In 2011, Michael Porter and Mark Kramer published the article “Creating Shared Value,” accelerating a global debate on the role of business in society and the alignment of core business strategies with the needs of society. At the workshop, Mark Kramer shared his perspective on how the concept of shared value has been received, how the approach to shared value creation has evolved as the movement has grown, and some examples of shared value creation in global health. Derek Yach and Ali Mokdad expanded on the potential for creating shared value in global health by identifying where there is the greatest need and opportunity for increased corporate-sector engagement to address the current and future major contributors to the global burden of disease. This chapter summarizes their presentations. Key messages are included in Box 2-1.
Since workshop speaker Mark Kramer, co-founder and managing director of FSG, and his colleague Michael Porter first began writing about creating shared value 5 years ago, the concept on which it is based—enhancing competitiveness by aligning core business strategies with the needs of society—has gained attention from companies around the world. As interest in the idea and global momentum has expanded, so has the amount of research being done to better understand it, revealing the complexity of embracing shared value. According to Kramer, during this
growth and evolution in the understanding of the concept, shared value creation has been seen to rest on two things: innovation and strategy.
Innovation is central to shared value creation, Kramer stressed, emphasizing that to meet the needs of new and emerging markets and to operate business in a way that aligns with the needs of society is a very different exercise from traditional business strategy. Kramer provided examples of companies founded on shared value innovation, including the company VisionSpring, which has developed a new approach to marketing eyeglasses in communities that lack access to optometrists. VisionSpring invented an eyeglass design in which two lenses can be adjusted by a small dial on the side to provide a range of prescriptions. This innovation created a new market of 700 million eyeglass consumers who are without access to an optometrist, but now have the potential to earn a better living and lead a fuller life because of the ability to improve their vision.
The other side of shared value creation is about strategy. Kramer provided the example of the South African insurance provider Discovery, which has reinvented the insurance business by developing a sophisticated set of incentives designed to lead their members to engage in healthier behaviors, resulting in lower health care costs, longer life expectancy, and greater profits for Discovery (Porter et al., 2014). Another example of shared value strategy is the fertilizer company Yara and its infrastructure investments in Tanzania to develop an agricultural corridor that extended
from the port to inland farmers, reaching new consumers of their product and increasing agricultural yields and incomes for hundreds of thousands of subsistence farmers.
Kramer contrasted two examples of initiatives focused on micronutrient fortification to illuminate the potential for scale and impact when business is engaged through a shared value framework. The first example is from Nestlé, which started working with the World Health Organization (WHO) to address specific nutritional deficiencies, first in West Africa, then in other parts of Africa, Latin America, and India. Through this initiative, Nestlé developed specific products, designed to provide necessary micronutrients, to be used by families on a weekly basis. These products are affordable to low-income populations, but still profitable for the company. Nestlé is now selling nearly 200 billion servings of these products a year.
The second example was an initiative between the company Danone and Grameen Bank to develop micronutrient-fortified yogurt. This initiative was based on a social enterprise model that generates revenue and income, but does not distribute profit. Rather, any profit is reinvested in the business and its mission. It was a successful venture that has been able to distribute about 36 million cups of the nutritional fortified yogurt per year. However, the initiative was not able to scale it beyond the initial factory because of the lack of profit and limited access to the capital that was essential to reach scale. The second example engaged business, met a social need, and was considered a success, but only the first which engaged business through a profitable shared value framework went to scale.
Returning to the example of Yara in Tanzania, Kramer pointed out that questions sometimes arise about why a private-sector company should be making investments in areas like infrastructure instead of the government. He explained that, at times, governments are constrained in their ability to look to the future or respond to the needs of poor or disenfrachised citizens. Government also is not always able to convene all of the stakeholders and exert the necessary leadership to build and lead a coalition. These are roles that companies can take on in a very powerful way. With this growing realization other sectors such as nongovernmental organizations (NGOs), development agencies, and governments are also rethinking the role of business. Rather than a traditional view that assumes business is a problem and creates harm for society, some actors in the NGO and public sectors are realizing that business has the innovative capacity to generate sustainable, scalable solutions that NGOs and government cannot. Kramer suggested that shared value requires a mindset shift on the part of governments to look closely at their policies to see if
they are encouraging shared value. Engaging business to write a check is not strategic or innovative.
Elaborating on the role of government, Kramer stressed that there are very positive examples of government investing in innovation that then spurs shared value opportunities. One such example is Grand Challenges Canada, which is a venture capital undertaking sponsored by the Canadian government focused on funding early stage companies with shared value innovations and then supporting those companies on a trajectory to be acquired by larger multinationals to take the innovation to scale.
