Investors can accelerate efforts to reverse US health inequalities – Calvert

Long-term inequality in health outcomes across ethnic groups highlighted by Covid-19 pandemic.

Investors have a key role to play in improving health outcomes across ethnic groups by addressing embedded and unconscious racism in their engagement activities across the healthcare sector, according to a recent report by Calvert Research and Management. 

Unequal health outcomes have been a long-term issue in the US and other developed economies, but disparities between ethnic groups have been highlighted during the Covid-19 pandemic. 

In several countries, infection and death rates from Covid-19 have been reported as varying across ethnic groups, with causes often linked to structural inequality and racism. More recently, surveys have suggested the uptake of vaccines to combat the virus could be lower in some ethnic groups, partly due to less-than-optimal past healthcare experiences. 

“Recent data on the disproportionate impacts of Covid-19 on certain racial and ethnic groups serve as the latest reminder of the harmful and lasting consequences of inequality in the United States,” wrote Laura Ahmadi and Bianca Minns, co-authors of ‘Systematic racism and inequality in healthcare’. 

The report lists a blizzard of statistics highlighting unequal health outcomes across ethnic groups in the US, in areas including cancer, heart disease and respiratory diseases. Calvert identifies worsening ‘social determinants’, such as income levels, educational attainment and access to nutritious food, often underpinned by implicit and explicit racism, as key underlying causes. 

But these issues are often exacerbated by the policies and processes of firms across the healthcare sector, which Ahmadi, ESG Research Analyst at Calvert, believes investors have the power to reform. Some of the issues and their potential remedies cut across the sector, such as changes to human resources policies, company culture or business model that encourage greater diversity among staff, in order to counter conscious or unconscious bias. 

“All firms can promote diversity and equity in the workplace by utilising diverse pipelines and recruitment networks, reporting publicly on the racial and ethnic makeup of workers across all organisational levels, and continuously monitoring equity within the firm using analytics and employee feedback,” says the report. 

Such moves are in the short-term financial interest of firms in the health sector, as well as contributing to longer-term social goods, says Ahmadi. 

“It is in the interest of healthcare providers to provide effective care for all their members for reputational, legal and regulatory reasons, as well as helping to reduce these inequalities.” 

Accessing diversity data 

Ahmadi acknowledges investors face difficulties in accessing data from investee companies to assess their commitment to and performance on diversity and inclusion. 

“My general sense is that the data does exist in some form within a lot of organisations, particularly in the US, but there is a hesitancy to share,” she says. “Our approach is to tell firms we recognise data evolves over time, but that it is important to start somewhere. At present, it tends to exist in different forms across different companies, but that’s not going to improve unless we encourage firms to disclose it.” 

However, Ahmadi emphasises that due diligence on diversity and inclusion ought to go beyond raw numbers, encouraging investors to obtain an understanding of the measures being taken by investee companies to improve them. 

More specific actions by investors to reverse unequal health outcomes include ensuring that pharmaceutical, biotechnology and life sciences firms adapt their clinical trials and genetic research to include sufficient representation from ethnic groups to equalise their effectiveness across all ethnic groups. 

Similarly, the use of machinelearning and artificial intelligence by health technology firms needs to be closely monitored to ward against embedding implicit bias, which could compromise the effectiveness of predictive analytics, diagnosis and treatment. 

“If you’re using historic usage patterns as evidenced by data, you could be under-representing the healthcare needs of certain populations because of historical barriers to healthcare access,” she adds, saying that all data-reliant technologies need to be subject to critical human oversight “rather than being taken as a given”. 

Covid as catalyst 

Despite the range of issues raised in the report, Ahmadi says there are many signs of improvement, with investors becoming more vocal on issues of racial justice, including a marked growth in race-related shareholder resolutions during the US 2020 proxy season. 

Further, there is evidence that pressure from investors is beginning to show in the healthcare sector specifically, as the lessons of Covid-19 are taken on board by companies, investors and regulators. Recent action may accelerate further, given the priority given to controlling the pandemic and increasing social justice by incoming US President Joe Biden. 

“It’s unfortunate that it took a global pandemic, but we do see more attention being paid by companies. Drug companies have been stepping up to enhance diversity of participants in clinical trials, says Ahmadi, adding that several firms involved in genetic research have committed to ensuring their products will be more inclusive in future. 

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