5 ways financial wellbeing can support wider ESG initiatives
As the focus on sustainability, equality and diversity grows – so does the need for businesses to demonstrate their commitment to environment, social and governance (ESG) initiatives. This has not only become an increasing factor in driving financial success, but it’s now essential for many staff to have an employer that is responsible, sustainable and ethical.
ESG refers to a set of standards measuring a company’s impact on the environment, society and how transparent and accountable it is.
- Environmental is all about impact and risk. For example, how a company uses natural resources, how its policies might impact them and how it reduces waste.
- Social relates to how a company manages its relationships with its workforce and the wider community. Staff wellbeing is a significant part of this.
- Governance refers to the way an organisation is run and managed. A genuine commitment to good governance goes beyond legal compliance.
Financial wellbeing has a significant part to play in ESG strategies – here are five ways it can support your wider initiatives.
1. Educate about sustainable finances
Ethical investing, banking and saving has become a huge talking point in recent years as people look to align their money with their values. In fact, more than three-quarters (77%) of adults who intend to invest say they are likely to consider doing so ethically, and 21 million savers would like to switch to a green pension.
The first thing to consider is whether your workplace pension offers sustainable investment options and if staff know about it.
A more comprehensive financial wellbeing programme could provide relevant educational resources, and personalised one-to-one financial coaching could help employees achieve their sustainable financial goals.
Increased financial confidence encourages more environmentally-aware financial choices.
2. Encourage environmental engagement
If you are considering a financial wellbeing programme that includes rewards and vouchers, there’s a good opportunity to incentivise eco-action.
For example, does your benefits platform offer discounts on products from ethical brands or B-Corp companies? Can you offer staff rewards for planting trees or choosing low-emission travel to work or for their holidays?
With energy bills at eye-watering highs, organisations could also consider offering discounted green energy tariffs.
3. Acknowledge the impact of financial challenges on employee wellbeing
The Principles for Responsible Investment, the world's leading proponent of responsible investment, listed mental health and access to health care among the top four priority social issues emerging from the pandemic.
We know money worries are one of the leading causes of stress in the UK - and 67% of working adults say it affects their work. Not only does it lead to more sick days and poorer productivity, but financial stress has a significant impact on our physical and mental wellbeing.
This is true of all employees - from recent graduates to senior executives - everyone will experience financial stress in different ways.
Companies that understand and acknowledge this can create a financial wellbeing programme that supports their employees’ financial, physical and mental health.
4. Improve sense of community and financial inclusion
Can you create a sense of community and support through your financial wellbeing activities and improve relationships along the way? For example, can you hold team sessions on how you can support each other through the cost of living crisis?
These could not only encourage your teams to speak openly about their own financial challenges, but also help you and them understand those of their colleagues, creating a more inclusive environment. It can also help you develop more inclusive policies. For example, if you know some staff are struggling to pay for their travel to work or childcare costs, could you review your flexible working policies to help ease the strain?
5. Promote pay transparency
From April 2017, it became a legal requirement for businesses with more than 250 staff to disclose their gender pay gap data, you could increase employee engagement and trust if you promote other types of pay transparency.
For example, could you consider introducing voluntary reporting to highlight your ethnicity pay gap and demonstrate the commitment your organisation has to improving fairness and diversity?
Paying staff a minimum wage is another legal requirement in the UK. This starts at £7.49 an hour (from April 2023) for workers aged between 18 and 20, going up to £10.18 for 20 and 21 year olds. Could you go one step further and ensure all staff (not just those age 23 and over) are paid at least the National Living Wage - £10.42 from April 2023 - or more?
In partnership with Claro Wellbeing
A financial wellbeing benefit to support your team where it matters most
