How employee benefits are becoming environmentally and socially conscious
Over the last few years, there’s been a mindset shift in understanding how personal behaviour affects the world and those around us. Many of us, on both an individual level and as corporations, have become more environmentally and socially conscious, which, as a result, is affecting the choices we make, including the types of benefits we choose.
While early benefit programmes were standardised by a few core offerings designed to provide a level of comfort to workers, as circumstances have changed the way benefits are presented has evolved.
Effects of the pandemic and the ethics of Generation Z
The Covid-19 pandemic has played a part in this evolution, as remote and flexible working meant that companies have needed to generate their workplace culture without being able to rely on employees being face-to-face. While the pillars of physical, mental and financial wellbeing are generally well accounted for, social wellbeing has accelerated in importance to become a major part of employee experience.
Another important factor is today’s workforce – particularly the entrance of Generation Z. For many, it’s more important than ever before that the companies they work for align with their ethics and way of thinking.
But the shift to more environmentally and socially conscious benefits has been enabled by the fact that a level of trust has been built between employers and employees. Employers want to accommodate and react to staff needs. In turn they offer them more choice, which means employees are more open to sharing what’s important to them and taking onboard their employer’s recommendations. As a result, this is creating a stronger, more personal employee experience.
There’s also been a push for greater environmental and social awareness by employers. With the entry of new regulations, companies are far more aware of environmental, social and governance (ESG) targets and reporting requirements, which filters down through the actions of the entire company.
Benefits are evolving
Benefits used to be tangible in terms of providing specific protection, for example, offering a particular treatment for a physical health issue. Now, organisations have become more comfortable spending on benefits that don’t demonstrate such clear ROI but are more orientated around behaviour and culture, because they’ve grown to understand the value and importance of these offerings.
Traditionally, environmentally focused benefits have been underpinned by government incentives such as cycle to work or low-emission vehicle schemes – driven by tax advantages.
Yet, we’re now seeing far more clients who are looking to offset company emissions and there’s a greater awareness about carbon footprints. The shift in mindset in the corporate world is creating greater awareness of how people think individually.
In fact, the latest WTW Benefit Trends Survey showed that more than half of companies believe that ESG will have more of an impact on their benefit strategies over the next two years.
Environmental and social benefits
ESG investments, including through pensions schemes, are already a relatively well-established area.
We’re also seeing a rise in the use of platforms that incentivise climate-positive behaviour. This could be a platform that allows employees to track their carbon footprint and offers tips on how to change behaviour and rewards positive activities. Employees are given the choice to tailor the reforestation or renewable energy activity they support to suit their circumstances and individual carbon footprint.
What’s engaging about these platforms is that they can be used on an individual basis, but also to track teams, business functions or whole organisations, so that there’s a sense of collaboration and teamwork.
An ESG focus is also being incorporated in to company charity days. Social initiatives such as volunteering that can be done in small teams is a way to bring remote groups together. Staff are encouraged to participate in activities such as beach clean-ups, tree planting and helping to preserve local wildlife reserves.
Many of the environmental and social benefits have only entered the market within the last few years, which means there’s still some way to go in terms of integration into benefit plans. We’re already challenging insurers on their actions in this area and on their ESG credentials in order to provide a well-rounded view of the market and third parties that our clients work with. As awareness rises, we anticipate many markets will move towards becoming more environmentally and socially conscious.
As ESG credentials and targets become more prominent, we expect companies will become more demanding about who they align with. So, in the long run, it pays to implement a well-rounded ESG strategy.
In partnership with WTW
WTW is a leading global advisory, broking and solutions company.
