Shortlisted for the PRI Awards 2024: System stewardship
Organisation: CCLA Investment Management
Signatory type: Investment manager
HQ country: United Kingdom
The approach, initiative, or process
The CCLA Corporate Mental Health Benchmark, launched in 2022, aims to inform and accelerate progress in corporate mental health, an area that has historically been hidden in the workplace.
Now in its third year, the benchmark evaluates listed companies and ranks them into five performance tiers based on their approach to mental health. Performance is assessed against 27 criteria that were developed by mapping existing frameworks and reference sources, with the support of an independent expert advisory panel.
The benchmark aims to improve the approach of more than 200 of the world’s largest listed businesses, each with more than 10,000 employees. The companies covered in 2023 span 10 industry sectors and 17 countries and employ 24 million people worldwide.
To raise the profile of the benchmark, and to incentivise businesses to implement the framework, we have spent two years building a global investor coalition on workplace mental health. Launched in July 2022 with just 29 founding signatories, the coalition now comprises 54 investor signatories across eight countries and four continents, with a combined £9.4 trillion in assets under management (as at 30 May 2024). Many of these investors are using the benchmark framework to engage with companies independently of us. The growth in investor support for this initiative demonstrates their increasing awareness of mental health as a material business concern.
This stewardship approach is novel because it combines regular, systematic performance ranking of companies with sustained and persistent engagement by a growing coalition of global investors.
Mental ill-health represents a clear social and financial risk to employers, relevant to every company with workers. It is high time that investors took a stand.
The economic case for investment in mental health at work is strong. An estimated 12 billion working days are lost globally each year to depression and anxiety alone, at an annual cost of $1 trillion in lost productivity. Meanwhile, for every $1 invested in scaled-up treatment for depression and anxiety, there is a $4 return in better health and productivity.
We acknowledge that benchmarking is a long game and, at approaching three years old, this benchmark is at a formative stage. Nonetheless, it appears to be doing its job in driving corporate performance on workplace mental health at a systemic level. It has mobilised the investment community into action and incentivised many businesses to improve. The ability to assess and compare companies enables investors to track corporate progress over time.
A systemic solution
Stewardship activities typically focus on companies that are owned in a particular investment manager’s fund or portfolio. This standard, ‘portfolio-centric’ approach may improve fund metrics, but it is unlikely to lead to sustained change, or to shift the conditions that hold a problem in place.
Systemic problems require systemic solutions. What is more, ‘portfolio-centric’ engagement can be hampered by the natural, regular turnover of companies as they are bought and sold from a portfolio.
The mental health benchmark approach is different because it aims to change the system; to change the accepted way in which business is done. It raises the standard across the board, resulting not only in a better portfolio, but also a better world, to the benefit of companies, investors and society at large. We all stand to gain.
The focus of the project is to incentivise listed companies to take voluntary steps to improve their approach to workplace mental health. However, the project is guided by an independent expert advisory panel which includes, among others, Lord Dennis Stevenson CBE and Paul Farmer CBE, the original authors of the 2017 government-commissioned Thriving at Work review.
Our Corporate Mental Health Benchmark was first published in 2022, with two separate company rankings: a ‘UK 100’ and a ‘Global 100’. 2023 was an exciting year because it was the first time we were able to re-assess companies to establish whether the combination of public ranking and sustained investor engagement was having the intended impact.
In 2023, we assessed 207 listed companies’ approach to workplace mental health. 119 of those had engaged directly with us between the launch of the 2022 benchmark and the end of 2023. 42 companies demonstrated sufficient improvement to move up by one or more performance tiers. Those 42 ‘improver’ companies have a combined workforce of 7 million people worldwide.
The measures to ensure transparency and involve collaboration
The initial assessment criteria were developed by mapping key frameworks and reference sources. In 2023, we undertook a gap-analysis to ensure that the criteria fully reflected the most up-to-date guidance from the World Health Organization and International Labour Organization. (This is detailed in Chapter 6 of the CCLA Corporate Mental Health Benchmark Global 100+ Report 2023.)
We aim to be fully transparent, not only about the assessment process and timeline, but also about how we evaluate companies. The assessment criteria are written up in a public document, updated annually to reflect the latest research, agreed with the external expert advisory panel and shared directly with benchmark companies at the start of each calendar year. The latest assessment criteria document is available online: CCLA Corporate Mental Health Benchmark Assessment criteria 2024.
When a benchmark is published, every company is provided with a detailed question-by-question report, with key feedback and a set of bespoke recommendations. This is followed by a collaborative investor letter, outlining the expectations of investors and the key recommendations for each individual company.
Support from external experts
Chronos Sustainability, a specialist sustainability advisory firm with expertise in targeted benchmark initiatives, is responsible for advising us on the design and development of the benchmark, for conducting the independent company assessments and for analysing the data.
An expert advisory panel, comprising independent workplace mental health experts and specialist practitioners, provides independent technical guidance on workplace mental health and supports us with the development of the benchmark. For details on members and responsibilities, refer to Chapter 5 of the CCLA Corporate Mental Health Benchmark Global 100+ Report 2023.
The expert advisory panel guides the project once the benchmark assessment criteria have been reviewed and the evaluation is complete.
We coordinate collaborative investor letters which are sent to each company annually on behalf of the 54-strong investor coalition, outlining the expectations of investors and the key recommendations for each business. A subset of 18 institutional investors lead or support engagement efforts with companies in the bottom performance tier.
Perhaps the most important stakeholders in this initiative are the companies themselves; specifically, the individuals within benchmarked businesses that embrace the CCLA Corporate Mental Health Benchmark welcome the dialogue with investors and who use the benchmark to strengthen their own hand in moving their businesses forward.
PRI disclaimer: This case study aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. It is written by a guest contributor. Authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.
CCLA disclaimer: Important information: The views expressed do not constitute financial, investment or professional advice. CCLA Investment Management Limited (registered in England, No. 2183088) and CCLA Fund Managers Limited (registered in England, No. 8735639), whose registered address is: One Angel Lane, London EC4R 3AB, are authorised and regulated by the Financial Conduct Authority.
