Industry partnership to study the ‘S’ factors | Pensions and Lifetime Savings Association

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Industry partnership to study the ‘S’ factors

15 June 2021

The Pensions and Lifetime Savings Association (PLSA) has partnered with the CIPD (the professional body for HR and people development), the £32bn pensions giant RPMI Railpen (Railpen) and think tank the High Pay Centre to understand 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 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 FTSE 100 companies to assess how well they explain their employment models and practices in relation to company strategy.

It intends 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. 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.

It will build on earlier studies conducted by the PLSA, CIPD and the High Pay Centre which found that investors’ interest on material workforce issues has not been translated into consistent corporate reporting and as a group, blue chip companies still had some way to go to achieving best practice, despite some notable good examples. 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 wellbeing.

With £2.2 trillion of assets under management, pension scheme investors wield significant influence in encouraging corporate best practice and success. They demand high levels of disclosure around employment practices because companies that look after their workforces tend to outperform their competitors. 

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.

Joe Dabrowski, Deputy Director, 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. This new research will uncover the extent to which UK companies are serious about doing the right thing and attracting long-term, responsible investors. This is especially relevant as we look to build back better following the disruption to employment and society at large during wrought by the pandemic.”

Ben Willmott, Head of Public Policy at the CIPD said: “Good people management is at the heart of good businesses, but all too often corporate reporting focuses disproportionately on short-term financial measures. If people really are an organisation’s best asset, then we need to see better reporting on people practices and we need investors to be a driving force behind requiring companies to improve the quality of their workforce reporting. If organisations are to succeed in the long-term, its vital that investors, board members and executive teams have a shared understanding of the value of the workforce and quality; regular reporting based on people analytics, can provide this.”

Caroline Escott, Senior Investment Manager at RPMI 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. Covid-19 has 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.  We are proud to support what will be an important contribution to the discussion, at what is a critical moment in the journey to build back better. 

Luke Hildyard, Director at the High Pay Centre, said: “How big employers treat their workers is a useful indicator of long-term performance, and also a critical measure of the value they contribute to society as a whole. So, it’s really important for investors to have access to detailed, consistent, comparable reporting of their companies’ employment models and working practices”. 

Mark Smith, Senior PR Manager
 020 7601 1726 |  [email protected]k

Steven Kennedy, PR Manager
 020 7601 1737 | 07713 073024 | [email protected]