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The Pivotal Role of Investors in Worker Financial Security: Expanding ESG Analysis to Include Financial Well-Being

Commonwealth recently released a paper on The Pivotal Role of Investors in Worker Financial Security: Expanding ESG Analysis to Include Financial Well-Being.  The report was coauthored with Katherine Collins and Stephanie Dobson of the Sustainable Investing Team at Putnam Investments.

Among the paper's key findings:

  1. Worker financial security is material to business performance; research links financial insecurity to decreased productivity, increased absenteeism and turnover, and increased workplace accidents.

  2. LMI workers' financial security needs are unmet and addressing them promises high return on investment; firms and investors should prioritize these lower-income workers' financial security.

  3. It's more than just wages; when ESG analysis includes Social ("S") factors, too often the focus is just on wages - in fact, adequate wages are necessary but insufficient to achieve worker financial security (and the resulting impact on firm and investment performance).

  4. Best practices for worker financial security exist; firms should offer robust, well designed financial benefits, and track their impact on workers and the bottom line; Investors should engage firms on the issue, encourage action, support corporate disclosures, and emphasize the materiality of the issue to firm performance.

To access a copy of the report, please visit the Commonwealth website here.

Stefan ZierESG