World Health Day

Climate change and workforce sustainability

Companies are increasingly focusing on ESG (environmental, social and governance) issues as they recognise the impact that it is having on their workforce and their business.

Co-workers in office happily discussing the details of a project

It’s time for employers to put the “S” in ESG — here’s how.

As we celebrate World Health Day and this year’s theme, “Our planet, our health”, we are all encouraged to recognise the impact climate change is having across all corners of the world and the actions we must take to create societies focused on wellbeing.

Two years since its inception, the New Zealand wellbeing budget continues to be referenced at a global level as a forward-thinking approach to improving societal wellbeing. Using human health, safety and flourishing to assess the success of national policies, it highlights the need for change to be considered and addressed across all facets of society, including companies.

In recent years many companies in New Zealand and across the globe have shown heightened focus on ESG (environmental, social and governance) issues. Global concerns about climate and equity are top of mind for investors and employers. And for many, this includes readdressing the social contract with one of their most important stakeholder groups — employees. The intent to tackle inequity in health and wellbeing is central to these goals.

The impact of climate change on workforce health

So how can the learnings from the pandemic prepare employers for the future crisis? Climate change is threatening to worsen health conditions across the globe. The World Health Organization (WHO) reports that climate change is already responsible for at least 150,000 deaths per year, and this number is expected to double by 2030.[1]

The health implications experienced as a result of the global pandemic, have signified the need for employers to plan and adapt for future health risks. Among those who are most impacted by climate change and the subsequent health challenges are our vulnerable populations. Employers have a real opportunity to prepare and correct the inherent inequities that may arise when faced with these future challenges.

More frequent and severe climate-driven storms, floods, wildfires, and temperature swings also lead to increased prevalence of infectious and chronic disease and worsened health disparities. The WHO analysed 15 European cities and estimates in the next 10 years, for every 1◦C rise in temperature above the city threshold level, there will be a 2% increase in mortality in northern cities and a 3% increase in mortality in southern cities.

The interconnectivity between climate change and health was exhibited in the Australian 2019-2020 wildfire season. This event triggered AUD 2 billion in health costs from smoke related premature deaths and hospitalisations, which was more than three times the previous record of nearly AUD 600 million from the 2002–2003 fire season[2].

Why should employers care?

For employers, this is not just about doing the right thing. We all have an obligation and opportunity to act now. These issues are increasingly central to a company’s reputation and financial performance as companies continue to be scrutinised by an array of stakeholders including investors, ratings agencies and clients.

As these trends progress, ESG performance will play an increasing role in attracting and retaining talent.  By 2029, the Millennial and Gen Z generations will make up 72% of the world’s workforce; compared to their predecessors, they will expect more focus from their employers on well-being and creating a safe, healthy and supportive workplace.  Our research consistently shows that the more benefits an employee has access to,  and the more an organisation is known for physical and psychological wellbeing, the less likely they are to move to a competitor. Happy workers also report being more motivated and engaged.

We know from our Health on Demand research that employers are a key catalyst for change and a trusted source for information.  Our global survey found that 46% of employees trust their employer to deliver high-quality, convenient, affordable and secure personal health solutions. In fact, after healthcare professionals, employers were the most trusted source of health solutions, ranking above private medical insurers, online retailers and technology providers.

How can employers help

Businesses can do a lot to improve access to health benefits and equity in the workplace. We’ve developed four ways that companies can apply an environment and social lens to their benefits. 

Four steps for employers to take

  1. Assess whether your benefit plan is aligned to your ESG/sustainability goals. Your benefit plan is an expression of your organisation’s values.
  2. Understand the health disparities that exist within your workforce, and consider what you can do as an employer to help overcome them.
  3. Look for discriminatory practices in your benefit plan and work with your providers to eradicate them. Examples include exclusions for mental health.
  4. Consider how you can better support employees who are disadvantaged from a socio-economic perspective. This includes addressing key determinants of health like access to nutritious food or addressing alcohol dependence, illicit drug use and cigarette smoke.

For more information, contact your MMB client executive or local office.

Meet the author

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Alison Bamford

Mercer Marsh Benefits Leader