Why it pays to invest in companies with a good work-life balance

IN many ways, it feels strange that employee wellbeing falls under the banner of sustainability. After all, what we’re really talking about is running a business with a degree of common decency. Treat people well and you get the best out of them. It’s not rocket science.

It’s crucial to a company’s productivity levels, which in turn affects profits. Happy employees equal a happy life.

In February, the world’s largest trial of a four-day week came to an end and most companies that took part either extended it or made it permanent¹.

The trial which included 2,900 employees across the UK reported a better work-life balance.

39% of those surveyed said they were less stressed, 40% were sleeping better and 54% said it was easier to balance work and home responsibilities.

It’s in an employer’s best interest for employees to feel satisfied at work. Companies that prioritise employee wellbeing are far more productive and profitable.

Research by Oxford University’s Saïd Business School² in collaboration with BT found that happy workers were 13% more productive - making more calls per hour and converting more calls to sales.

This isn’t just a fleeting trend. Employee wellbeing sits under the social category of ESG (environmental, social and governance) factors and is a growing area. By 2027 it’s projected to reach over a whopping $66bn³.

Employers are cognisant of the power of a holistic package. It’s not just about a good salary anymore - employees are demanding a good work-life balance and additional benefits like private health care, gym memberships, entertainment, and shopping discounts.

The physical and mental health of employees has taken even more precedence after the Covid-19 pandemic.

Despite it no longer being a “global health emergency” understandably, its impact continues to be felt⁴. Some would argue that it has caused employers to permanently shift their attitudes towards employee wellbeing - it’s not optional, it’s a necessity.

Companies that refuse to prioritise it inevitably face criticism. Recently, there’s been a string of famous firms that have been caught in the firing line because of their failure to treat employees well.

Not only is a company’s reputation tarnished, but profits can also drop, and the value of a company can decrease quite dramatically.

Investing in companies that prioritise employee wellbeing is win-win for both employees and investors. Employee satisfaction is high while investors get access to productive and profitable businesses.

However, companies aren’t only addressing their work culture internally. Some companies are also acknowledging their external impact. Environmental and governance considerations are particularly important right now. For example, climate change is on the world’s agenda, so it’s enticing for investors when a company has a net zero plan.

The point is, there are lots of ways companies can practice sustainability. If you’re interested in investing in funds that consider ESG factors, you can select them according to your values.

If you are interested in sustainable investing, check out the Fidelity Sustainable Investment Finder which helps you filter funds according to seven filters. It includes sustainability-focused, environmentally focused, socially focused, ethically focused, ESG weighted, limited exclusions and faith based.

There are currently 20 socially focused funds you can find through our Sustainable Investment Finder. Usually, these funds will integrate ESG factors and values into the investment process. Some examples may include human rights, environmental sustainability, and social housing.

Sources:

¹ The Guardian, 21 February 2023
² University of Oxford, 24 October 2019
³ Allied market research, 16 May 2023
⁴ BBC, 5 May 2023

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. The Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.