Philanthropy can also fund the early stages of development to help bring innovations designed to create shared value to scale. As an example, Kramer referred to a partnership between The Bill & Melinda Gates Foundation and the Coca-Cola Company to improve the incomes of smallholder farmers in South Africa. Coca-Cola wanted to sell juice in South Africa, but because it was too costly to import the fruit pulp, the company wanted to purchase crops grown locally. However, there was a huge transition cost for farmers to learn how to grow fruit instead of their usual crops and a delay before they had a harvest to realize an income, even though the poor farmers would have much higher incomes from the new crop. So, the Gates Foundation funded the transition cost, which would not have met the hurdle rate for investment from Coca-Cola to use its own funds, and then Coca-Cola agreed to buy the fruit after the transition period. While at first it may seem unusual for one of the largest foundations to fund a project that expands the product line for one of the largest for-profit corporations, it is a symbiotic relationship in which the foundation can provide support to farmers without creating long-term dependency on philanthropic funds, and the company can launch a new business that satisfies the return on investment expected by their shareholders.
Kramer touched on the issue of perceived and actual conflict of interest when engaging business in social issues. The common perception in the development sector is that government is the way to achieve social progress and private enterprise is not to be trusted, and this perception is frequently reflected in policy and attitudes. Unfortunately, this perception is not always wrong because there are incentives for companies to act irresponsibly and sometimes they do. These incentives tend to be very short term and there is a need for companies to think more in the long term. As evidenced in some of the examples Kramer shared, there is endless opportunity in getting public–private partnerships right by engaging companies in what they can do well to solve problems and look toward the long term, and engaging the expertise, resources, and influence of international aid agencies and organizations such as WHO. Other sectors also see the reward and are beginning to be open to it. Employing profes-
sionals within these organizations who have experience across sectors, including private enterprise, international development, and NGOs, and who understand all three perspectives and languages, is a valuable tool for moving toward multisectoral collaboration based on shared value.
However, Kramer emphasized, shared value is not only about government, philanthropy, and society rethinking business. It also requires business to think differently and realize the value of aligning their success and growth with the interest of society. Shared value is understanding that individuals and communities that were traditionally treated as philanthropic beneficiaries are now customers. This requires customer research to understand the needs and wants of individuals to whom a company is trying to sell. The shared value lens obligates businesses to focus on what consumers want and will use. Through market research focused on these populations, surprising information is being uncovered. Often those assumed wants and needs are not accurate. The shared value shift to thinking about beneficiaries as customers requires a departure from finding solutions that sound good toward conducting research to understand how to meet their needs in ways that they actually want.
When asked to identify the internal stakeholders within a company that need to be engaged in discussions about creating shared value, Kramer noted that the CEO’s support for shifting strategy toward shared value is critical as it requires expenditures of capital, undertaking risk, and new ways of working that the organization has not dealt with before. However, it also requires the involvement of operational staff at each level because they recognize the opportunities on the ground and understand the capabilities of the company to develop shared value initiatives.
Beyond the internal support required, companies need shareholders to understand and embrace shared value. Kramer suggested that this shift is starting to be seen within shareholder circles, but progress has been slow. Part of the challenge is that the investment community tends to view shared value through the lens of socially responsible investing, which is more about avoiding investments in harmful industries or companies rather than analyzing the economic prospects of the company. What is needed, he suggested, is a shared value lens within the investment community that seeks companies acting responsibly and tackling social issues in a way that improves their own economic performance. Some investors are applying this shared value lens, but it is at a nascent stage.
A comment was made about the suspicion around the potential of shared value within communities where inequality is stark and private businesses seem to be a part of the problem, or at least neutral, instead of the solution. In response, Kramer acknowledged that some leading companies are embracing shared value, but many are not there yet. However, he sees hope because these lower-income populations within communi-
ties are viable customer groups for new products and services based on shared value. Companies that begin to meet these needs will grow and thrive, serving as useful examples. Kramer noted that the problem of inequality has not been solved through philanthropy or government either. Although he does not believe shared value will be the panacea, he thinks it can be a new and helpful step.
