The Pensions and Lifetime Savings Association (PLSA) has partnered with the CIPD (the professional body for HR and people development), the £32bn (€37.2bn) pensions giant RPMI Railpen and think tank the High Pay Centre to assess investor expectations and how effectively the UK’s largest listed companies are discussing and responding to workforce factors, which have been brought into sharp focus during the global pandemic.
The group, which brings together both sides of the company-investor dialogue, will explore what key workforce metrics are of most value to investors and examine the annual reports of FTSE100 companies to evaluate how well they explain their employment models and practices in relation to company strategy.
The group also plans to explore areas including the disclosure of workforce composition, such as gender and ethnicity; stability of the workforce; skills and capabilities; and engagement and well-being.
The PLSA said that within these major themes, metrics including aggregated turnover rate, the proportion of full- and part-time staff, employee share ownership, living wage accreditation and time lost to sickness and injuries, mental health sickness rates, gender and ethnicity pay gaps and age diversity of the workforce will also be under review.
The research will be supported by insights from company engagements conducted by the Railpen team, who have since March 2020 been probing portfolio companies on their approach to looking after employees’ physical, mental and financial well-being.
Caroline Escott, senior investment manager at Railpen, said: “Railpen has been engaging on workforce treatment with portfolio companies for many years, both as a financially material issue and as a topic which resonates with our members. For instance, we were one of the first UK pension schemes to update our voting policy to reflect how we vote at companies where we do not think employees have been treated fairly.”
She said that COVID-19 shone a spotlight on the importance of an engaged, motivated and looked-after workforce to sustainable corporate success and “reignited the debate around what good workforce reporting looks like”.
The research project, which will be led by the public policy team at the CIPD, is especially relevant following the government’s launch of a consultation intended to scrutinise the effectiveness of occupational pension scheme trustees’ current policies and practices in relation to social factors, PLSA stated.
Joe Dabrowski, deputy director of policy at the PLSA, said: “The PLSA and its members believe deeply in the responsible investment. Companies that are able to demonstrate the highest standards for measuring workplace factors like remuneration practices, workforce composition, stability and skills are more likely to be well run and deliver higher returns for shareholders.”
He said the new research would uncover “the extent to which UK companies are serious about doing the right thing and attracting long-term, responsible investors”.