Investing in healthier workplaces for all

Summary

• We set our endowment dual objectives of achieving financial returns and health impact. One way we do this is to use our voice as an asset owner to create health impact together with companies we’re invested in and in networks that seek to drive change 
• Healthy diets, air pollution and workplace health are the three key determinants of health that our engagement work focuses on 
• As part of our engagement work focusing on workplace health, we’ve joined ShareAction’s Good Work Coalition, and are supporting the work of the Workforce Disclosure Initiative 
• With the coalition, we’ve signed a shareholder resolution asking Sainsbury’s to become the first UK supermarket to accredit as a Living Wage employer, committing to paying its employees and contractors a wage sufficient to live on

Workplaces are a key social determinant of health

Our workplaces impact our physical and mental wellbeing. The environments we work in, the pay and benefits we receive, as well as the relationships we form with others all play a part. These social determinants of health can be even more important than healthcare or lifestyle in influencing our health. And they not only impact people but companies’ bottom line too – recruitment, staff turnover, absenteeism, productivity and reputational risks are all linked to workplace health.  

As a funder and investor working to build the foundations of a healthier society, we set our endowment a dual objective: to achieve financial returns as well as health impact. One way we achieve positive impact is through engaging with companies we invest in. Workplace health is one of three emerging areas, alongside healthy diets and air pollution, where we’re seeking to drive health impact by urging organisations, particularly larger ones, to consider practical and meaningful ways to improve their practices.

Employers raising standards is good for health and for business

Our actions as an investor are consistent with our values as a charitable foundation. We believe that using our voice on issues related to our mission, and working constructively with others to solve challenges, is an important route for our organisation to have impact. 

For us, part of our responsibility as an ‘engaged investor’ is encouraging companies we invest in to address the social determinants of health through their products and services, how they treat their employees and the effect of their activities on the environment. To achieve this, we join forces with other engaged investors, and promote ESG practices (Environmental, Social and Governance) among companies we invest in as well as peers in the investor community. We look to provide constructive challenge and evidence-based approaches to help them consider and drive improvements.

Our experience as founding members of the Healthy Markets Initiative, an investor coalition to support better diets, taught us that when investors collaborate on a common ask they have real power to influence corporate strategy and public policy. To date, we’ve seen milestone changes made by the UK government and companies like Tesco – which made a landmark commitment to increase healthy food and drinks sales – and Unilever – which agreed to publish more data on the healthiness of its products, off the back of our engagement. 

Building on these successes, in December 2021, we joined the Good Work Coalition coalition of 40 members including Aviva Investors, Legal & General Investment Management and BMO Global Asset Management. The group, which represents £3.8 trillion in assets under management, is encouraging investors and businesses to create the conditions that support more equitable working practices. The coalition is led by ShareAction, an organisation promoting responsible investment which we’ve worked with since 2019.  

One area where we believe employers can have substantive impact on people’s health is pay. Lower incomes are linked to worse health. For example, a survey by the Food Standards Agency found that one in four households on low incomes struggles to eat regularly or healthily because of a lack of money. Tackling income inequality through schemes like Living Wage accreditation can be a powerful tool in addressing health inequalities. 

Commitments from influential employers pave the way for change

The mix of higher National Insurance contributions, cuts to Universal Credit and a freeze on the income tax personal allowance mean that the average supermarket worker will be £1,040 worse off in 2022. Yet, of nearly 9,000 UK accredited Living Wage employers, no supermarket is Living Wage accredited. Accreditation commits an organisation to pay all workers and contractors an independently-calculated wage that meets the real cost of living in the UK. 

That is why, together with other investors in the Good Work Coalition, we’ve signed a shareholder resolution asking Sainsbury’s to pay the real Living Wage to all its workers and contractors. We know that rewarding work is important to Sainsbury’s. The supermarket has made recent pay rise commitments so that many of its staff receive the living wage. However, we think it can go further by becoming an accredited employer and committing to paying the living wage to all staff now and in the future. And by having a plan to pay the living wage to third-party contractors, who are among the most vulnerable and low-paid workers in our economy. As the second-largest UK supermarket and an employer with a workforce of 189,000 people in the UK, a move like this could create significant health impact. 

As a long-term investor in a healthier society, we would like to see Sainsbury’s become an accredited living wage employer. Not only do we expect this to improve employee health, but it would also likely have positive benefits for Sainsbury’s in areas like recruitment and send a positive signal to other retailers. 

There is a strong business case for adopting higher base rates of pay. More than 9 in 10 accredited Living Wage employers have reported business benefits for their recruitment, retention, and productivity. 

Following this shareholder resolution, we intend to work with Sainsbury’s to build an action plan that addresses the asks we are raising along with other shareholders.  

This is the beginning of our journey on engaging with companies on workplace health. Next on our list is reviewing closely where we can have most impact going forward, including by using data collected by the Workforce Disclosure Initiative to assess companies’ reporting on workforce issues and guide where we might be able to create meaningful change through engagement.