Kramer emphasized that, through the highlighted examples and experiences, he has learned that the more he works with companies, governments, and NGOs around the world, the more he realizes that the concept of shared value that he co-developed with Michael Porter is not a simple idea. It requires profound changes in thinking among companies about innovation, strategy, and choosing how and where to compete, and among government and NGOs about their policies and and ways of engaging companies. However, Kramer stressed that shared value creation has shown that, when it takes hold, the scale of impact that can be achieved is phenomenal. Kramer has come to believe that while shared value is hard work and the mindset shifts it requires are not easy, it is worth the effort. He feels this new way for business and society to work together can achieve progress on issues of global health and poverty, among many others that the world has grappled with throughout history, and perhaps achieve more progress within the coming decades than society has for centuries.
Shining a light on the potential for shared value opportunities in health, Kramer noted that many current companies were developed based on business models and product design that predated both the more recent thinking about shared value opportunity and many discoveries about the health consequences and health outcomes that are determined by behavior, socioeconomic conditions, lifestyle, diet, and the physical environment. These are areas where businesses can contribute in either harmful or helpful ways. He suggested that every company is in the health care business because they have their own employees’ health to be concerned about, but also because nearly everything individuals do each day has an impact on health, including products that are used and the environment in which they live. Kramer concluded that all companies, therefore, can and should consider the potential for applying shared value principles to health.
Picking up on Kramer’s suggestion that all companies have the potential to create both harmful and helpful impacts on health, Ali Mokdad from the Institute for Health Metrics and Evaluation provided context on the pressing health issues globally where there could be shared value
opportunities based on some of the key results from the 2013 Global Burden of Disease (GBD).
GBD is a systematic scientific effort to quantify in a comparative magnitude the health loss for every country in the world by age, sex, and population. It includes data from 188 countries dating back to 1990. It shows trends in risk factors and mortality. Subnational-level data for many countries is also collected to illuminate disparities within countries. The GBD includes 306 diseases and injuries and more than 2,000 disease sequelae, and 79 risk factors. It is updated annually and supported by a grant from The Bill & Melinda Gates Foundation. The data collection and research effort includes more than 1,000 collaborators in 108 countries. The included health metrics are
- Traditional metrics: disease and injury prevalence and incidence, death numbers and rates;
- Years of life lost due to premature mortality (YLLs): count the number of years lost at each age compared to a reference life expectancy of 86 at birth;
- Years lived with disability (YLDs): for a cause in an age–sex group that equals the prevalence of the condition times the disability weight for that condition; and
- Disability-adjusted life years (DALYs): the sum of YLLs and YLDs and are an overall metric of the burden of disease.
Since 1990, when the earliest GBD data were collected, mortality by every age group in the world has decreased. Mokdad suggested this global trend is a great success story of the public health programs, government investments, donors, and businesses that have focused on decreasing mortality since the GBD data were first published. However, in terms of morbidity, little progress has been made. In analyzing the recent data, Mokdad concluded that the leading causes of death globally can be largely attributed to four issues: socioeconomic inequalities, lack of financial access to health care, poor quality of care, and preventable causes of death. Of these four areas, Mokdad suggested that the greatest opportunity for businesses, and other sectors, to reduce morbidity is through investments focused on the fourth issue, preventable causes of death. While reducing socioeconomic inequalities, expanding insurance, and improving quality are all important goals and can improve health and reduce disparities, he emphasized that focusing on preventable causes is likely to be more cost-effective, yielding bigger potential benefits and costing less than other strategies. Some of the most prevalent risk factors for preventable death are smoking, physical inactivity, diet, blood pressure, and cholesterol. From Mokdad’s perspective, addressing these risk
factors through approaches tailored to the needs of specific communities is where businesses are likely to identify the best opportunities for creating shared value that reduces the global burden of disease and provides business opportunities.
Building on the shared value opportunities in health described by Kramer and Mokdad, Derek Yach, Chief Health Officer of Vitality, suggested specific opportunities for the private sector to engage in promoting the health of populations by adopting shared value approaches and demonstrated their potential impacts. Yach outlined these opportunities and potential impacts by describing how public health leaders have historically interacted with the private sector and health; how market forces and the power and reach of corporations can theoretically advance global health; why rigorous metrics and reporting systems are the drivers for this transition; and how the core products and services of companies from diverse sectors influence population health.
What Do Public Health Leaders Say About the Private-Sector Role in Health?
Traditionally public health strategies targeted specific disease-causing pathogens, including infectious diseases and those associated with basic living conditions and nutrition. During the Cold War, Yach explained, public health highlighted the value of programs implemented through government-led measures, including strong regulations, taxes, educational and environmental programs, alongside policies that aimed to ensure the health of populations with minimal personal engagement. Public health officials eventually realized that health promotion strategies to address chronic diseases driven by unhealthy behaviors required more complex approaches. Tobacco use was one of the first unhealthy behavioral risk factors to be targeted with tobacco companies cast as a public health enemy. In recent years, strategies to address tobacco have been a model to address other unhealthy behaviors associated with many products and services produced by the private sector.
