Why Mental Wellbeing Matters in the ESG Framework

“Vasudhaiva Kutumbakam" is a Sanskrit phrase from ancient Indian scriptures that means "the whole world is one family". The phrase embodies a philosophy that encourages people to consider the whole universe as a family, and to transcend borders, languages, and ideologies to achieve complete harmony with each other, and with everything around them. The phrase also embodies a vision where discrimination and violence have no place among its members. The corporate world could well start with a company as a microcosm of the universe.

Mental wellbeing and ESG

In the ESG framework, the “social” has largely focused on diversity and compensation matters. Talent attraction and retention becomes important, and DEI (Diversity, Equity, Inclusion) has found resonance. However, not much attention seems to be paid to workplace mental wellbeing. Companies should endeavour to not just make the workplace pleasant, but also make the entire employee work life pleasant. Most companies focus on employee well-being and provide opportunities for employees to engage with others in the organisation. It would be ideal to have a “Happiness quotient” that one can aim to achieve. But it is well understood that there is no one silver bullet, and there some broad areas that need to be covered.

First comes the social (S) pillar where the company focuses on employee’s well-being. Companies need to prioritise mental health support for employees, including stress management, mental health days, and access to counselling. Moreover, the workplace culture needs to foster an inclusive, supportive work environment that encourages open discussions about mental health along with investment in employee mental health and well-being to improve productivity, retention, and overall business performance.

Second is the governance (G) pillar. Ensuring board members understand and prioritise mental health as a business imperative. CEOs and senior leaders

champion mental health initiatives and set the tone for organisational culture. The companies should also report on mental health initiatives, progress, and metrics.

Third is the environmental (E) pillar. A healthy workforce contributes to a company's long-term sustainability and resilience. Companies should consider mental health implications for workers in their supply chain.

The BRSR Conundrum

At a more practical level, Indian corporates have embraced the BRSR framework. The Business Responsibility and Sustainability Reporting (BRSR) framework in India includes employee well-being as one of its reporting areas. The metrics for employee well-being includes parental benefits, employee accessibility, and percentage of unionized workers. Principle 3 of the BRSR framework states: “Businesses should respect and promote the wellbeing of all employees, including those in their value chains”.

Many leading companies have put out various versions of this: “We help our employees be the best version of themselves by empowering them to enjoy a healthy, safe, high-quality work-life balance. We know that when people are healthy and living their life’s purpose, they can contribute more – whether that’s towards their families, work, or society. We continue to create a positive workplace environment to support people’s physical, mental, social, and emotional well-being and help them fulfil their purposes.”

However, there are no “mental wellness” or “happiness” indicators in either the essential or leadership indicators within the BRSR framework. Companies could start by tracking some mental health metrics and reporting: employee mental health surveys, mental health-related absenteeism and presenteeism, investment in mental health initiatives, employee turnover and retention rates and mental health-related training and education programs.

And start adopting some best practices that are required at companies which includes developing a comprehensive mental health strategy, providing an accessible mental health resource, foster an open and inclusive culture, monitoring and reporting mental health metrics, engaging with stakeholders and investors on mental health initiatives.

As awareness grows, investors, stakeholders, and regulators increasingly expect companies to prioritize mental health within their ESG frameworks. Corporate India needs to adopt metrics for mental wellbeing. “Find a job you love, and you don’t have to work a day in life”. This holds good for bosses and employees with both trying to create a work environment. Let us all create such a workplace and a happy world.

(The author is founder and MD, InGovern Research Services, a corporate governance advisory firm)