Investor Action on Health: A Review

Abstract

EXECUTIVE SUMMARY 1. Using a system-level approach, we review the different mechanisms through which investors can contribute to improved population health outcomes. Specifically, we highlight how these investor action mechanisms – including corporate engagement, environmental, social and governance (ESG) ratings, board oversight, and policy engagement – have been used by institutional investors (i.e., asset owners, asset managers) to advance 15 priority health issues, ranging from food safety and alcohol harm to air pollution and worker health. 2. We categorize the 15 priority health issues according to their maturity from the perspective of the investment community. Investors are motivated to use the full spectrum of mechanisms to address mature issues (e.g., human rights, tobacco smoking) and these are actively incorporated into investment decisions and stewardship activities, as there is general consensus about the financial materiality of these issues. Progressing issues (e.g., nutrition, access to medicines) are growing in significance within the investment community and involve a diverse yet underused array of mechanisms. Emerging issues (e.g., digital well-being, access to quality housing) have only recently begun to attract some attention from investors who are beginning to recognize potential financial risks associated with these issues. 3. We propose that investors need to recognize the maturity of the issue when deciding which mechanisms to use. By matching the right mechanism to the maturity of the issue, investors are more likely to further advance the relevance of the issue in the broader investment community. Drawing on lessons from other ESG issues, including climate change and diversity, equity and inclusion, we develop a framework that can be applied to investor action on health-related issues. Using this framework allows investors to understand which actions are most likely to be relevant for each issue given its stage of maturity. 4. The complexities associated with population health and the financial system provide challenges and opportunities for investors. We detail five different challenges relating to investor action on health: 1. Issue scope: The meaningful differences between different types of health-related issues means that investor action needs to be designed to fit with the characteristics of each issue. 2. Defining impact: The goals associated with investor action on health will ideally be measurable and attributable to investors’ efforts. 3. Impact time lags: Many of the desired impacts of investor action on health will take time to be implemented so investors will need to identify realistic timeframes and key milestones for different types of outcomes and impacts. 4. Demonstrating financial materiality: Existing financial materiality assessment frameworks place varying emphasis on health-related issues so motivated investors may need to play an educational role to raise the profile of less mature issues. 5. Considering system-level effects: Although the investment system is complex, investors can identify key leverage points in the system to unlock wider support for their efforts. Despite the barriers posed by these challenges, we highlight that investors have opportunities to carefully design their actions to increase their effectiveness when seeking to positively contribute to population health