Yach suggested that public health strategies to address noncommunicable diseases (NCDs) have historically shunned the use of public–private partnerships (PPPs) due to a deep distrust of industry, with the tobacco industry largely serving as the impetus for this distrust. Government actions have been seen as the only solution to address risks linked to corporations. Leaders in academia and NGOs have called on govern-
ments to implement more stringent regulations to limit the activities of big businesses and to reduce major NCD risks, such as high body mass index (BMI), and tobacco and alcohol use, which contribute to the leading causes of death such as cardiovascular disease.
This historical reality persists today among some public health leaders, Yach suggested, setting the tone and direction that sets the basis for government policies, NGO advocacy, and the way “causes and solutions” to NCDs are framed by the media. In contrast, the private sector increasingly sees opportunities to advance better health through innovation and the development of products and services that address major global health concerns. These opportunities are being recognized as shifts in demography and disease are driving the need for investment in infrastructure and innovation.
The current obesity epidemic in the United States and globally demonstrates the controversy generated by initiatives like soda taxes. Nonetheless, the public sector alone cannot resolve the enormous health challenges faced by global communities today. Though history has demonstrated that the public sector’s skepticism is not unwarranted, it is also clear that government regulations on consumer goods and services are insufficient. Given this, Yach suggested it is time to acknowledge that corporations, with their powerful impact on societal norms and individual behavior, must engage in the conversation to change global health trends.
How Can Market Forces and the Power of Corporations Advance Global Health?
Yach posited that shared value can be applied to health by all sectors in three ways:
- Businesses can invest in comprehensive, evidence-based health and well-being packages that improve employee health while driving productivity, boosting corporate morale, and improving retention. A healthy workforce creates long-term economic and social value to a company’s bottom line.1
- Companies can promote shared value through their core products and services. While employee health and well-being packages can reach millions of employees, the core products and services of businesses can have an even greater impact on population health by reaching billions of consumers. Businesses are in a unique position to create products that promote health and reduce the
1 See http://thevitalityinstitute.org/projects/health-metrics-reporting (accessed May 16, 2016).
harmful impacts of their products and services among consumers and society. In recent years, demand for healthier products has increased as consumers become more aware of lifestyle behaviors that impact longevity and quality of life. Finally, fears of litigation and regulation often stimulate many companies to act faster. Consumer demand for healthier products and services is emerging rapidly, fueled by new technologies, demographic aging, and urbanization.2
- Companies can promote health and well-being by investing in the communities in which they operate. Companies can engage local, national, and global public health agencies to address needs in their local communities and major health risks in their consumer base. Ensuring a healthy consumer base enables productive and sustainable relationships between companies and consumers.3
Despite these shared value opportunities for companies to improve health, Yach noted that continued distrust between the public and private sectors is not yet yielding beneficial results to populations. NCD risks and related challenges require a shift in the way public health interacts with the private sector. This will not be easy for either side, but the gains for health will make it worthwhile. Examples exist of companies addressing improved health through better business models that can illuminate the potential. In September 2015, Fortune magazine published an issue on the top 51 companies changing the world by “doing well by doing good.” The conclusion was that “business in pursuit of profit still offers the best hope of addressing many of mankind’s most deeply rooted problems. Companies that are making genuine efforts to change the world for the better should be encouraged . . . the future of mankind depends on it” (Fortune, 2015). CVS Health, for example, was highlighted as a company changing the world by removing all tobacco products from its shelves in 2014. After an initial drop in sales, investors responded positively and CVS Health saw a 66 percent increase in its stock price.
How Can Metrics and Reporting Drive Change for Good?
While a shared value framework is helpful for engaging business in improving health, Yach stressed that its broad acceptance will require metrics to ensure that actions by companies and their impact on health are accounted for through quantitative and qualitative measures. There is
2 See http://thevitalityinstitute.org/projects/health-metrics-reporting (accessed May 16, 2016).
3 See http://thevitalityinstitute.org/projects/community-health (accessed May 16, 2016).
a growing understanding among corporations, leading NGOs, accounting bodies, and asset managers that nonfinancial measures have a significant material impact on the bottom line of companies over the long term. “Integrated reporting” platforms are increasingly tracking a few such measures; however, health remains weakly covered within these efforts. Yach mentioned a number of key reporting platforms that incorporate measurements on environment, social factors, governance, and corruption in their frameworks:
- DJSI: The Dow Jones Sustainability Indices are a family of U.S.based benchmarks for investors who understand that sustainable business practices may lead to long-term shareholder value and wish to reflect their sustainability convictions in their investment portfolios.
