How the ‘new normal’ for work is challenging what it means to be a socially responsible company

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The coronavirus pandemic is shaping the future of work. Flexible hours, working from home, jobs in the gig economy, and digital transformation may not have needed a special push from a ruthless virus, but COVID-19 has accelerated and possibly set certain trends, namely:

What’s New: The global pandemic and subsequent closures have increased investor focus on the role of companies in society, especially in dealing with their customers, suppliers and employees. Many workers who are on precarious contracts and / or receive low or hourly wages and few, if any, benefits have come to be hailed as heroes, essential to the functioning of society and economic systems. Digital Transformation: If you are reading this article on a laptop or smartphone, if you are about to participate in a Zoom or Webex work conference, if your school-age child is struggling with the challenges of remote learning, this item will be family. While the change related to digitization, specifically in areas such as cloud computing, artificial intelligence (AI) and semiconductors, was already happening rapidly, the pandemic has only accelerated it further, with internet connectivity helping to changing the nature of work and the workplace in ways that would not have been possible even a decade ago. With this seismic shift comes an urgent need for companies to adapt and adopt digital technology. Flexible work arrangements: The lockdown also appears to have accelerated a number of pre-existing trends, such as the shift to automation, relocation of supply chains, and the adoption of more flexible work arrangements. Coming out of the lockdown, a new business reality is likely to be that to attract top talent, companies will have to offer attractive and flexible work practices. This could have numerous long-term implications, such as a change in demand and prices for commercial office space, a greater appeal of suburban living, higher spending on home offices and entertainment, and less spending on business travel. . Increased education and training: The pandemic has also highlighted certain demographic and population issues, many of which are related to the future of work. This aging population has implications for the workforce, public spending, and pensions and retirement savings. Many forms of education could be affected and the specific skills required can change rapidly due to the other interlocking issues mentioned above, and the means of delivering education can shift towards an online model. These pandemic-related factors and responses will change the way we do business and the way we live our lives. Big changes bring financial risks and opportunities, which companies will have to balance with their social obligations. If we start from the premise that the lasting value of an investment is ultimately driven by the relationship between stakeholders, including directors, investors, clients, suppliers, the environment, society, regulators and, of course, the employees, long-term viability. An investment requires decision makers to understand and balance the needs of these diverse groups. Seen through this lens, employee considerations become a vital input when it comes to environmental, social and governance (ESG) issues. Applications related to ESG integration include avoiding companies that have such bad employee relationships that they are unproductive (or even strikes), which translates into a substantial reduction in revenue and increased costs. More comprehensively, it means getting an idea of ​​which companies view their employees as assets rather than budget lines. Which companies are providing training to prepare staff for the future of work, paying a living wage that ensures an adequate standard of living, and taking into account company culture and work-life balance considerations? Although the focus on these issues appears to have intensified during the pandemic, these social factors tend to be less understood by investors due to a lack of access to high-quality and transparent information or disclosures on these issues. As economies emerge from COVID-19, it will also be important to consider the altered macroeconomic context, including higher levels of government spending and debt and associated opportunities for structural reform of national labor markets, all of which will be critical to delivering shape our work. lives. That said, active engagement with companies can go a long way toward better understanding and / or influencing corporate culture and identifying areas where a company’s future employment lags behind. The recent growth in ESG and sustainable assets has been accompanied by an increase in active participation, perhaps most notably in the form of proxy voting, with investors increasingly voting against management. Change is inevitable. One partners, customers, staff, future employees and shareholders are demanding that companies embrace it. With the advent of effective vaccines, as we finally emerge from the pandemic, companies and industries that rigidly adhere to old ways of working will do so at their own risk. Our lived experience tells us daily: The future of work is here. It’s an essential part of the “S” in ESG, and the investment implications of ignoring this new reality are not small. Andrew Parry is Director of Sustainable Investment at Newton Investment Management More: More of us working from home increases new and costly cybersecurity risks for employers Also read: Shareholder voting is another electoral process that needs more access and transparency