World Mental Health Day: Why Directors Must Lead on Mental Health and Wellbeing

Each year, World Mental Health Day shines a spotlight on the importance of wellbeing. For directors and officers, it is also a timely reminder that mental health is no longer viewed as a “soft” HR issue, it is increasingly a matter of governance, regulation, and liability.

Boards and senior leaders have a duty of care to their employees. Regulators, investors, and wider stakeholders now expect companies to demonstrate clear policies, frameworks, and support mechanisms around workplace wellbeing. This means directors who fail to address mental health risks may expose themselves not only to reputational damage, but also to litigation and regulatory scrutiny.

The Health and Safety Executive (HSE) has made clear that stress at work is a health and safety issue. In practice, this means boards can be held accountable if they fail to take reasonable steps to protect employees from psychological harm. With mental health conditions increasingly cited in employment tribunals, from claims of constructive dismissal to allegations of discrimination, directors and officers could find themselves personally named in legal action.

Progress is being made, but there is still work to do. According to the CCLA Corporate Mental Health Benchmark, 65% of listed companies now assign board-level or senior management responsibility for mental health, up from 52% the year before. Yet this still leaves 35% of companies without formal governance in place, exposing directors to potential gaps in oversight and accountability.

As Charlie Hassell, D&O Product Lead, explains: “Mental health is still treated like an HR problem, but it’s fast becoming a board issue, and a D&O one. If directors aren't across what's happening culturally in their business, or if there's no structure in place to support employee wellbeing, they could be exposed. We’re seeing a shift, employees are more willing to push back, regulators are paying attention, and expectations around duty of care are higher than ever. This isn’t just about policies, it’s about whether leadership is actually doing the work. If they’re not, and something goes wrong, D&O cover could come into play. It’s a risk that’s often overlooked until it’s too late.”

The link between culture, governance, and liability is stronger than ever. A toxic or high-pressure workplace, where mental health is ignored or mishandled, can generate claims not only from employees but also from shareholders, who may argue that leadership failed in their duty of oversight.

D&O insurance provides a vital layer of protection for individuals, but insurance is only part of the solution. Prevention begins with governance. Directors must ensure that mental health strategies are embedded into corporate frameworks, risk registers, and boardroom discussions. This includes stress risk assessments, manager training, access to employee support programmes, and regular reviews of wellbeing initiatives.

On this World Mental Health Day, boards should reflect on whether they are meeting not just their ethical obligations, but also their legal and fiduciary duties. Protecting employee wellbeing is both the right thing to do and a safeguard against personal liability.

CCLA. (2024). UK listed companies step up on mental health – but half still fail to deliver, CCLA benchmark finds. CCLA Investment Management. https://www.ccla.co.uk/news-me...?