- FTSE4Good: FTSE4Good Index Series in the United Kingdom is designed to measure the performance of companies demonstrating strong environmental, social, and governance (ESG) practices. These indexes can be used to assess responsible investment and to identify environmentally and socially responsible companies. They operate as a transparent and evolving global standard, and as a benchmark index to track performance of responsible investment portfolios.
- GRI: The Global Reporting Initiative is an international independent organization that helps businesses, governments, and other organizations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, and corruption. It identifies specific indicators, works closely with the United Nations Global Compact, and is global in scope. More information on GRI and its process is included in Chapter 7.
- IIRC: The International Integrated Reporting Council is a global coalition of regulators, investors, companies, standard setters, accountants, and NGOs. The coalition promotes communication about value creation in the evolution of corporate reporting, and provides a framework for integrated reporting based on six capitals. It does not provide specific indicators or standards.
- King III Compliance Report: South Africa’s King Report is a weekly report that highlights major trends across markets, and helps individual investors filter as well as prioritize relevant information. Features include session summaries, short-term investment strategy, macro strategy, technical trading comments, sector-specific comments, and political color and commentary.
Integrating Health into Reporting
The IIRC framework identifies six key capitals that together create a successful business. They include financial capital, manufactured capital, intellectual capital, natural capital, social and relationship capital, and human capital (see Figure 2-1). Yach explained that human capital includes a workforce’s competencies, capabilities, and experience as they align with and support the business. Healthy human capital generates employee loyalty and productivity, which contributes to a healthier bottom line. Health is both an input—through employee health and wellbeing—and an output—through the impact of its core products and services. In this way, Yach suggested, health is a fundamental driver of a successful business model.
The IIRC framework highlights the importance of six capitals as being inputs and outcomes of corporate actions. Yach noted one of these is human capital. Many companies report on human capital through existing reporting standards. Components that are reported include information on diversity and equal opportunity, equal remuneration for women and men, and occupational health and safety training and education.
Most indexes do not include health, or are limited to occupational safety and health. This perception is evolving, as reflected by a recent quote by IIRC Chairman Mervyn King, who stated: “Human capital is one of the six capitals in the IIRC framework, and a critical aspect of it is the health of a company’s employees. The healthier employees are, the more productive they are—and that’s for the benefit of all stakeholders.”
The WHO constitution explicitly states that health is a fundamental human right and defines health as “a state of complete physical, mental and social well-being and not merely the absence of disease of infirmity” (WHO, 1946, p. 1). Yach suggested the concept of health as an input to a successful business model must expand beyond occupational safety and health to ensure that all dimensions identified by WHO are addressed, optimized, and integrated into the culture of health. If companies are not comprehensively measuring health, Yach suggested, it will be more difficult for them to improve health.
As major institutions that employ millions of people and reach billions through their consumer base, businesses are in a unique position to make a radical impact on the landscape of population health. They can even reframe how contemporary public health approaches health promotion. A recent review of 10-K reports to the U.S. Securities and Exchange Commission (SEC) by Vitality indicated that many companies provide a narrative report on issues related to health, including overall health care costs and the existence of workplace health promotion programs. Yach suggested these narratives need to be expanded to include a more com-
prehensive definition of employee health. He elaborated that employee health needs to shift from being considered a cost to be controlled to being viewed as an investment in workforce productivity and morale. As detailed in Chapter 3, there is emerging evidence that companies that invest in a culture of health see significant improvements in financial returns when compared to companies that do not invest in health. This evidence suggests that comprehensive efforts to invest in employee health and well-being are not simply a moral imperative offered within a company’s corporate social responsibility portfolio, but a strategic investment in overall corporate performance. A culture of health does not happen by chance—it must be built as part of a core business strategy. Doing so yields greater value for employees, consumers, and investors. Yach noted metrics that measure a company’s culture of health and the health and well-being of its employees, or “input” metrics, need to be evidence based to ensure they reflect risk material to the bottom line.
Metrics, Yach suggested, also need to focus on risks that are amenable to workplace interventions to incentivize companies to invest in employee health and well-being over time. Yach shared that in working with experts and leading companies, Vitality has identified key employee health and well-being indicators that fit into three categories:
- Governance (leadership and culture);
- Management (programs, policies, and practices); and
- Health risks and outcomes. (The Vitality Institute, 2016)
How Do the Products and Services of Diverse Corporate Players Influence Health?
