Investor statement on workforce engagement

A company’s workforce is fundamental to its long-term success. Ensuring an engaged, motivated and fairly-treated workforce – and intentionally incorporating workforce perspectives into strategic decision-making and corporate governance processes – can support stronger, more resilient financial performance over the long term.

As investors, we do not believe there is a single ‘right’ way to incorporate the worker perspective which suits every firm in every sector. However, we believe companies in the US and UK could, for example, consider appointing a workforce director to their board, given workforce directors can efficiently provide benefits over and above – and ideally in combination with – other workforce engagement mechanisms. Alternative and potentially effective engagement mechanisms may include designated non-executive directors, advisory panels, or other tailored engagement structures.

A growing body of evidence shows that strengthening workforce engagement can deliver a range of benefits, including:

• Enhanced board decision-making through broader perspectives and improved insight into operational realities; and

• A more engaged workforce, which can support productivity, retention and long-term value creation.

As asset owners and investment managers, we commit to engaging constructively with companies on workforce engagement. We will share perspectives drawn from our own experience and wider engagement, listen carefully to companies’ views, and offer support where we see thoughtful and credible approaches being developed.

In return, we encourage companies to:

• Consider how best to engage their workforce, including whether different governance mechanisms – such as workforce directors, designated non-executive directors, advisory panels or other models  may be appropriate;

• Draw on available guidance and emerging best practice; and

• Provide meaningful disclosure to investors on their approach to workforce engagement, including rationale, implementation and outcomes.

For those of us who invest via external managers, we also encourage managers to raise workforce engagement practices with investee companies and report back to clients on these discussions.

We are grateful to the investor, academic, corporate and worker community for their support in pulling together our 2023 guidance. We welcome additional investors who share these objectives to join the Workforce Engagement Coalition and support stronger workforce engagement across markets to help improve outcomes for savers.

Supported by:

• Border to Coast

• Brunel Pension Partnership

• Church of England Pension Board

• Merseyside Pension Fund

• Rathbone Greenbank Investments

• Royal London Asset Management

• Universities Superannuation Scheme