the current pandemic. Rather than simply being a public relations manoeuvre, Corporate Social Responsibility (CSR) has become a tool by which companies might align good and greed.
Leading finance companies concur that employee welfare is a valuable indicator of companies’ profitability and longevity. “How companies are responding to COVID-19 has quickly become a differentiator in their brand reputation, talent attraction and sales” states Jeremy Davis, the CSR Vice-President of Moody Corporation.
During Uniting Business LIVE, Jeremy Davis (Moody Corporation), Mariela Vargova (Senior Analyst of Invesco Ltd) and Keeran Gwilliam-Beharee (CSR Vice-President of Vigeo Eiris) discussed how protecting the social fabric is good for business.
Accessing Innovative Financial Tools
Sustainable Finance comprises a multitude of bonds only afforded to enterprises whose operations and services pursue positive social and environmental impact. These innovative financial tools are designed not only to address social and environmental issues but also to support solution creation.
Within the field of sustainability linked bonds, green bonds favoring technologies advancing biodiversity and climate resiliency are prevalent. However, social bonds focused on strengthening social fabric are becoming more common.
Finance research companies like Vigeo Eiris are increasing their “social” portfolio, particularly given this global pandemic context. Gwilliam-Beharee (Vigeo Eiris) says “We've been happy and very proud to support a number of social bonds looking to support investments in healthcare and in social security systems.”
Some analysts, such as Vargova (Invesco Ltd) believe that “Social equity issues are/will be a center and focus of the investment community in capital markets.” The utilization of indices on low or no carbon emissions is already widespread and companies should expect higher standards and innovation in benchmarking corporate social impact to soon emerge. Companies looking to attract investment must improve their recruitment and employment processes and standards, as well as business operations’ impact on local communities.
Increasing Corporate Preparedness and Resilience
Companies have long understood the penalties imposed on those who infringe labor and human rights violations both from a legal and a reputational standpoint. However, the effective management of social issues can also boost productivity and allow companies to be better prepared for arising global and local challenges. Davis (Moody Corporation) believes that it is time that companies explore the intersectionality of ESG (environment, social and governance) issues, he says “You have to widen the aperture and look more holistically at the whole value chain and how you are engaging with that”.
Companies offering parental leave often find that its financial cost is minimal compared to the cost of recruiting and training new employees to replace the new mothers that resign. Vodafone estimates savings upwards of 19 billion dollars per year by offering 16 weeks of parental leave, irrespective of the employee’s gender, sexual orientation or method of conception or adoption.
Gwilliam-Beharee (Vigeo Eiris) adds another example of proactiveness being rewarded “Companies that had already adopted flexible working policies (where they were encouraging and enabling their employees to work from home) when lockdowns began to be imposed across different jurisdictions, they had a clear head start.” These companies had already made the necessary technological investments over time. So they did not lose productivity nor incurred huge expenditure on technology this year.
Companies looking to increase their preparedness and resilience should include social issues in their risk assessment policies. The identification of social risks and the development of suitable employee welfare solutions is crucial for companies looking to increase their profitability and longevity.
Ensuring Enterprises Longevity
Brand longevity hinges on the ability to deliver products and services that are not only efficient but also have a positive social impact. Vargova (Invesco Ltd) agrees “By embedding social awareness and social risk into portfolios we believe we ensure long-term performance."
The new generation of customers is ever-increasingly interested in social justice issues, particularly those concerning racism, gender equality and decent work. Thus, in the past year, social movements like the Me Too, Black Lives Matter grew massively. The pandemic has also shed a spotlight on essential service workers which made some governments re-evaluated current systems: In October, Geneva, Switzerland adopted the world’s highest minimum wage, suitable to the cost of living and supporting essential workers in typically low-remunerated positions.
As new consumers' purchasing decisions are ever-increasingly dependent on moral considerations and government pressure on the private sector to enhance employee’s welfare, the longevity of enterprises hinges on their social good.