In addition to employee health and well-being acting as an input and driver of economic success, Yach explained population health is also a critical output of business activity. For more than two decades, it has been recognized that the impact of a company’s activities on the environment can be profound. Energy, water, and land use impact the environment. Environmental pollutants can contaminate the land, water, and air. Historically, such impacts were ignored. Today, they are regarded as economic and legal threats or opportunities for sustainable businesses, and more often managed accordingly. The same concepts apply to human health. As a start, Yach suggested, business leaders need to be more aware of the quantitative and qualitative effects their core business activities have and could have on population health beyond their employee base.
Businesses from all sectors can alter the health profile of their goods and services to improve population health and to create long-term sustainability. For example, Sodexo, a global food services company, states that
the “increasingly health-conscious consumer [base] will force companies to innovate their products and services” to meet growing demand. Roche Pharmaceuticals noted that “payers are increasingly evaluating clinical efficacy, comparative-effectiveness, and cost benefits . . . to determine pricing” (The Vitality Institute, 2016, p. 32). This is increasing access of pharmaceutical drugs to a larger number of people worldwide. Unilever also realizes that the increasingly health-conscious consumer base has transformed from a niche market to a market norm.
The consumer plays a significant role in business decisions through consumer demand, Yach suggested, represented by real-time numbers, trends, and projected reactions. Research on consumer demands, trends, and opinions can generate metrics as further proof that health is growing in importance, and thereby serve as validation for companies reluctant to embrace health as a shared value.
Yach presented a chart listing a selection of the highest revenue-earning Fortune 500 companies from a few key sectors showing their revenue, employee base, and consumer reach (see Table 2-1). Developing comprehensive health and well-being programs for their employee base can have a notable impact, cumulatively reaching millions of individuals through their employee population. A company’s even greater potential lies in creating a ripple effect of change through its core products and services. The retail, food and beverage, and alcohol industries alone have a consumer reach of nearly two-thirds of the global population, which creates enormous potential for change. Yach noted that minimal modifications in the salt, sugar, and saturated fat contents of products consumed by billions, reduced levels of alcohol in a popular global beer brand, and improved adherence to antihypertensive medication all have the potential to benefit human health.
If leveraged through market forces, Yach suggested these actions could achieve health gains at substantially lower cost than many government-led initiatives. In particular, retail holds power as a gatekeeper and as a leader in defining what is consumed. Food, alcohol, and sports goods are examples.
The potential for wide-scale benefits to health is only starting to be realized. Nonetheless, it starts with a retailer understanding that selling health-enhancing and healthier products will benefit their bottom line in the long term. Similarly, Yach suggested, technology is so ubiquitous in society and it can be used as a platform to disseminate health-promoting messages to reach a majority of people. Billions have access to a technology device such as a mobile or smart phone. With the advent of social media, these technologies can become a launching pad for promoting a global culture of health. Technology can also open doors for consumers to better access health care through telemedicine, engage in physical activity,
receive brain stimulation and other eHealth services, as well as use GPS (Global Positioning System) tracking in emergencies.
Measuring success requires looking at the impact of these measures on population health. Yach presented a table showing a list of the most prominent risk factors, including hypertension, childhood underweight, tobacco, alcohol, high BMI, physical inactivity, and lack of fruits and vegetables (see Table 2-2). For each health risk, there is at least one industry that can have an impact on curbing this threat and reduce the total number of deaths it claims per year.
Selling healthy products is only one component of the strategy. Marketing through media campaigns and strategic product placements that increase consumer demand is another powerful tool. After removing high-fat and high-sugar goods from its check-out lines, two-thirds of Tesco customers reported that these moves would help them make healthier choices for their families. This demonstrates that it is not just about what you sell, but it is also about how you market what you sell. Since this change, Tesco reports that “the overall healthiness of its customers’ shopping in convenience stores improved significantly over the first 3 months, based on the data we have about the nutritional content of our customers’ shopping baskets.”
Yach noted that companies that successfully transform and embrace new technologies, opportunities, or threats do so on a solid base of investments in research and development (R&D). Legacy companies with a history based on products and services that were immune for decades to serious pressures to change, including food, alcohol, tobacco, and insurance, have often ignored R&D investments. A company’s process of change often starts through an assessment of its commitment and recent increased investment in R&D. The primary intent of the research should not be just to meet consumers’ taste preferences (in the case of food), but to improve the health qualities of their products and services. Details of R&D priorities are rarely provided by companies, but investors, asset managers, and consumer groups would benefit from such data because they can help distinguish companies who talk about the need to transform versus those who are serious about investing in change.
