The ESG Initiative at the Wharton School


Companies that walk the talk on workforce investments reaping 4% higher return on invested capital: report

Outlet: Benefits Canada
Companies that back up talk about investing in employees with action are associated with a four per cent higher return on invested capital, according to a global report by the CPP Investments Insights Institute, FCLTGlobal and the University of Pennsylvania’s Wharton School.

The report, which analyzed year-end data for roughly 2,900 companies in the MSCI all country world index between 2010 and 2021, found companies reported a 1.2 per cent increase in contemporaneous annual return on invested capital on an absolute basis, a 0.5 per cent increase in contemporaneous annual sales growth on an absolute basis and 2.8 per cent lower annual employee turnover on an absolute basis.

It also found that, within a year, employers that commit to investing in employees are associated with better outcomes than companies that neither communicate nor demonstrate this commitment.