PROMOTED CONTENT: BVCF: The call for a health taxonomy

Globally accepted health taxonomy can serve as a guideline in directing funding and intensifying awareness for public health investment

How can we drive further health investments from the private and public sectors?

The Covid-19 pandemic has heightened the urgency to ensure health For All and global health equity. To accelerate and drive responsible investments towards common healthcare goals, a health taxonomy with impactful and measurable health metrics is needed.

To date, the environmental component has dominated the prevailing ESG and sustainability reporting frameworks. Increased awareness of corporate responsibilities has mobilised significant investments from the private sector and ESG asset allocations from financial market participants into climate-positive projects. The social and governance categories have occupied less mindshare when compared to the environmental category.

Health is a theme as important to humanity as climate change. Financing from both public and private means should be engaged to achieve Health For All and global health equity. Health should naturally be part of the social category within ESG initiatives and investments, but currently health is seldom represented. The lack of globally accepted metrics for assessing health and health-related economic activities that are impactful and measurable is a key reason. A health taxonomy that identifies health-positive economic activities that contribute to a set of common healthcare goals can serve as a guideline in directing funding and intensifying awareness for public health investment. 

What does a health taxonomy do?

Experience from the climate movement shows that well-studied metrics that are consistently measurable in a straightforward manner, such as carbon emission reductions and water usage, are critical in highlighting the broader societal and population impact of a corporation’s economic activities. The European Commission has developed the EU Taxonomy to define environmentally sustainable economic activities, which is intended to serve as a framework in directing funding towards desired projects and protect investors from greenwashing. 

The current health-related metrics used in various sustainability reporting frameworks (if health is included) are mostly limited to company specifics, such as employee insurance coverage rate and employee injury rate. Although these metrics are meaningful on a company level, they do not fully reflect the contribution, whether positive or negative, that the corporation’s economic activities have on broader societal and population health. 

There needs to be a set of impactful and measurable health metrics that define sustainable economic activities for public health. For example, reducing the use of chemicals in a food product supply chain may be more akin to that of carbon emission reduction – where it reflects the public health impact of a company’s economic activities beyond the company’s employees.

A health taxonomy can serve as a common language to define a set of common health targets. It can ensure that stakeholders have a more holistic appreciation of health-positive as well as health-negative economic activities.

Why is a health taxonomy important?

Health is defined differently by different people, and health outcomes are affected by many non-medical factors. Research shows that social factors can be more important than health care or lifestyle choices in influencing health, with some studies suggesting that social factors account for between 30-55% of health outcomes.¹ Health is in fact more than a birth rate, insurance coverage, employee injury rate and acute event statistics, such as disease incidence and death rates. 

Lessons should be drawn from the financing of climate initiatives for financing of Health For All. In addition to defining what are sustainable health economic activities, there should be conscious efforts to prevent “healthwashing”, similar to the current efforts to prevent greenwashing.

Stakeholders now know to examine the broader impact of climate-oriented activities – while the intention can be good, the activities can potentially lead to negative externalities in some parts of society. Similar to climate-oriented products and initiatives, the healthcare ecosystem and supply chain of products and services are complex and multifaceted. For example, generic pharmaceutical companies sometimes face criticism for not creating value because they lack R&D innovations. However, it is virtually impossible to supply a world of more than eight billion people with drugs from only proprietary manufacturers. To scale up the supply of drugs and manage prices, generic pharmaceutical manufacturers play a critical role in the overall pharmaceutical supply chain. 

Furthermore, as ESG investing became mainstream, it led to the development of many different green standards and climate checklists. There are arrays of service providers that aim to help companies and financial market participants interpret and comply with various climate and sustainability regulations. The lack of common definitions and the potential for greenwashing have been the two major challenges for the development of climate/sustainable financing over time. To effectively advocate for health investments, a globally accepted health taxonomy that sets common goals and clarity in communication will be crucial.

How can we kick-start the process of a health taxonomy? 

With the WHO as the only dedicated health entity under the UN and its work on the commercial determinants of health as a foundation, it is the best organisation to spearhead the process and work with a consortium of stakeholders and health experts. 

The WHO can seek to work with other global entities, such as the EU PSF, the World Bank/IFC, the International Sustainability Standards Board, the International Capital Market Association and stock exchanges, as well as the private sector and financial market participants to develop a set of qualifying and continuing reporting health metrics that are impactful and measurable. Both public market and private market investors can actively include health metrics into their investment evaluations. Coordinated efforts among key stakeholders and organisations to develop a globally accepted health taxonomy will be imperative to effectively crowd in investments towards the common goals of Health For All and global health equity.