Private finance is changing the shape of the world as the investment community unites to mobilise resources towards addressing climate change. A new alliance is targeting another systemic risk: health. Nick Herbert talks to Jessica Attard, programme director – health and social care, ShareAction.
In October 2022, 35 investors managing over US$5.7trn formed a new alliance committed to building healthier, fairer societies. The Long-term Investors in People’s Health initiative, led by ShareAction and supported by The Health Foundation and Guy’s & St Thomas’ Foundation, is uniting asset managers and asset owners who want to prioritise population health. ShareAction is a charity working to unleash the positive potential of the investment system.
Investors have enormous influence on people’s health through the companies in which they invest, yet health remains a blind spot for many investors. This is contributing to poor health, impeding business performance, and exposing investors to risk – even as responsible investment has been on the rise.
‘Typically, responsible investment has focused on climate change and the environment and, although there is an S in ESG, health hasn’t really been a factor,’ said Jessica Attard, programme director (Health and Social programmes) at ShareAction. ‘And yet health is not dissimilar, in terms of systemic risk and financial implications, to climate change.’
Poor health already costs 15 percent of global GDP, according to McKinsey. Health inequalities are widening, and the cost-of-living crisis is creating urgent challenges for people’s physical and mental health. In Britain, fewer than one in 10 men, and only 16% of women, are likely to be in good health by the time they retire. Covid-19 has exacerbated existing health inequalities, with mortality rates up to four times higher in the most deprived areas of the UK.
‘We only need to look back on the last couple of years to see the link between population health and economic prosperity,’ said Attard. ‘We’ve just lived through a pandemic that ripped through the economy and turned it upside down. And we’ve seen lots of investors start to take note and recognise health as a key issue.’
Health has an impact on productivity in companies and in the wider economy. It has implications for investors.
‘In the UK alone, some 70 million workdays are lost each year due to mental health problems,’ said Attard. ‘People are also leaving the workforce prematurely because they aren’t in good health and that is contributing to tight labour markets. We’re seeing the link between health and economic prosperity playing out at the systemic level and at the company level.’
The new initiative, which builds on ShareAction’s long running nutrition-focused Healthy Markets Initiative, was instigated by the Health Foundation and the Guy’s & St Thomas’ Foundation. Nutrition is just one aspect of population health.
‘We have a huge amount of support from both these foundations, which have committed £3m to the initiative over the next three years,’ said Attard. ‘We hope to secure additional funding.’
The initiative will give investors the tools to improve health outcomes for workers, consumers, and communities, by sharing best practice and creating opportunities to collaborate on corporate engagement. Investors are asked to commit to embed health into their policies and practices and use their influence to accelerate impact throughout the investment sector.
‘There’s growing demand for pension funds and asset managers to prioritise health,’ said Attard. ‘Asset owners are looking for funds that can demonstrate that they have a positive impact on people’s health, or at least that they’re mitigating the negative impact they’re having.’
And it is not just a case of investing in healthcare as an industry sector.
‘Although healthcare and pharmaceuticals are important, they have a relatively small impact on people’s overall health compared to everything else,’ said Attard. ‘We know that 80% of our health is shaped by our environment, such as the quality of jobs we do, the air we breathe, the types of products we consume.’
To move the dial in terms of improving population health, investors should look at the food industry, the polluters, and large employers. ‘They should be asking questions like: are they paying a living wage? Are they offering secure contracts? Are they thinking about the health and well-being of their staff? Are they measuring sickness absence, for example?’ said Attard.
Looking at health and population health from a more holistic perspective points you in quite a different direction to how the industry currently approaches the issue. There is a real opportunity for the investment community to embrace health within responsible investment practice.
ShareAction’s research has identified significant gaps in investors’ understanding of health and associated risks, as well as opportunities for improvements that could strengthen the resilience of investors’ portfolios. Two thirds of asset owners surveyed were not aware of options to invest in funds delivering positive health impact. Three quarters of asset owners said they receive minimal or no information from their fund managers on stewardship in relation to health.
Health is largely absent from asset managers’ risk and ESG assessments and isn’t routinely captured in sustainability indices.
‘We encourage companies to develop health strategies alongside or as part of their sustainability strategies including any targets and commitments and publish them on their websites,’ said Attard. ‘And we encourage companies to make sure that those targets are in line with government definitions of ‘healthy’ and recognised standards, rather than setting their own definitions and marking their own homework.’
At the same time, companies face strengthening regulation focused on how their products and policies contribute to public health. Over 50 jurisdictions now have sugar taxes in place.
As a practical guide for investors looking to formally strengthen their action on health, ShareAction has developed an over-arching framework centred on three pillars through which companies, and, in turn, investors, can influence health (see Figure 1). Using this framework, investors can assess health-related risk factors by considering company impacts on workers, consumers, and communities.
‘Each one of those pillars might be more or less important for different companies,’ said Attard. ‘If they’re a really big employer, then the Worker Health pillar might be where they can have most impact. For a consumer goods company, then it’s probably going to be pillar two (Consumer health). A logistics company might find that pillar three, Community Health, is where they can have greatest impact.’
Positive momentum among investors is building. Legal & General, for example, has called for a ‘H for health’ to be included in the ESG approach.
Asset managers are starting to bring health analysts into sustainability teams, and a growing number of asset owners are including health as an explicit theme in responsible investment policies.
‘We’ll be looking to make sure the signatories of the programme are making progress in the right direction,’ said Attard.
ShareAction publishes its Leading Practice survey every two years of more-than 70 of the world’s largest asset managers that, going forward, will include an assessment of their health policies and practices as well as climate and other ESG topics.
‘We’ll be able to monitor the practice of these leading asset managers to see what impact they are having,’ said Attard. ‘Health is, ultimately, the most important asset we have as individuals, as families, as society. There is a lot of passion, interest and enthusiasm in this space.’