CLS Blue Sky Blog

Wachtell Lipton Discusses Workplace Wellness and Employee Mental Health As Investor Engagement Priorities

With the prospect of global vaccines on the horizon, companies worldwide continue to address the challenges of pandemic management and recovery on their businesses, the communities and constituencies they serve and especially on their employees.  As companies seek to prioritize workplace and customer health and safety alongside productivity and the achievement of strategic plans, the psychological, as well as physical, well-being of employees has been brought into sharper focus this year.  The urgent need to address issues of diversity, inclusion, racism and racial injustice, gender equality, and attendant financial and socioeconomic inequities has heightened attention to workplace wellness, as have pandemic-related illness and loss of life, economic and job insecurity, social isolation, lockdowns, travel restrictions and remote working and schooling.

For a long time, matters of employee wellness, mental health and emotional well-being generally had been largely only areas of internal focus for companies—and in some instances were overlooked due to unwarranted stigma attached to mental health issues within certain professions and industries and uncertainty about how to navigate stress, depression, anxiety, burnout and other conditions and illnesses and how to normalize discussion of these issues.

Employee mental health and well-being are now shifting up the priority chain and becoming matters of external interest.  Effective corporate initiatives on emotional wellness are now valued by shareholders, as well as other stakeholders, who are recognizing how these issues affect personal and professional lives, productivity, morale, recruitment, retention, and ultimately influence a business’s ability to generate long-term sustainable value as it prioritizes employees.  Companies are beginning to highlight these matters in external disclosures.  For example, in its inaugural fall 2020 ESG report, Uber emphasizes how it has “amplified our focus on mental health and well-being and identified systemic ways to normalize the conversation, such as adding a well-being day off as an option in our time-off request system”; Eaton’s latest sustainability report spotlights “Supporting mental health”; and AstraZeneca now discloses in its sustainability reporting a formal “Workforce Wellbeing Model,” how its employees are driving action on mental health generally, global strategies for integrating mental and physical health in the workplace and 2025 performance targets relating to a “healthy workforce,” including as to workplace pressure management.

From the investor perspective, what is new—and accelerating—is how institutional investors and asset owners globally are asking to understand corporate approaches to supporting the mental health of employees.  Shareholder engagement and dialogue is occurring in the context of investor assessments of public companies, corporate leadership and board oversight as to human capital management (“HCM”), corporate culture and resiliency, compensation and employee benefits, and broader community impacts.

In the U.S., especially in the COVID-19 context, shareholders have begun reviewing corporate disclosures and engaging on measures taken to support the physical and mental health of the workforce.  In the U.K., an investor-led mental health engagement program begun by CCLA Investment Management has been seeking to “build a substantial coalition of investors” to push for progress, “drive workplace mental health to the top of the corporate agenda” and “boost the mental resilience and wellbeing of workers across all sectors and industries.” Other novel investor-related activities include:

As workforce mental health and well-being become employee priorities and part of a company’s investor-facing ESG and sustainability profile, more companies will report on and discuss such matters with shareholders.  As investor and business priorities align as to workplace mental health, companies may wish to consider whether their initiatives are updated and appropriate for their workforce, including as to relevant privacy and legal considerations, and prepare to disclose such initiatives and address shareholder queries.

This post comes to us from Wachtell, Lipton, Rosen & Katz. It is based on the firm’s memorandum, “Workplace Wellness and Employee Mental Health – An Emerging Investor Engagement Priority,” dated November 30, 2020.

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