Product innovation often advances faster than business model innovation. Food companies have produced a range of healthy products that never reach scale due to commodity prices, consumer resistance, or simply a lack of marketing support. Yach noted that sound research needs to guide decisions and be supported by smarter regulations.
Beyond metrics on R&D, Yach suggested that sector-specific metrics
are needed to guide change and assess progress. For example, the food and beverage and retail industries can assess their impact by analyzing the percentage of profits from healthy foods. This affects the per-capita consumption of healthy versus unhealthy products. Insurance companies can measure the impact of products, incentives, and programs on longevity as well as the decline of accidental injuries and deaths. Pharmaceuticals can also use access, coverage, and adherence as assessment points. This increases the sustainability of its consumer base and can expand it. Yach suggested that these examples reflect the IIRC framework for a successful business model by ensuring that health is both a driver and product of economic success. These assessments help investors, consumers, and asset managers measure the impact of human capital through a health lens and give them a better understanding of the overall health of a company, including employee health and well-being as an input and the health impact of products and services as an output.
Yach emphasized that the public and private sectors must find a way to work together where they are aligned toward similar goals; the newly adopted SDGs providing a starting point. He noted that it will not be easy but, by combining shared value and IIRC frameworks, and leveraging data, sectors can already work on improving population health together, measuring and verifying results of positive impact along the way. That is what Yach believes will rebuild trust.
Balancing Conflicts of Interest and Advancing Global Health and Safety
Victor J. Dzau, National Academy of Medicine
In his opening remarks, the National Academy of Medicine (NAM) President Victor Dzau acknowledged that important solutions to many of the aspirations and challenges in global health have been achieved through PPPs. Within cross-sector partnerships, the issue of conflict of interest (COI) will arise and need to be addressed; however, Dzau emphasized that COI should not be viewed as necessarily bad. Using the field of health care as an example, he explained that to be able to deliver important innovations and care to patients and society, the business sector is necessary, along with academics, nonprofits, and the public sector. No one entity has sufficient expertise to solve complex global problems, and PPPs bring together the best collective resources to solve these challenges.
Concerns arise over private companies’ motivations within the health sector, particularly when they are engaged in product development and access focused partnerships that may be engaging only in an effort to
TABLE 2-1 The Potential Influence on Health of Core Products and Services from Diverse Sectors
|Sector||Company||Revenue (millions)||Employee Population||Consumer Reach|
|Retail||Tesco||101,580||500,000||More than 80m shopping trips every week|
|Food & Bev.*||Nestlé||100,116||339,000||Maggi alone is in 1/3 households globally|
|Alcohol*||AB InBev||47,603||154,026||459m hectoliters in 2014|
|Heineken||25,668||76,163||137,983m hectoliters of beer sold in 2014|
|Tobacco*||BAT||42,506||57,000||667b cigarettes sold in 2014|
|Motor Vehicles||Volkswagen||268,567||583,423||10.21m cars sold in 2014|
|Toyota||247,703||338,875||10.23m cars sold in 2014|
|Social Media||1,550||9,199||1.55b monthly active users|
|300||6 000||87m unique visitors in 2014|
|Pharmaceuticals*||Johnson & Johnson||74,331||126,500||More than 1b lives touched daily|
|Novartis||59,593||133,413||More than 1b people reached, 2014|
|Medical Devices||General Electric||148,321||305,000||N/A|
|Electronic/Tech*||Samsung||195,845||498,000||307m smartphones sold, 2014|
|Apple||192,795||115,000||800m iOS devices sold by mid-2014|
|Insurance||AXA Advisors||161,173||96,279||103m clients in 59 countries (AXA Group)|
|Allianz||136,846||147,000||86m clients in 70+ countries|
|Sports*||Nike, Inc.||27,000||62,600||900m units moved annually|
|Adidas||19,200||53,7.1||660m units produced per year|
NOTES: *Denotes a sector dependent on retail to get their product to consumers. AB InBev = Anheuser-Busch InBev; BAT = British American Tobacco; N/A = not available; PMI = Philip Morris International.
SOURCES: As presented by Derek Yach on December 3, 2015. Data found at http://fortune.com/global500.
