Since 2020, we’ve become more health aware than ever before. Germs have always been everywhere, but now we’re noticing them: an unshielded cough, an unmasked kiss, a spluttering sneeze. Friends became potential ‘contacts’. Hosting a dinner party gained a moral dimension. 

But while health is almost constantly on our minds, it’s failed to accrue the same attention in corporate circles. Despite the colossal impact that the pandemic has had on business – the FTSE dropped 14.3%, its worst performance since 2008, while unemployment rates jumped up around the world – conversations around the business impact on health have lagged shamefully behind. So how has health become a blindspot to business?

The missing S in ESG

It’s now widely accepted that the sole responsibility of a business is not just to maximise profits. Last year, a record $649 billion was spent on Environmental Social Governance (ESG) focused funds globally, which now make up over two thirds ($25.2 trillion) of the global market. Belief in businesses’ ability to have a positive impact on society is clearly at an all-time high.

Yet data indicates that the scope of this influence is limited. While COP26 incited promising agreements – forcing most big UK firms to demonstrate how they will hit net zero in line with national targets – a global pandemic failed to yield such promises. According to Capital Monitor, out of the ESG-related shareholder resolutions filed in 2021, eighty-five related to climate, compared to a mere 5 regarding health, safety, and well-being. As well as this, mentions of  ‘climate’ vastly outweigh those of ‘health’ in the annual sustainability and stewardship reports of eight of the world’s largest asset managers.

“The investment sector is at least 10 years behind on health to what it is on climate,” posits Jessica Attard, Head of Health Programme Development at ShareAction. “When investors think about ESG, the E is much further along than the S. And generally speaking, when people talk about social factors, health doesn’t feature very much at all.”

It’s a perplexing oversight. Not only because health affects every individual on the planet, but also because poor health is costly. As much as a third of deaths worldwide are attributable to the overconsumption of products produced by profit-driven commercial entities – including alcohol, tobacco, and highly processed food. In 2008, a government-commissioned report revealed that in the UK alone, poor health cost around £100 billion per year. Last year, the CBI found that 63% of years lost to poor health are in the working age population, which costs the UK around £300 billion in lost economic output annually, excluding health costs.

Health is inextricably linked to wealth (the Middle English ēse denotes both ‘physical health’ and “prosperity, happiness, welfare; preservation, safety”), as was acutely reinforced through the pandemic. We saw that when a population falls ill, so does the economy – that the functioning of society depends on robust healthcare systems and inclusive social security. As well as this, we saw that businesses are uniquely positioned to target health-related issues, whether that be changing production lines to mass produce ventilators, or a vaccine produced at record speed. So why, as the environmental impacts of corporations are studied with microscopic scrutiny, are their health impacts left largely unexamined?

Jessica figures that part of the problem is a misunderstanding of what ‘health’ means. “When we talk to investors about health they think about healthcare and pharmaceuticals,” she conveys. “Whereas in reality, all companies have a role in health, whether that be through being our employer or through the production of products or services.”

Another issue is a lack of metrics available to measure a company’s health impacts or evaluate how seriously asset managers are taking health as a systemic risk. According to a ShareAction report published in August, while most asset owners said that improving population health was a priority, three-quarters of respondents confessed they had minimal or no information from their fund managers on stewardship in relation to health, while two-thirds were unaware of asset managers that provided options to invest in portfolios that promote health. Asset owners like Guy’s and St Thomas’ Foundation are leading the way in calling for asset managers to better integrate health as a systemic risk into their stewardship practices. 

“Imperfect data shouldn’t prevent investors from making progress, in fact we want to see more investors calling on companies to improve their disclosure as a first step in engagement on this theme.”

