Building “Health” into Corporate Reporting

Derek Yach, Chief Health Officer, Vitality 12 October 2015

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Growing Recognition of Non-Financial Measures as “Material” to Sustained Profitability

Integrated Reporting platforms are increasing in number and relevance

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SDGs: New Opportunities for Public-Private Engagement to Tackle Major Global Risks

Goal 17: Strengthen the means of implementation and revitalize the global partnerships for sustainable development

“To be successful, the goals need a united attempt from all businesses and markets. Organizations can think about their part in reaching these goals through integrated thinking and enhancing their reporting process. By prompting consideration of the six capitals in decision-making and resource allocation – thinking about the wider ramifications beyond the purely financial – Integrated Reporting is an important tool.” (IIRC website)

Source of visual: United Nations

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“A Problem Cannot be Solved in the Same Consciousness in Which it Arose” – Einstein

Companies who lead the indices of reporting bodies are valued by investors and consumers

Environment | Major social issues | Governance

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Investing for Good Creates Financial Value

Source: Cornerstone Capital September Report

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Why Include “Health” in Reporting?

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Health Contributes to a Healthy Bottom Line

Health is key to every company’s productivity, morale, innovation and a lack thereof drives healthcare costs

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Health has to date been narrowly defined as an occupational health and safety issue effecting employees and rarely considered as a driver of new business opportunities - except in relation

to pharmaceuticals and medical devices

1. For Workplace Health, “Health” Needs Reframing

Source: Global Reporting Initiative (GRI), G4 Guidelines

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Portfolio of ACOEM award winners vs. Standard and Poor’s 500 (S&P 500, 500 large companies with stock listed on the NYSE or NASDAQ)

Source: Fabius et al. (2013). The link between workforce health and safety and the health of the bottom line. JOEM. 55 (9), 993-1000.

Effective Workplace Health Programs Show Solid Financial Returns to Investors

The portfolio of companies that won awards for nurturing a “Culture of Health” outperformed the market over a 13 year period

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Medium-low Medium Medium-high High Experts $-10,000.00

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Women 2013

Women 2014

Men 2013

Men 2014

A New Example: Vitality’s Health Promotion Reduces Costs - Evidence from McKesson (2015 Koop Award for Workplace Health Winner)

Per-Person Healthcare Cost Savings Relative to Low-engagers

Source: Study by Andrea Feigl (Harvard). In process of publication.

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2. Core Products & Services Impacting Health Often Already Drive Long-Term Profitability

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2. For More “Unlikely” Companies, Opportunities to Create Markets for Health are Expanding

Many companies continue to contribute to the burden of disease but are transforming products and marketing to reverse this profitably

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• Leading companies recognize the value to their bottom line of investing in the health of communities they serve or derive employees from• Many South Africa companies are

pioneers in understanding this

3. The Time is Ripe for Stronger Corporate-Community Engagement for Health

It is time to build on existing reporting frameworks for health

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“Human capital is one of the 6 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.” –Mervyn King

Employee Health

IIRC Framework Implicitly Includes Employee Health

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+ Employee health

Health Fits in Existing Conceptual & Reporting Frameworks

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What Type of Health Metrics are Needed?

KEY:• Leadership and Culture = Governance• Programs, Policies and Practices = Management• Health Risks and Outcomes = Evidence of Success

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What Will Happen if We Get This Right? Profits and Health Gains!

Source of graph: Malan et al, in press

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What Happens if We Get This Right? People Feel the Difference!

Vitality Member Uses Fitness Device to Lose 40 Pounds“I am happy to say I have lost 40 pounds in 9 months all without ever setting foot in a gym!” - Andrew Cooke, VP of Property Management, Hines as agent for Morgan Stanley

Vitality Member Loses 93 Pounds and Gains a Healthier Lifestyle “I love setting challenging goals and working towards them. Vitality allows me to do that to improve my health, so it’s very motivating and addictive.” - Doris Chavez, Assistant Director, Accounts Receivable at McKesson Medical-Surgical

Vitality Member Breaks a 16 year Smoking Habit “I can honestly say thatthe [smoking cessation] program offered on the Vitality website worked for me, and I know that this time it is for real.”- Brandon Bahlawan, Damage Claims Administrator, Aggreko

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Thank You

dyach@thevitalitygroup.com