Harnessing the power of investors can prevent lives being cut short, says Dr Jennifer Dixon, Chief Executive of the Health Foundation.
While investors are increasingly embracing the opportunity to make climate-positive investments, there remains a blind spot when it comes to people’s health. This must change. Poverty cuts lives short. People in the UK’s poorest neighbourhoods are currently dying over a decade earlier than their peers. Living in poverty today can mean balancing impossible decisions between eating and heating your home. However, most investors haven’t yet grasped their potential to improve health inequalities despite their considerable influence over commercial health determinants.
Covid-19 highlighted the intrinsic links between the economy and health. In 2020, UK GDP fell by over 9% – the largest annual hit to economic output since the post-World War I recession. The number of lives lost and the scale of the fiscal shock was partly down to a historic lack of investment in health – as our Covid-19 impact inquiry report found. The message is clear. We can’t have prosperity without good health.
Health isn’t just about healthcare. In fact, around 80% of people’s health is down to wider determinants: the jobs they do, what they consume, and where they grow up and live. Poor health is often intrinsically linked to factors like inadequate education, low quality work, insecure jobs, low pay, substandard housing, poor diet, smoking and pollution.
As a result, investors have an enormous influence on people’s health through the companies in which they invest; companies that play a crucial role in shaping the health of workers and their families, customers, and wider society.
There has never been a more urgent need for investors to prioritise health. A converging set of issues means we face an unprecedented health crisis. For a start, Covid-19 has left 100 million people globally at risk of being pushed into extreme poverty. The ongoing cost-of-living crisis is creating further urgent challenges for people’s physical and mental health, with the poorest households under increasing strain.
Both these crises exist in the context of the climate emergency, which is also a health emergency. Climate change negatively affects the social and environmental fundamentals of health – clean air, safe drinking water, sufficient food and secure shelter. Between 2030 and 2050, climate change is expected to cause a quarter of a million additional deaths globally each year, from malnutrition, malaria, diarrhoea, and heat stress.
In every sense, the cost of poor health is increasingly unsustainable. Alongside the impact on people’s lives and livelihoods, poor health costs an estimated 15% of global GDP. Not considering the health impact of investment poses financial risk to companies and their investors – including rising health-related regulation, growing public scrutiny and reduced productivity. For example, 50 jurisdictions now have sugar taxes in place – more than the number of countries with carbon taxes.
Options for impact
Now is the time to make health an ESG priority. Like the climate crisis, it is a systemic risk that investors can no longer afford to ignore. In practical terms, asset owners and managers looking to embed health considerations in their investment approaches have numerous options. This includes engaging with food companies to introduce robust strategies that will improve the healthiness of their products. Investors can also make sure businesses pay a living wage and offer employees secure contracts, flexible hours and sick pay – which can reduce the stresses that damage physical and mental health.
However, even investors wanting to prioritise health may find themselves struggling to make well-informed decisions. One of the main barriers is that health-related risks are not routinely captured within the ‘social’ pillar of ESG frameworks. If they are, the approach is narrow, piecemeal and short-term. Health is an incredibly broad investment theme, linked to so many aspects of human activity. And yet, the data is largely ill-defined and inconsistently reported.
To help investors play their part in building healthier, fairer societies, we are supporting a new global coalition called Long-term Investors in People’s Health. The alliance, led by ShareAction, and supported by the Health Foundation and Guy’s and St Thomas’ Foundation, will harness the power of investors from across the UK, America, Japan, and the Netherlands to push health up the responsible investment agenda.
It will be a forum for demonstrating leadership on health, shaping best practice for health-related stewardship, driving policy conversations and influencing the data landscape to measure progress. We are working closely with investors to give them the tools to improve health outcomes for workers, consumers, and communities.
Partnering for progress
As part of this, we have identified 16 topics for investors to prioritise. They include alcohol, financial wellbeing, food safety, worker health, housing, pollution and smoking. For each, we’ve identified a global impact goal – linked to one of the UN’s Sustainable Development Goals, where possible – and a set of practical asks and metrics.
By becoming a signatory, asset managers and asset owners will partner with other leaders on initiatives to accelerate company progress and disclosure on key health issues. They will get early insight to mitigate health-related risks within portfolios. And they will push for policy changes and encourage data providers to improve how progress can best be measured.
Investor momentum is building. For example, CCLA Investment Management has just launched its Corporate Mental Health Benchmark, evaluating how 100 of the world’s largest companies are approaching and managing workplace mental health. Investors who fail to act on health risk getting left behind as the market moves.
Investors must seize the opportunity that improved health presents – including helping people to enjoy healthier lives, enabling companies to access a healthier job market – and ultimately strengthening their portfolios. We urge all responsible investors to push health up the agenda.