Press

Published in: Oxygen Consulting, May 2023

By Ray Algar

Reflections on the Equinox Discrimination Case: An ESG and SDGs Perspective

The recent (May 2023) discrimination lawsuit against luxury gym chain Equinox, in which personal training manager, Röbynn Europe was awarded a substantial jury verdict, invites us to explore the broader implications of the case. Specifically, it prompts us to examine the case through the lens of Environmental, Social, and Governance (ESG) principles and the United Nations Sustainable Development Goals (SDGs).

Equinox Discrimination Case Overview

The facts of the case are that Röbynn Europe, a personal training manager at an Equinox gym in New York, alleged that she was subjected to a hostile work environment and subsequently fired based on her race and gender. The eight-person jury found in her favour, awarding her $1.25 million in compensatory damages (designed to compensate her for the actual harm she suffered, such as lost wages or medical expenses) and $10 million in punitive damages — awarded in cases where the defendant’s (Equinox) behaviour is found to be especially harmful, serving as a form of punishment and a deterrent for similar behaviour in the future. Equinox Holdings, however, disagreed with the verdict. In their response, the company stated: “We vehemently disagree with the jury’s finding as well as the unjust and excessive award, and we will seek to have the judge overturn the jury’s decision. We do not tolerate discrimination in any form, and as was presented in court, the plaintiff’s employment was terminated solely for attendance issues after arriving late for work 47 times during her 11 months with the company, which she conceded in writing. Her claims of bias are completely baseless and uncorroborated. We are confident that the court will rectify this egregious verdict.”

Environmental, Social and Governance Analysis (ESG)

In the context of ESG, this case directly highlights the ‘S’— the Social aspect. It raises questions about Equinox’s commitment to diversity, equality, and the fair treatment of its employees, key elements of the social pillar of ESG. The allegations of a hostile work environment based on race and gender are deeply concerning, suggesting potential systemic issues within the company that run counter to best practices in social governance.

United Nations Sustainable Development Goals (SDGs) Insight

The United Nations’ Sustainable Development Goals (SDGs) related to reducing inequality (Goal 10) and promoting peace, justice, and strong institutions (Goal 16) are particularly relevant to this case. The alleged actions are contrary to these goals, highlighting the need for businesses to actively work towards creating inclusive, respectful environments where all employees are treated equitably.

Recommendations and Reflections for Business Leaders

It’s crucial for Equinox, indeed all businesses, to learn from this situation. This could involve implementing or strengthening anti-discrimination policies, providing diversity and inclusion training, and establishing a clear, safe process for reporting discrimination or harassment. If Equinox is truly committed to rectifying the situation, transparent action is needed rather than simple denial especially if there is evidence of similar historical cases.

Lead with Empathy: As a leader, it’s important to empathize with employees who may have experienced discrimination or harassment. Understand that these experiences can have profound personal and professional impacts.

Culture of Openness: Foster a company culture that encourages open dialogue about discrimination and harassment. This can make it easier for employees to come forward with their experiences and for the company to address these issues effectively.

Responsibility and Accountability: Recognise that addressing discrimination and harassment is not just about reacting to incidents when they occur. It’s about proactively creating a work environment that respects and values all employees.

Align with ESG and SDGs: Reflect on how your company’s practices align with ESG principles and the UN SDGs. Consider how you can further incorporate these principles into your company’s operations and culture.

Long-Term Impact: Consider the long-term impact of your actions and decisions. How you handle discrimination and harassment cases can significantly influence your company’s reputation, employee morale, and overall success. McKinsey discusses the idea of a ‘productivity lift’ in their 2019 article when companies get these ESG principles and overarching culture aligned.

Wider Implications

This case serves as a reminder to all organisations of the importance of upholding ESG principles and striving towards the UN’s SDGs. Discrimination in any form is not only morally wrong but can also have severe financial and reputational consequences. Businesses must foster inclusive, diverse workplaces where all employees feel valued and respected.

Conclusion

Reflecting on the Equinox case, it becomes evident that business leaders are challenged to not only uphold ESG principles and the UN’s SDGs but also to respond effectively and thoughtfully to discrimination allegations. Such situations require more than blanket denials or defensive postures. Leaders must take clear, transparent actions that demonstrate their commitment to addressing the issues raised.

