With Covid-19, workers around the world are facing the potential worsening of their working conditions. What we are doing to address the social aspect of ESG for our portfolio and ourselves right now.
The 1st of May is Labor Day. Throughout the world, the day is being used to honor the struggles of the working classes and the efforts of trade unions. This year, workers around the world are facing an extra threat: the potential worsening of their working conditions caused by the COVID-19 pandemic including risks of retrenchments, decreased or no salary, lack of support in the case of illness or when having to take care of children or of contracting an infection while working.
The benefit of being a responsible employer
Many companies are aware of the difficult situation and are doing their best to support workers throughout the crisis. This ultimately benefits not only their staff, but also themselves: Companies that are showing a clear commitment to their workforce are maintaining the goodwill of workers, customers and the broader community. This is why companies can actually benefit from providing safe working conditions for employees, supporting staff in case of illness or when looking after children and dealing with potential labour regulation changes.
Asset managers are changing their ESG focus
An increasing number of asset managers, invested in companies affected by the pandemic, have realized that skilled labour are valuable company resources. And the retention of these skills can allow companies to maintain a competitive edge during and beyond this crisis. Companies that are proactively ensuring the protection of the workforce during the crisis can be expected to provide a better financial return in the longer perspective.
As a result of this, many asset managers are shifting the focus of ESG from mainly focusing on the E as in environmental factors to now also prioritizing the S or social aspects (see here). A part of this shift is to help portfolio companies to support and protect their workforce. This includes the provision of liquidity for portfolio companies to ensure job security and the identification of provisions by the national governments which determine options to maintain income for workers. In the future these asset managers will most likely also require that portfolio companies develop and implement stringent HR policies which provide workers with essential working benefits.
At responsAbility we are doing our best to support and protect our staff. We are providing a well-organized home office set-up to shield employees from the risk of infection through travel on public transport and close contact in an office environment (see here) and we are offering flexible working hours, which is particularly important for employees with childcare duties.
At the same time, we help our portfolio companies to retain and support their workforce. Most of our investees are operating in countries with comparatively poor labor legislation and working conditions. Reaching out to offer help during this difficult situation is part of our DNA as impact investors. Via our ESG assessments we ensure that workers in our portfolio companies benefit from safe and fair working conditions – now and in future.