Australian insurer backs Canada’s first national social impact bond

Government launches investment measure to combat high blood pressure

The government of Canada has launched the country’s first national social impact bond, focused on tackling high blood pressure, with Australian insurer QBE and the Royal Bank of Canada amongst the investors.

The social impact bond, announced by Canada’s health minister Jane Philpott, will support 7,000 older people in Toronto and Vancouver to make lifestyle changes to keep their blood pressure low.

It has received C$2.9m (€2m) in backing from 11 investors, including insurer QBE, RBC Generator – a C$10m impact investment fund from the Royal Bank of Canada, charitable foundations and high net worth individuals, and TELUS Ventures, the venture investment arm of North American telecommunications firm TELUS.

The Public Health Agency of Canada has guaranteed C$1m of investor capital. So, investors stand to lose up to C$1.9m or earn up to a C$600,000 return if measured outcomes in tackling the condition are met.

The MaRS Centre for Impact Investing, part of Canadian innovation-focused non-profit MaRS, designed and structured the social impact bond.

Speaking to RI, Adam Jagelewski, its director, said the move was a ‘proof of concept’ measure for the government which wants to promote prevention as a means to tackle chronic disease. He said: “With the new government under Justin Trudeau there is a real shift to better outcomes for Canadians. There is a focus on results and the social impact bond model zeroes in on what is and isn’t working.”

One in five Canadians have high blood pressure and another one in five are on the cusp of hypertension – abnormally high blood pressure. The estimated annual cost of treating hypertension by 2010 is $20bn. It cost $14bn to treat hypertension in 2016.The Heart and Stroke Foundation of Canada is delivering the programme, called the Community Hypertension Prevention Initiative, in the popular Canadian retailer Shoppers Drug Mart through volunteers who will recruit participants to be supported and tracked on lifestyle changes in a bid to lower their blood pressure over three and a half years.

Jagelewski said the model of partnering with a retailer could promote scale through using existing infrastructure to target people.

He also said Shoppers Drug Mart, which is donating space, may also use data gained from its loyalty customer cards to incentivise changes to a healthier lifestyle.

One of the SIB’s investors TELUS will also use its tech expertise to support reaching people, said Jageleski.

Philpott said: “Our government is working with partners on innovative ways to prevent chronic illness, such as high blood pressure and cardiovascular disease. Social financing mechanisms can bring governments, the private sector and the non-for-profit sector together on shared public health priorities.”

Alongside the launch of the SIB, MaRs has released a paper on designing the social impact bond. The paper, which looks at way to improve the development of SIBs, recommends inspiring investor confidence.

It says: “Foundations, philanthropists and companies are moving every more money into impact investing. Pay for Success (another term for social impact bonds), however, is still new, and its unfamiliarity instills caution even in investors for whom social impact is as important as financial return. Investors put about $290,000 on average into the Heart and Stroke PFS deal. This relatively small ticket size emphasizes the importance of reaching out early to collect enough investors.”