Working from home
Most white-collar offices quickly needed to enact working-from-home protocols. However, concerns have arisen around workforce productivity6, exacerbated by limited childcare options as parents juggle work and home schooling. Whilst cutting out commuting is saving time and lowering stress levels, IT functionality, as well as limited room and equipment availability, might have the opposite effect. With women taking on a disproportionate share of caring responsibilities in many households7, this could have long-term knock on effects on gender diversity within corporations, unless mitigated by strong support measures. Support staff, such as catering, facilities, or cleaning, might be heavily affected by furloughing or lay-offs.
Supply chain impacts
Faced with unprecedented demand for some products and plummeting demand for others, the negative effects felt by supply chains include cancelled contracts, extended payment lead times and thus loss of liquidity to pay for alreadyexecuted work, millions of jobs lost8, lack of appropriate workers (as in agriculture), and pressure from buyers with ongoing sales to reopen factories despite domestic shutdown, leading to enhanced occupational health and safety risks. With, for example, the lack of auditing due to travel restrictions, as well as labour laws being suspended, already low labour standards might decrease further – such as has been the case in the Indian state Uttar Pradash9.
Our engagement approach
In March 2020, BMO Global Asset Management released a statement on “Expectations for social practices”10, in which we outlined our core expectations around social issues, building on three main pillars: respect human rights, uphold labour rights, and safeguard public health. The statement also covered other aspects, some particularly relevant as part of our COVID-19 engagement response:
- Provision of a healthy and safe work environment
- Provision of fair wages
- Responsible business conduct (including tax transparency)
- Effective stakeholder engagement
- Respect for freedom of association and collective bargaining
Engagement on COVID-19 responses now forms a regular part of our day-to-day engagement dialogue with companies. Dependent on the company, region and sector, we call for measures in areas including:
- Occupational health and safety, including the provision of protective gear
- Paid sick leave, especially in jurisdictions such as the US where there is no government mandate
- Flexible shift work for those not able to work from home/remotely
- Flexibility and adjustment in expectations for home-working staff who are impacted by childcare closures
- Pay premiums for workers that are deemed essential
- The provision of mental health support.
We see a clear business case for taking a progressive approach on these issues: workers experiencing physical or mental health difficulties are less likely to be able to perform their tasks, causing disruptions to business continuity; additional pressure through a lack of flexibility in a stressful pandemic environment will limit employee satisfaction, performance, and loyalty; fair wages ensure that no ‘distracting’ additional jobs are necessary, basic needs are paid for, and retention rates increase. Failure to respect worker rights can also be harmful to corporate reputations, particularly for consumer-facing businesses.
On the positive side, the response to our labour-related engagement has been better than expected, with many companies installing physical distancing measures, providing at least some protective gear, and enabling remote work where possible. Paid sick leave and pay premiums have also been commonplace – but many are time-limited, with some companies already announcing their end11. In our engagement, we highlight the need to make these changes last as overall social benefits, which can lead to positive returns for the company.
There have also been some enhanced transparency around corporate COVID-19 responses. Some companies have dedicated websites, for the first time acknowledging the relevance of their workers as crucial for their business; others have proactively approached investors about their responses.