TABLE 2-2 Selected Health Risks Amenable to Reduction Through Corporate Actions
|Risk||Deaths (2010)||Business Sector||Corporate Reach (millions/year)||Actions to Decrease Burden Within a Decade|
|Hypertension||9,395,860||Pharma/medical devices/drug distribution||6,384/5,628/5,760||Better screening, treatment, and medicine adherence|
|Childhood underweight||860,117||Food/retail||27,240/3,840||Bottom of pyramid innovation|
|Tobacco||6,297,287||Tobacco/retail||3,840/3,840||Reduced risk products|
|Alcohol||4,860,168||Alcohol/retail||4,692/3,840||Road safety and responsible drinking|
|High BMI||3,371,232||Food/retail/pharma/sports||27,240/3,840/6,384/4,920||Healthier nutrition and calorie reduction|
|Physical inactivity||3,183,9400||Sports||4,920||Active transport and reduced sedentary behaviors|
|Dietary lack (fruits and vegetables)||F = 4,902,242 V = 1,797,254||Retail/food||3,840/27,240||Increase average daily portions by 1 (e.g., 2 to 3)|
NOTE: BMI = body mass index.
SOURCES: As presented by Derek Yach on December 3, 2015. Data from Lancet, 2015.
seek “future profits or markets or to control the agenda of international agencies.” However, consistent with the principles of shared value, Dzau believes companies can both do good and do well. Working together through partnerships helps corporations better understand the market and the challenges on the ground and ultimately better meet societal needs.
To address COI that arise when working in partnership, many organizations have adopted various practices. Dzau pointed out that COI has been defined as a “set of conditions in which professional judgments concerning a primary interest (e.g., a patient’s welfare or validity of research) tends to be unduly influenced by a secondary interest (e.g., financial gain).” He noted that the secondary interest is not always financial gain and many other interests can unduly influence judgment. He also explained that personal COIs are different from institutional COIs and cautioned that although they do overlap, they are different and it is important to separate them. Dzau said there is also the issue of actual COI versus the appearance of COI. He suggested that it is important to recognize and deal with the appearance of conflict; however, often, most institutions do not separate actual from appearance simply because at the end of the day, issues arise whether your judgment was unduly influenced by secondary gain or personal interest, or there is the appearance of the decision being influenced.
Commenting on principles for identifying and assessing COIs, Dzau mentioned that in 2009, the Institute of Medicine released a report that examines COIs in medical research, education, and practice and in the development of clinical practice guidelines. He noted that the severity of a conflict of interest depends on the likelihood that professional decisions made under the relevant circumstances would be unduly influenced by a secondary interest and on the seriousness of the harm or wrong that could result from such an influence (IOM, 2009).
Dzau pointed out that there are quite a few good practices and guidelines available for managing COIs in PPPs. He mentioned that, for example, Omobowale et al. (2010), in their review of policies and interviews to understand how COIs can be mitigated and managed in PPPs, found that a range of good practices exist, including accountability and governance, acknowledgment and disclosure of possibility of conflict of interest, abstention and withdrawal from the decision-making process, training, whistle blowing, public reporting and transparency, and independent monitoring. Using examples from Global Alliance for Vaccines and Immunization (GAVI) and PATH, Dzau summarized the guidelines and procedures that these organizations are using to address COIs. He mentioned that the GAVI secretariat hires procurement expert(s) to address COI issues as related to procurement and links them up with
broader policy on COI. He pointed that this is a kind of independent objective decision making that applies to specific companies with different partners. In this case, all of the partners are required to complete a conflict of interest form when executing contracts and participating in meetings. He said that PATH, on the other hand, puts more on the value side for disclosure and transparency, rather than implementing an external monitoring mechanism to address COI. Dzau suggested that it would be a good practice for every company or NGO to disclose or report any kind of conflict or financial relationship as it develops.
Dzau summarized his experiences dealing with COI policies at Innovations in Healthcare (formerly the International Partnership for Innovative Healthcare Delivery), a nonprofit organization hosted by Duke University and founded by Duke Medicine, McKinsey & Company, and the World Economic Forum while Dzau was Chancellor at Duke University; dealing with personal COI at Duke University and as the CEO of Innovations in Healthcare; and lastly dealing with COI policies as the President of the NAM. When asked who is responsible for responding to questions and addressing public reactions about Innovations in Healthcare hosted by Duke University, Dzau answered that depending on the level of inquiry, the management team responds, which consists of communicators, lawyers, faculty, and others. He noted that in assuming his current position as President of the NAM, he stepped down from all corporate boards and ended all commercial relationships because of the Academies’ role in providing independent advice and recommendations to Congress and other national and global policy makers. In this capacity, there cannot be any real or perceived COI.