In responding to such a situation, a company could consider an independent review of its policies and practices. This could provide valuable insights into the root causes of the issue and offer recommendations for improvement. Additionally, open dialogue with staff about the situation and the measures taken to address it can foster a culture of trust and mutual respect.

Leaders should also consider how they can learn from these experiences. This could involve implementing or strengthening diversity and inclusion training, or creating more robust processes for employees to safely report discrimination or harassment. Moreover, leaders can use such moments as opportunities to reaffirm their commitment to creating a workplace where all employees feel valued and respected.

In the long run, these actions not only contribute to a more inclusive and equitable workplace but also help to reinforce a company’s reputation as a responsible and ethical business. It’s a clear reminder that, as we move towards a future where social responsibility is increasingly important, proactive leadership is required to ensure businesses are part of the solution, not the problem.

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Published in: Oxygen Consulting, February 2023

By Ray Algar

Fitness Industry’s Social Impact: Gymtopia at 10 years

Over the past decade, the corporate world has seen a significant shift in its focus from just maximizing shareholder returns to also making a positive impact on the environment and society. This shift is known as the Environmental, Social, and Governance (ESG) agenda. In this post, I want to explore the ESG agenda, corporate social responsibility, and the role that businesses, particularly in the global health and fitness industry, can play in driving social impact. We will also examine the United Nations Sustainable Development Goals (SDGs) and Gymtopia’s achievements over the past 10 years.

A Brief Gymtopia Recap

The idea for Gymtopia came to me when I was speaking with Richard Bilton, President of Companhia Athletica, a successful chain of clubs in Brazil. Richard was telling me about a shoe collection project their clubs had started. The simple idea was to ask members to bring in their old gym shoes when they were trading up to a new pair. The shoes are laundered, bagged and passed to Symap, a Brazilian charity that encourages poor children into sport. Seemingly little things like shoes matter, because without shoes kids cannot take part in sport. Companhia Athletica collected 700 pairs of shoes from members to kick-start the project and is now collecting just under 4,000 pairs each year.  I was fascinated by Richard’s project for several reasons:

• How big could this shoe project become if other clubs around the world were inspired to get involved? It does not take long for the idea to spread and create momentum.
• Why are these inspiring and socially worthwhile club projects not more ‘discoverable’ by others around the world? I was finding out about them by accident at a conference in Sao Paulo. Discovery matters because it inspires others to get involved.
• Clubs are themselves significant and influential communities that can be harnessed to create any type of social impact that they care passionately about. Some gym chains now operate thousands of clubs with millions of members making them larger than the population of a small country. If you ask millions of members to participate in a simple ‘act of giving’ the result can be extraordinary.

So, the idea I had that day was to ‘capture’ all these stories and put them in a single place on the web where they are discovered and widely shared. This is Gymtopia’s mission.

Environmental, Social, and Governance (ESG): A Brief Overview

The ESG agenda has gained significant momentum over the past decade. Today, investors and consumers are demanding that companies be transparent about their environmental, social, and governance practices. This shift has been driven by several factors including:

1. The growing awareness of climate change and other environmental issues on businesses, society, and the economy.
2. Employee and consumer activism — more people are demanding that companies take responsibility for their social and environmental impact.
3. Reputation and brand risk, as companies face increasing scrutiny from consumers, employees, and other stakeholders on their ESG practices.
4. Growing investor demand for ESG information and investment opportunities that align with their values and sustainability goals.
5. The emergence of sustainable business models and innovations, as companies see the business case for incorporating ESG considerations into their strategy and operations. Look at the impact that spiralling energy costs are having on the survival of health and fitness businesses, caused in part by Russia’s invasion of Ukraine.
6. The need for ethical and responsible corporate behaviour — everything from sustainable sourcing, employment practices to corporate philanthropy.

The ESG agenda is now recognized as a critical element of corporate strategy and a means for businesses to create long-term value for all their stakeholders.

The Role of Business in Solving social Issues and Inequalities

I’ve long believed that businesses can play a significant role in solving social issues and inequalities. They have the resources, expertise, and reach to address some of the world’s most pressing problems. Companies are increasingly using their platform to highlight and solve large social problems. In doing so, they have demonstrated the power of business to drive change and create positive social impact.