The lack of data on company impacts on health means that there has been limited shareholder pressure on organisations to limit negative health impacts – a stark contrast to how the same entities are approaching climate. The contradiction is perhaps best embodied by the case of British American Tobacco – recently rated with the third highest ESG rating in the FTSE 100, despite its obvious health risks. Indeed, while quantifiable goals like net zero are pushing companies to divest from fossil fuels, in the absence of similar metrics, investors feel less able to make an accurate assessment of a company’s health impacts, and therefore have to date not pushed them to do better. Jessica mantains that “imperfect data shouldn’t prevent investors from making progress, in fact we want to see more investors calling on companies to improve their disclosure as a first step in engagement on this theme”. 

New momentum

But the tide is turning. ShareAction is one of a number of organisations that are helping investors and companies consider their health impact, on an employee, consumer and community level. Last year, they coordinated investor pressure to file the UK’s first health-related shareholder resolution at Tesco, prompting them to improve the health profile of its products by 2025. The UK supermarket giant responded by committing to an increase in sales of healthy products to 65 percent of total sales, alongside plans to include at least one of the recommended five a day of fruit and vegetables in two-thirds of ready meals.

“I think we’re at the early stage of this trajectory that sees health rising much further up the agenda of investors, of government, and in turn of companies as well,” explains Jessica. “So many more investors are supporting calls for shifts towards healthier products within supermarkets and manufacturers. And they’re doing that in part because it’s the right thing to do, but also because they recognise the material, financial risk of shifting consumer trends, increasing regulation, and greater expectation of companies to make it easier for people to live healthier lives.”

The tobacco industry is a clear example of the way industries are looking around for ways to evolve and adapt in order to maintain shareholder value. While overall rates of cigarette smoking have been in decline, stocks in the tobacco sector have grown. This is partly due to companies diversifying their portfolios, to include products that have less damaging health impacts. 

The multinational tobacco company, Philip Morris International, dreams of a “smoke-free future”, which it hopes to deliver through investment in alternative products like IQOS heated-tobacco. It sets out to increase its smoke-free revenue to 50% of total net revenue by 2025, as well as expanding into other goods that contain no nicotine at all, such as sleep-assisting botanicals and products able to deliver medicine through the respiratory system.

“My hopes are that the investor community, which has amazing power in terms of driving change, can be better informed about what they can ask other cigarette companies.” Jennifer Motles, Philip Morris’s chief sustainability officer, told Bloomberg. “If other cigarette companies adopt the same metrics, and start reporting on them transparently, we can make cigarettes obsolete and can multiply the pace at which this is achieved.”

This is not to say that we shouldn’t continue to regard the health pledges of cigarette manufacturers with skepticism; we should. What it does show, however, is that improving health impacts has become the new normal. It’s no different from the way in which companies reliant on fossil fuels must divest in order to survive. “Companies producing negative health externalities are at risk of becoming stranded assets for investors,” Jessica asserts. “Better health impacts are usually better for profits in the long run.”

Thinking holistically

Thankfully, there’s a benefit from the fact that environmental proposals outrun those relating to health; we can see that an alternative is possible. “People have got some heart from the fact that there has been progress made on the green agenda where once upon a time, people thought this was too difficult,” reflects Jennifer Dixon, Chief Executive of The Health Foundation. “I think there’s something there about what the green agenda can teach the health agenda”. 

What both the environmental and health agendas have in common is that they require organisational bodies to adopt a long-term mindset in order to tackle deep-rooted societal issues. It’s this, however, that Jennifer feels is critically missing, with officials failing to recognise that individual health is a systemic problem.

“Policy makers so often believe that health and indeed the public believe that health is down to individual responsibility. But in actuality, it’s down to wider determinants,” she suggests. 

“People aren’t more obese now because they suddenly lost the willpower to change or their biology has changed”.

“Interestingly, they are not taking that approach to get to net zero. They’re not saying to people: it’s your fault you’re buying too much meat, or it’s your fault, you’re not buying electric cars. They realise that they have to change the context to make those choices easier.”

