In 2017, the UK Government commissioned an independent review on mental health and employers – the Stevenson Farmer report.
The results were eye-opening and, among other discoveries, found that poor mental health costs the UK economy between £74bn and £99bn per year. It also found the costs to the employees themselves stood at between £33bn and £42bn, while workplace interventions to improve employee mental health offered a return to business of between £1.50 and £9 for every £1 invested.
“This was considered the first real look at workplace mental health,” CCLA’s stewardship lead Amy Browne (pictured) tells our sister title Portfolio Adviser. “The fact businesses were losing billions of pounds every year because people were either not well enough to be fully productive, or were taking extended sick leave due to mental ill health, clearly evidenced that poor mental health is a sustainability risk and a blind spot for investors.”
At this time, CCLA – the sustainability-focused asset management firm which specialises in investing for non-for-profits – was already engaging with “a small handful” of companies it was invested in, and asking basic questions regarding the mental health support they offer their employees. The aim was to continue to grow this capability in order to raise awareness and improve the productivity of the companies it had invested in.
Then, the pandemic hit. This was, incidentally, three weeks before Browne joined the firm and around the time CCLA partnered with Paul Farmer, former CEO of charity Mind, and Lord Dennis Stevenson – co-authors of the 2017 report – alongside Chronos Sustainability and the Principles for Responsible Investment to start work on its mental health benchmarks.
“It became very clear that, alongside people becoming physically unwell, people staying at home for extended periods of time and being isolated from friends and family was resulting in a mental health crisis,” she said. “So, my first task on joining CCLA was to write to every FTSE 100 company, on behalf of ourselves and a £2trn investor coalition of 15 investors which we had built up, and discuss their mental health practices.
“This was a more difficult task than you may first imagine. But after writing 100 letters, and chasing two or three times across some companies, we received responses from 74 of them.”
When analysing the results, Browne says it became clear there was a divergence. “There were pockets of amazing leading practice by these businesses, in terms of protecting the mental health of their employees. There were also often leaders who knew there was a problem, and really wanted to improve. There would be lots of money going into initiatives, but there was no strategy. Without a strategy, there is now way to identify where the problem lies, so you cannot target your response and keep up with the changing needs of your workforce over time.”
This marked the formal inception of CCLA’s Mental Health benchmarks. By Q1 2022, CCLA had devised its criteria used to evaluate and score the UK’s largest listed companies on their public disclosures. And, by May, the CCLA Corporate Mental Health Benchmark UK 100 was born. Later that year, CCLA expanded its reach and launched the CCLA Corporate Mental Health Benchmark Global 100.
Fast forward to today (17 June), the firm has launched the third iteration of its UK benchmark.
Latest results
Results from the latest investor-backed benchmark come shortly after an NHS-commissioned study which estimates that the economic cost of poor mental health stands at £110bn in England alone.
However, the number of large UK companies in the top two performance tiers for their mental health support has doubled since 2022, now standing at 20 companies. These firms account for approximately 1.5 million employees.
Some 24 companies moved up a tier for their performance, while six now reside in the top tier: BT Group, Centrica, Entain, Experian, J Sainsbury and Serco Group.
However, 51 companies reside in the bottom two tiers. The number of companies publicly disclosing the training they provide line managers to support employee mental health also fell since the last benchmark to 44%, a six percentage-point fall from 50% in the 2023 benchmark. Meanwhile, just 42% of FTSE CEOs actively promote workplace mental health initiatives.
In terms of companies which have fallen into the bottom tier, and which have not engaged on any level, the worst offenders are Pearson, Melrose Industries, Smurfit Kappa Group and TUI. Companies which have languished in the bottom tier since the last rebalance, and have decided not to engage, are Howden Joinery Group, Vesuvius, RHI Magnesita, International Consolidated Airlines Group and Dowlais Group.
Overall, however, 70 out of 101 companies have engaged with tackling the issue of mental health in the workplace. This includes companies across all tiers, with some companies reporting shortly after the benchmark deadline. This means that hopefully, according to Browne, their performance will be better in next year’s benchmark.
“The significant increase in engagement since 2023 suggests a growing awareness by companies of poor mental health as a business risk, with many informally citing talent acquisition and retention as a key driver,” she explains.
“This year’s benchmark demonstrates that the most progressive companies are making concerted efforts to get ahead on mental health. The results show a revealing and widening gap between the leaders and the slow-moving majority.
“Seven companies made it into tiers 1 and 2 for the first time in 2024, with one in five now ranked in the top two performance tiers. This should be celebrated.
“However, there remains concern about the lack of progress in companies at the bottom of the tier rankings. Employees deserve better from their employers.”
What’s the catch?’
When engaging with companies ahead of the benchmark rebalance, Browne says it’s “funny how many companies think I am trying to sell them something”.
“Often companies will ask how much it will cost them. Sometimes, they look at the share register and are confused as to why CCLA isn’t on there, but that we are still getting in touch with them.
“It’s then down to me to explain the “greater good” approach and the theory of change here, which is that a rising tide lifts all boats. Sometimes, the quickest and most efficient way of improving your own holdings is by changing the system itself, and the way business is done. This is the ultimate ambition here.
“CCLA may have been the first company to identify this as a risk, but we are no longer a lone voice. This is evidenced by the growth of CCLA’s investor-run coalition, which now has 54 signatories and a combined £9.4trn of assets under management. This far, far outweighs our total AUM, multiple times over.”
Not only does engaging with CCLA cost the companies nothing, it should also save them a significant amount of capital, too.
“If I told a company that if they engage with us, they will get an average return of £5.30 for every £1 they invest into making improvements, I think it would be remiss of them not to do so,” Browne says.
“And, according to Deloitte, poor mental health costs UK companies in the public sector an average of $1,900 per individual employee, per year. It costs even more in the public sector.”
Plans for evolution
The benchmark is gaining traction and becoming much more influential over time. Browne says this works in myriad ways: it appeals to the competitive nature of listed companies, who look to beat their sector peers. Other firms have also told Browne that they are driven purely by how they can create a better workplace for their employees.
“One UK bank told me last year that there is a ‘talent war’ out there, and that they see mental health as the ‘jewel in their crown’. They said it is a key differentiator in terms of talent intake.
“Other companies will cite talent retention as a reason for engaging. Good people are more likely to stay, if they are well cared for. One company wanted to improve its approach after it lost one or two employees to suicide. It raised awareness of the importance of mental health, and now the CEO themself is driving the company’s entire mental health initiative and work with the benchmark. It’s amazing to see.”
Looking ahead over the medium term, Browne says the focus is on increasing the number of company responses and continuing to improve the uptake.
“But typically, the investor signatories and other members of the coalition are the same names I see on the stewardship circuit discussing other topics, too. This suggests the issue is still not mainstream,” she reasons. “So, what I would love to see in the next few years, is for the mental health crisis to become as mainstream as climate change, as a topic for investors.”
This article first appeared on PA Future’s sister site Portfolio Adviser