Peloton: This fitness equipment and digital platform company has implemented initiatives to promote mental health and partnering with mental health organizations to raise awareness and reduce stigma.

CrossFit: Their gyms partner with organisations to support social justice initiatives such as LGBTQ+ rights and racial equity.

Headspace: This meditation and mindfulness app has partnered with numerous organisations to make its services accessible to underserved communities.

GoodGym: This UK-based running community has developed a unique business model that combines exercise with social good. The company organises group runs that involve performing tasks such as cleaning up parks or delivering groceries to older and isolated adults.

TOMS: This shoe and apparel company has a unique business model where for every pair of shoes sold, they donate a pair to someone in need. They have also expanded their giving to include eyewear and clean water initiatives.

Patagonia: This outdoor clothing and gear company has been a leader in promoting sustainable business practices and environmental conservation. They have launched numerous initiatives to reduce their environmental impact and encourage consumers to do the same.

The United Nations Sustainable Development Goals and the Health and Fitness Industry

The United Nations Sustainable Development Goals (SDGs) provide a framework for businesses to contribute to global development. The SDGs consist of 17 goals that cover a range of social, economic, and environmental issues. The health and fitness industry can play a vital role in driving progress towards these goals. For example, in addition to promoting healthy lifestyles, the industry can also contribute to reducing poverty, improving education, and addressing climate change — all key sustainable development goals.

Embracing ESG: Balancing Positives and Limitations

These are challenging economic times so while embracing the ESG agenda has several benefits, there are also potential limitations that need to be considered. For example, there may be a trade-off between financial performance and ESG performance. Additionally, companies may face increased regulatory scrutiny and the need for additional resources to implement ESG practices. However, evidence suggests that companies that embrace ESG practices can generate long-term value, reduce risks, and enhance their reputation. Moreover, companies that fail to address ESG risks may face increased regulatory and legal challenges, reputational damage, and loss of investor and consumer trust.

Responding to ESG Sceptic’s

There may be sceptics who argue that companies should focus solely on their primary mission and maximise shareholder returns. However, evidence suggests that embracing ESG practices can be good for business. By addressing environmental, social, and governance risks, companies can reduce costs, enhance brand reputation, and create new business opportunities. Moreover, businesses have a broader responsibility to society, and addressing social and environmental problems is not only the right thing to do but can also create long-term value.

Empirical Evidence for the Business Case of ESG

There is increasing empirical evidence to support the business case for ESG. For example, a study by George Serafeim, a Professor of Business Administration at Harvard Business School found that companies that embraced ESG practices had higher financial performance, lower risk, and better overall governance. Similarly, a report by the Global Impact Investing Network (GIIN) found that companies that focused on ESG factors were more likely to attract investment and generate better financial returns. These studies and many others suggest that embracing ESG practices can lead to long-term financial and non-financial benefits for companies.

Gymtopia’s Achievements Over the Past 10 Years

Gymtopia has achieved significant success over the past 10 years. The platform has become a hub for health and fitness organisations to showcase their social impact projects. It has inspired other organisations to start their own social impact projects and has created a community of like-minded individuals committed to driving social change. Gymtopia has also demonstrated the power of the health and fitness industry to create a positive social impact, showing that even small initiatives can make a big difference but there is more to do.

Conclusion

The ESG agenda has become a critical element of corporate strategy, with companies increasingly recognizing their responsibility to create long-term value for both shareholders and society. The health and fitness industry can play a vital role in driving social impact, and initiatives such as Gymtopia demonstrate the power of the industry to effect positive change. While there may be potential limitations to embracing ESG practices, evidence suggests that companies that do so can generate long-term financial and non-financial benefits. As we move forward, businesses must continue to embrace the ESG agenda and recognize the broader role they can play in creating a more sustainable and equitable world.

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Published in: Asian Journal of Sport and Exercise Psychology, December 2022

By Sandra Klaperski-van der Wal

Sport and Exercise Psychology and the UN’s Sustainable Development Goals

Abstract by the Author

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Published in: Health Club Management, January 2019

By Kate Cracknell

Why every business (which includes the fitness industry) needs to start thinking about social impact.