Chris Holmes was sat in a courtroom in London when it hit him. He was working on the board for KFC at the time, and was opposing a blanket ban on new takeaway joints opening across London. “It couldn’t have been more hostile,” he recalls. He was sitting next to a man who worked for Mcdonald’s, looking into the eyes of a daunting group: the Mayor of London and his team, Public Health England, Diabetes UK, Cancer Research, Guys and St Thomas’ Foundation, and School Food Matters. 

“Even how the room was set up felt very much like it was ‘us’ against ‘them’; the policymakers on one side of the room, and the people that run the food environment on the other. They couldn’t have been further apart.”

What Chris found particularly frustrating, is that despite how the meeting was set up, in actuality, both parties wanted the same thing. Youth obesity was a problem. In 2019, 21% of year 6 children in the UK were obese (a figure which rose to 25.5% the following year), a figure they both wanted to change. “A lot of the framework set by regulating bodies is to try and half childhood obesity by 2030,” Chris explains. “That’s a great ambition, but how on earth can you get there if you don’t work together with the industry itself?”

He began to wonder if there was another way. What if instead of villainizing fast-food chains, he could help guide young people towards healthier options? In March 2020, Chris began pooling his ideas together and set up SMASH, an app designed to help young people Save Money and Stay Healthy. Partnering with numerous restaurants and supermarket brands across the UK, the platform shines a light on healthier options and provides discounts for those aged under 25. This fights against prevailing trends where unhealthy foods are excessively promoted by companies, with over 80% of food and drink advertising in the US spent on fast food, sugary drinks, sweets, and unhealthy snacks.

Chris has ambitious long-term goals for SMASH, such as working with local authorities to give discounts on healthier food to lower-income demographics. However, at present, progress is being inhibited by archaic rules and regulations.“ You charge VAT on a bottle of water at the same rate as a full-fat coke. How on earth is that right?” Chris asks. He is irked by arbitrary distinctions between food products – those that tax Pringles more than Doritos, and biscuits more than cakes (sparking the infamous Jaffa Cake tribunal in 1991). 

Yet there is a potential to engender meaningful change through taxation. “We want to build a dataset and present a bigger case to the government: what if the healthier stuff was VAT free and the less healthy stuff had VAT on it? What difference would that make to the health of the nation?”

When organisations work together, there’s immense potential to shift consumers towards a healthier diet. “Major brands can play an amazing and pivotal leadership role for the independents to then follow,” Chris exclaims. “I think the point is: there is no such thing as a wholly good or a bad retailer when it comes to health. No one organisation, person, policy will ever have the answer. We’re just trying to shine a light on those who are having a crack and I think could be a really good thing for society.” 

This comes down to a critical point. We’ll only get so far calling out sweet shops. But if organisations are genuine about wanting to improve their health impact, they must be transparent about what those impacts are, and be willing to work with partners across sectors to make drastic changes. Much like fighting the climate crisis, achieving better public health is a task only achievable through collaboration.

What can companies do to have a better health impact?

• Evaluate health impact on all stakeholders. Using ShareAction’s framework is a useful way for companies to break down the different groups a company impacts. Much like climate reporting frameworks, it divides health-related risk factors into worker, consumer, and community subcategories. 
• Be transparent about your health impact. When companies make their health impacts readily available, they are better able to gain stakeholder trust, with nearly 94% of consumers more likely to be loyal to a brand when it commits to full transparency. This can help consumers make informed decisions, as well as identifying areas where the health impact can be improved.
• Incentivise good employee health. Employers can motivate their workforce to engage in healthier behaviours through incentivising actions that improve health, such as subsidised gym memberships. 
• Engage with community health. Companies can have a positive impact on their community by partnering with a local initiative that supports a particular public health goal. 
• Participate in public debates. According to The Health Foundation, one of the key ways in which business can make a difference to public health is by participating in public debates (such as those relating to the Sugar Tax or the National Obesity Plan). This enables them to positively influence the national approach to health which affects employees, customers and suppliers.