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ESG analysis: Happier employees predict higher stock prices

Richard Peterson
Richard Peterson
CEO of MarketPsych

The research team at MarketPsych pulled together research on the relationship between workplace safety and corporate performance in homage to the World Day for Safety and Health at Work. We used our Refinitiv MarketPsych ESG Analytics – scores produced via AI-based scoring of millions of news and social media articles. Using that data we see that companies with safe and happy employees outperform their peers in the public markets. This effect is consistent with academic research on employee satisfaction1, and the effect appears to be global.

  1. Refinitiv MarketPsych ESG Analytics uses natural language processing to score ESG-themed content in digital and social media.
  2. One score available via the Marketpsych ESG Analytics is Workplace Sentiment.
  3. Companies with high Workplace Sentiment score outperform their peers.

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MarketPsych partnered with Refinitiv to create the multi-dimensional Refinitiv® MarketPsych ESG Analytics (RM-ESG). The software underlying the scores uses complex natural language processing (NLP) hosted on a carbon-neutral array of cloud servers to score environmental, social and governance-themed (ESG-themed) content in articles pertaining to companies and countries.

Natural language processing with RM-ESG

Rather than scoring sustainability from a company’s own reports and press releases, the RM-ESG feed provides an external perspective.

The NLP engines avoid corporate documents such as press releases, corporate websites and regulatory filings, instead opting for the outsider perspective of over two million articles and posts daily from tens of millions of authors in thousands of credible news sources, blogs and social media.

Discover more about the Refinitiv MarketPsych ESG Analytics and how to incorporate the sentiment scores into your analysis

Measuring workplace sentiment

One of the RM-ESG scores is WorkplaceSentiment. The WorkplaceSentiment score represents the ratio of positive to negative comments about a company’s working environment.

A higher score indicates more positive workplace sentiment and happier employees commenting on the company’s working environment and safety in social media.

Quantitative research

Academic researchers found that stock prices of the U.S. companies ranked as the ‘Best Places to Work’2 outperform over time. In basic quantitative research, when S&P 500 companies are ranked by their past month’s WorkplaceSentiment score, the stock prices of companies with extremely high scores (top 5 percent) significantly outperform those with low scores (bottom 5 percent) month after month.

The equity curves depicting the performance of the highest and lowest WorkplaceSentiment portfolios are plotted in Figure 1.

Note that Tyson Foods (chicken meat processing), McDonald’s, and UPS are among the most frequently mentioned with negative workplace sentiment. At the top of the list are consulting firms such as Accenture and Robert Half International.

Global research

The phenomenon of happier employees leading to higher stock prices appears globally. In the Chinese media, we see that references to Workplace Development (workplace safety and labour training efforts) precede stock price outperformance.

In the strategy shown in Figure 2, each month, Chinese stocks in the CSI 300 ranked in the top 20 percent on WorkplaceDevelopment are purchased and held for one month.

The growth of $1 invested in that portfolio is depicted in the blue line.  The share price returns of the remaining 80 percent of Chinese stocks (lower on Workplace Development) are tracked in the red line.

The monthly WorkplaceSentiment and WorkplaceDevelopment scores may provide useful inputs for stock investors seeking outperformance. More importantly, we hope these findings will encourage self-interested companies to cultivate supportive, safe and purpose-driven working environments for their employees. Here we see corporate greed aligning with employee well-being.

Discover more about the Refinitiv MarketPsych ESG Analytics and how to incorporate the sentiment scores into your analysis


1 – Bellet, C., De Neve, J. E., & Ward, G. (2019). Does employee happiness have an impact on productivity?. Saïd Business School WP13.

2 – Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial economics101(3), 621-640.

Refinitiv MarketPsych ESG Analytics analyse corporate sustainability-related news and social media in near real-time.

Powered by MarketPsych Data’s AI-based natural language processing engine, the analytics are derived from millions of daily articles in thousands of global news and social media outlets. They provide numerical ESG insights on companies and countries to drive better investment decisions.