Philip Newborough, the co-founder of impact investor, Bridges Fund Management, tells Kate Cracknell capitalism risks losing its mandate, and why every business (which includes the fitness industry) needs to start thinking about social impact.

When you refer to Bridges as an impact investor, what do you mean?

Bridges Fund Management is an investment company that uses commercial expertise to deliver both financial returns and social and environmental benefits. We believe that market forces and entrepreneurship can be harnessed to do well by doing good.

Over the course of the 20th century, the prevailing model of capitalism became all about maximising risk-adjusted returns. There was an unrelenting focus on shareholder value and profit maximisation, with scant regard to the other consequences that business or capitalism had. This has only accelerated with the emergence of private equity.

Our view at Bridges is that, in the 21st century, all businesses and investors should base their decisions not just on financial returns, but also on impact.

They need to take into account the effect they have on their broader stakeholders: employees, the supply chain, the environment and so on. If you don’t do this, then you’re not serving society terribly well – and that’ll ultimately undermine the value of the business.

The capitalist model may create wealth in the short term, but if it doesn’t start to address the broader issue of serving society, it risks losing its mandate – its licence to operate.

If inequality continues to grow, that might force more difficult change.

What was your personal motivation for setting up Bridges?

During my career I’d seen grants being used to try and solve social issues such as the wealth divide, to little or no effect. Income inequality was just getting worse.

Our thesis at Bridges is that governments alone can’t solve these problems by taxing and spending and that philanthropy can only go so far; if you want to address these issues, you really need to tap in to the huge pool of private and investment capital that’s out there.

That’s why, over the last 16 or 17 years, we’ve tried to find different ways of using our capital to make a difference – matching capital to innovative, entrepreneurial solutions.

How do you decide which businesses to invest in?

Obviously we look at the financials. Scale is another key aspect: our initial investment is typically £10–15m, so we’re looking for established, high-growth businesses. There needs to be a ‘specialness’ around the business too: it needs to be disruptive, differentiated and led by a team that believes very strongly in both the impact and the financial plan.

However, the first thing we look at is the impact the business can have, and here we focus on four areas: health and wellbeing; education and skills; sustainable living; and under-served populations.

Within the fitness sector, from an impact point of view, low-cost gyms have always been an obvious investment for us. Going to a high-quality gym was really a luxury until the emergence of low-cost gyms: they’ve made high-quality fitness much more accessible. Even people on lower incomes can be members.

Are all your investments in the UK?

Our investments are predominately UK-based – The Gym Group as a prime example in the fitness sector – but we do invest outside the UK too. We own Viva, which is the largest low-cost gym business in Spain, as well as Portuguese market leader Fitness Hut. We also own Planet Fitness, one of the largest fitness franchises in the US.

The challenges we’re facing in the UK in terms of income equality, climate change, ageing populations and so on – are pretty much the same across Europe and the US. We find our approach resonates across the developed world.

Some have seen fitness as a risky investment, what’s your view?

Actually, we love it: it really chimes with our investment style. The fitness market is very local, with proximity people’s main consideration. That makes these businesses very scalable: you know the population, you understand the demographics of the people you’re trying to serve, you know how many of them there are, and you can, therefore, predict realistic penetration rates. You can go step by step, reflecting on and improving the model as you roll out one site at a time.

You also invest mainly via capex, so you can speed up, slow down and then pause before moving forward if needed.

So, we very much like the dynamics from an investment point of view. The site-by-site roll-out means you get good data – and the more sites you open, the better your data gets.

Aside from the actual investment itself, what does Bridges bring to the table?
We bring a lot in terms of the execution and the operation. Our day job is helping businesses work through the growing pains that are associated with all successful companies: helping them scale, developing the tech systems that sit around the business, involving the management team, driving employee engagement and so on.

Employee engagement tends to be very strong in the companies we invest in: one of the great things about an impact-driven approach is that it tends to create a stronger sense of purpose. In the end, most people want to feel that what they’re doing in their day job has meaning and value – so when you have a business with such a clear sense of purpose as The Gym Group, for example, you create a huge amount of employee engagement and dynamism. Your employees get behind what you’re trying to achieve, not just in financial terms, but also in terms of your impact on members and the population as a whole.

Read the remainder of this social impact article by clicking on the link below.

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