Now is the time to get health and older age care into the ESG criteria of pension fund mandates

The Silver Linings competition for business plans is a good place to start, says the CEO of Business for Health

In Europe, McKinsey calculates that better health achieved through preventative strategies leading to fewer health conditions, fewer early deaths, expanded participation, and higher productivity – could contribute $2.4 trillion to Europe’s GDP by 2040, equivalent to a 10% boost or an additional 0.5 percentage point of annual growth above current projections, and reverse an expected contraction of the labour force.

 

In the U.S.A., adding just one extra year of healthy life expectancy will have enormous financial benefits estimated at $38 trillion.

 

There is no question anymore that good health throughout life and on into older age equals wealth.

 

That is why I agreed to be one of the judges for the Silver Linings older age care competition, especially because it makes an explicit link between health, ageing and the pensions that beneficiaries save for during their working lives, with the competition strapline: because our pension beneficiaries really do matter. 

 

The pandemic has laid bare the stark reality and impact of poor health compounded by health inequalities in the richest nations on earth.

 

This will continue to worsen unless wider systemic issues are addressed to “level up health” between the richest and poorest citizens.

 

These compelling statistics show it was therefore a missed opportunity in the U.K. government’s budget announcement in October this year to make the link between health and wealth clearer, especially regarding productivity, and backed up by more explicit policies to level up health.

 

The budget majored on unleashing the creativity and innovation of business to drive economic growth and recovery, focused on higher skills, higher wages and higher productivity. It announced heavy investments in science and innovation, including sizeable increases in R & D investment, aiming to grow from 0.7% to 1.1% of GDP by 2026/7 (higher than Germany, the O.E.C.D. and U.S.A.), and unlocking the ability of pensions to invest directly into higher risk innovation areas.

 

But it should have been much more focused on health and care as an asset to invest in, with long term returns measured by closing the gap in health inequalities, reducing demand on the health and care system, and growing health and wellbeing of populations with related increases in labour productivity and, ultimately, economic growth.

 

Given the increasing recognition of the role that employers could play in reducing up to 20% of the disease burden on the healthcare system, especially in the area of mental health, chronic diseases and musculoskeletal conditions, more focus could have been given to support employee-led health interventions, such as mid-life health checks and healthy eating and exercise in the workplace.

 

Measuring what matters gets done, yet current performance metrics in the healthcare system are not geared enough to incentivize prevention, and we are seeing a healthcare system becoming increasingly unsustainable post-pandemic. We urgently need to re-gear incentives as part of wider systemic change to link health to wealth and address the 85% of the factors determining our health that lie outside the formal health and care system.

 

The U.K. Office for National Statistics’ Health Index is a good step towards this and will help focus public debate and policy attention across government on a broad concept of health as an asset and a key measure of success. It measures health as an asset in three domains: (1) healthy people, which focuses on health outcomes; (2) healthy lives, which captures health-related behavioral risk factors; and (3) healthy places, which captures wider social, environmental and commercial determinants of health.

 

Other indices, like the U.K.’s Urban Health Index, show how layering data relating to different social and environmental indicators can build a better picture of how their environment impacts their health. Global initiatives such as the Partnership for Healthy Cities are already underway like Vancouver’s Healthy Cities data dashboard, which launched in April 2021, tracking progress against 23 health and wellbeing indicators and 12 shared targets.

 

But we need health data to develop the metrics, which will require transparent, consent-based, secure sharing data to reassure the public.  We need trustworthy systems to address citizen concerns over the use of their data, while enabling data sharing across the life course in multiple sectors; this would accelerate our understanding of drivers of age-associated poor health and identify preventative health strategies and therapies with the potential to improve healthy life expectancy and to level up health.

 

Critically, we need business to have a much larger role in the systemic shifts needed to enhance and level up health. The O.E.C.D. are looking at the role of business as part of its Beyond GDP Agenda, including its Centre on Well-being, Inclusion, Sustainability and Equal Opportunity (WISE) focused on generating new data and solutions to improve people’s well-being and reduce inequalities.

 

New initiatives like the Business Framework for Health launched in October with the Confederation of British Industry (CBI), and backed by Chris Whitty, England’s Chief Medical Officer, is geared to harness data and develop metrics to measure and incentivize positive contributions by business to health in three areas: 1) Direct impact: business influence on workforce health 2. Secondary impact: business influence on health via products and services sold 3. The external influence of business on the communities in which they operate and the wider environment/society.

 

This is part of a longer-term plan to bring ‘health’ into ESG mandates, to become “ESHG”.

 

Health is where the climate change agenda was 10 years ago, and now is the time to guide more investment and innovation into health guided by ESG mandates as we do for climate change, applying them to healthy life expectancy and societal health.

 

COP26 in Glasgow was a reminder that living healthier means living greener too: tackling air pollution, active transport, eating less meat are all part of the One Health model linking human, animal and planetary health. Let’s start investing in health as we are starting to in climate.

 

The Silver Linings competition is a great way to instigate the kind of entrepreneurial thinking that can create investable, profitable and sustainable projects that our pension funds can invest in on behalf of the beneficiaries whose money they are stewards of.

 

 

 

Tina Woods is CEO of Business for Health

 

 

Tina will be speaking at a special info evening event for The Silver Linings older-age care competition: ‘Because our pension beneficiaries do matter!’ in London on Thursday November 25 , 5-7pm, for anyone who is interested in hearing more about the competition and how to submit a Business Plan.  

 

Where: Audley Nightingale Place

3 Nightingale Lane, Clapham, London, SW4 9AH

 

Click here  to register your attendance.