The writer is chief executive of Guy’s & St Thomas’ Foundation
It is clear now that Covid-19 has not been experienced equally. Your risk from the virus is higher if you live in polluted areas or if you live in neighbourhoods with few affordable healthy eating options and higher rates of obesity. It is also higher if you already have other long-term health conditions, which you’re more likely to do if you live in poor quality housing and have little say over your working conditions.
What is less well documented is that all these factors are influenced by businesses and the investors who back them. To a large extent they are the negative externalities of companies’ products and services, the quality of work they provide and their impact on the environment.
These externalities matter. The pandemic shrank the global economy last year and led to job losses in many countries. Nine out of 10 deaths from Covid have occurred in countries with high obesity levels. Poor health strained public finances before the pandemic, but there are also costs for businesses. In the UK, for example, 70m work days are lost each year due to mental health problems.
Health ought to be a key factor in investors’ environmental, social and corporate governance decisions. Curiously, it is not. Most asset managers now have a wide range of strategies and funds claiming to address climate change, but health gets little more than a nod in their annual investment reports.
Fortunately, we can learn from how climate has moved up the investment agenda. Steps taken have included clear disclosures, investor activism and regulatory support. Take the GHG Protocol, which categorises greenhouse gas emissions into three “scopes”: direct emissions, indirect emissions and the emissions that occur in a company’s value chain. From this we can draw an analogous line to companies’ impact on health.
Scope one is consumer health — the products and services companies sell, which can be positive or detrimental to our health, such as tobacco and sugary drinks. This can also include essential services such as energy and insurance which often come with a “poverty premium” — extra costs borne by those on low incomes.
Scope two is worker health, or workplace practices that can increase or reduce turnover, absenteeism and motivation, such as precarious employment, labour rights and unfair pay. And third is community health — the ways in which business activities shape the environment, for instance in adding to air pollution.
Disclosures along these lines would help investors with risk assessment, capital allocation and strategic planning. They would show tobacco and high-sugar foods to be “stranded assets” like oil, gas and coal reserves. They might encourage greater investment in “offsets” that promote greater health, such as new mental health technologies. Most importantly, they would better align businesses’ interests with society’s.
None of this is conceptual. UK supermarket giant Tesco has agreed to boost sales of healthier food and drink in response to investor pressure. The Workforce Disclosure Initiative has mobilised investors with over $7tn of assets to ensure companies disclose data on their workforce practices.
Regulators, too, could step up. They increasingly require investors to consider the environment in their decisions. Healthy life expectancy, which in countries like the UK is stalling, is probably as much in a pension fund member’s interest as addressing climate change. Policy has a role to play also. Global initiatives like sugar taxes have proved remarkably effective in encouraging healthy innovation in food and drink.
More and more, good health is good for business, and the reverse can also be true. A clearer commitment to investing in a healthier society should be one of the pandemic’s legacies.
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