IWBI Special Report Chapter Series: “Investing for Health”



Northampton, MA – News Direct – International WELL Building Institute

Excerpt republished from: Prevention and Preparedness, Resilience and Recovery: An IWBI Special Report

When a company like CVS Health says “health is first” in its corporate social responsibility (CSR) report, there is no ambiguity about how it values ​​health.

Its 2019 CSR report, focusing on the priority areas theme of healthy people, healthy businesses, a healthy community and a healthy planet, uses an in-depth assessment of materiality factors, such as that “access to quality health care”, “employee health and safety” and “diversity, equity and inclusion” to monitor progress towards its goals.1 If only a similar approach rooted in health were more ubiquitous in all companies and also affirmed by the investment community.

Instead, health and wellness is routinely underestimated by companies and often undervalued or misunderstood by investors who value those companies. This is a missed opportunity, because the fact is that the health and well-being of a company’s employees dramatically affects its bottom line. A peer-reviewed study in 2016 showed that portfolios made up of companies that scored high in the Corporate Health Achievement Awards (CHAA) appreciated 204 to 333% compared to the appreciation of the S&P 500 index. by 105%. Another study, also from 2016, compared 45 companies that received high scores in a health and wellness assessment and found that they appreciated 235% versus just 159% appreciation in the S&P 500 Index over a six-year simulation period.

Before the pandemic, these benefits may have been known only to those who knew how to seek them out. Employee health was generally viewed as a peripheral and altruistic concern that could at best attract better talent and reduce turnover. But the current global health crisis has made it clear that protecting workers’ health and employee resilience are critical to any organization’s ability to succeed. This new awareness has the potential to bring health to the forefront of the investment world in ways it has never been before.

According to Mona Naqvi, Head of ESG Index Strategy for North America at S&P Dow Jones Indices and a member of the IWBI Governance Council, “Companies are under scrutiny like never before when it comes to issues. health and how they treat their employees. The COVID-19 issue provides us with the roadmap and blueprint to better integrate a more systemic and holistic understanding of health as it relates to markets. This crisis has demonstrated the materiality of public health.

Health underpins all of ESGModern day investment — brought forward in particular by environmental, social and governance (ESG) factors and frameworks — has repeatedly demonstrated how these non-financial indicators lead to improved business performance. In 2015, in a massive meta-analysis of around 2,200 studies focusing on the link between ESG criteria and corporate financial performance (CFP), the researchers’ main conclusion was: “Investing in ESG is financially profitable ”. And investors reacted accordingly. Morningstar Inc. found that a group of 300 mutual funds that incorporate ESG factors into their investment decisions quadrupled new money inflows from $ 5.4 billion in 2018 to $ 21 billion. $ 4 billion in 2019.

Health was not originally a primary focus of impact investing. But in recent years that has started to change. In 2018, the WELL Building Standard (WELL) was included as part of Swire Properties’ Green Bond Framework, with the company anticipating that it will look to WELL certification to “continue to execute our healthcare investment strategy. across our real estate portfolio, ”said Dr. Raymond Yau, Managing Director of Technical Services and Sustainability and member of the IWBI Governance Board. In the aftermath of the COVID-19 crisis, this is exactly the type of solution the market is craving.

And that was before the global pandemic and the ensuing attack of COVID-19 infections around the world. Today, as health has catapulted to the top of everyone’s priority list, we see a new urgency around health in the investment landscape, from impact investing to ESG reporting.

“Environmental, social and governance investments were becoming increasingly popular before the virus began to circulate, as investors flocked to companies that have taken steps to manage non-financial risks associated with issues such as climate change, board diversity or human rights issues in procurement. chain, “wrote Kristin Broughton and Maitane Sardon in the Wall Street Journal at the end of March 2020.” But the pandemic has demonstrated on a large scale the importance of other factors that are essential for ESG investors. Among them: disaster preparedness, business continuity planning, and treating employees through perks like paid sick leave, as companies steer employees toward working from home. “

Extract: The future of investing in health… As we move from the COVID-19 response to recovery (and even resilience), investing in health must be part of the response. We’ll get there much faster if we do more to accelerate these strategies: refine our ESG reporting to better reflect health, capitalize on this moment to ensure we think better and rebuild better, prepare for the future and foster the leadership.

Detailed recommendations include:

Successful businesses, successful peopleIn a post-COVID-19 world, it will be difficult to imagine an investment landscape that does not fully consider the value of health and wellness. Making the right choices now will not only impact the entire investment community, but will transform the future of investing and how it works for everyone.

The good news is, we’re seeing a cohort of health investing leaders emerge – pioneering investors and companies that don’t just say their people are their greatest asset. , but act accordingly.

Because in the end, what Daniel Malan said five years ago is still true: “If a small group of early adopters can show the way, there are gains to be made in the short term and the long term impact will be. substantial.

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