The Argument for ESWG Investing

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By Ryan Bonnici, chief marketing officer, Gympass

One of the big issues facing investors these days is the role of ESG (environmental, governance and social) issues in making decisions about where to put their money. Questions have been swirling around ESG and whether it’s having enough of an impact. But experts point out that it can still be a very important and profitable guide.

What’s not in doubt is that all the talk about ESG, along with disclosure requirements, has led to a deep focus on what businesses are doing in these categories. And businesses are responding.

Meanwhile, businesses are also facing another crucial issue — one that desperately needs attention. According to a study from my company, Gympass, the world of work has entered a crisis of well-being.

For The State of Work-Life Wellness, we surveyed more than 9,000 employees of various types of businesses in major markets. Among the findings: Employee stress is at an all-time high; 60% of employees are emotionally detached at work; and nearly half (48%) of employees say their well-being declined in 2022.

This is not just a result of the pandemic. In fact, even before Covid-19, scientists were warning of “a public health crisis sweeping the American workforce.” A study of data through 2017 by the National Academies of Sciences, Engineering, and Medicine found that Americans age 25-64 ”have been dying at higher rates since 2010,” and that their “risk of dying from certain conditions — such as drug overdoses or hypertensive heart disease — has been climbing since the 1990s.”

The pandemic made things worse. Still, millions of workers remain out of the workforce or taking on reduced hours due to long Covid. But physical illness is not even the biggest culprit damaging workplace wellness — more people are absent from work due to stress and anxiety than physical illness.

Businesses have clear incentive to address this and help improve the health of their staff. The more that wellness takes root as a core function of how a business operates, the more successful and profitable it is. As my colleague Gympass CEO Cesar Carvalho wrote, shareholders have more reasons than ever to take a broad look at wellness in choosing where to invest.

I believe we can help make this happen by updating ESG with the introduction of a new letter.

Elevating wellness

The term ESG was coined nearly 20 years ago in a report by the United Nations. Now, businesses have entire departments and company-wide goals focused on ESG issues. And teams of investors even focusing on ESG exclusively.

Unfortunately, wellness generally takes a backseat. As Gallup notes, “Many leaders are treating DEI and wellbeing as two distinct initiatives, despite the fact that they are fundamentally connected. You can’t improve either in isolation, and leaders who attempt to do so are probably getting both wrong.”

It’s time to elevate wellness. I propose that, starting in the new year, we talk about ESWG.

Just like environmental, social, and governance issues, wellness is an entire category of its own. It includes both physical and mental health, for starters. The Gympass report notes that, “Organizations that take a proactive approach to helping employees develop resilience and

mental strength will undoubtedly create a healthier and more engaged workforce capable of driving even better business outcomes.” Having written publicly about my own mental health journey over the years, I know that support for psychological wellness is a crucial part of what leads me to decide where I wish to work.

A successful, holistic wellness program also includes other pillars, such as occupational, intellectual and financial well-being. In fact, a report for the U.S. Chamber of Commerce Foundation calls financial wellness a “business imperative.”

It turns out that a group of researchers have made a similar suggestion about updating ESG. In a study published by BMJ Global Health, they suggested an “ESG+H initiative,” with the H standing for health. It “could serve as catalyst for the inclusion of health criteria into mainstream financial actors’ business practices and investment objectives,” they wrote, adding that “health considerations directly impact profitability of the firm and therefore should be incorporated into financial analysis.”

I prefer ESWG, so that wellness doesn’t come across as an afterthought. It should be a central business function.

Given that research connects wellness programs to stock performance, there’s no question that investors would gain from a new focus on well-being inside organizations. In the year ahead, let’s do all we can to make that happen.

Ryan Bonnici is chief marketing officer at Gympass.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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