The Rise of Health Metrics in ESG Investing

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Some of the world’s most sophisticated investors have been using Environmental, Social, and Governance (ESG) data for years to help identify companies that perform well over time in the market.1Their belief that high ESG scores correlate with high corporate financial performance is now supported by a large and rapidly growing body of research. Deutsche Bank’s much-discussed study, for example, found that 2,200 of ESG studies conducted between 1970 to 2015 report a positive ESG–Corporate Financial Performance (CFP) relation.2

The metrics used in these ESG frameworks are constantly evolving, however. Everything from changing regulations to technology has contributed to the debate over which ESG metrics should be reported (i.e., materiality) and how these items should be measured (i.e., standardization).

Now, compelling new research is pointing to health and well-being as the next big material element investors should be incorporating into their ESG analysis.

Why Health and Well-being, Why Now

Several recent peer-reviewed studies, using simulation and past market performance, show that businesses with strong employee health and well-being programs outperform the S&P 500 significantly. For example,  portfolios composed of companies that scored high on Corporate Health Achievement Awards (CHAA) appreciated by 204% to 333% compared to the S&P 500 Index appreciation of 105%.3 A different study, comparing 45 companies who received high scores in a health and wellness health assessment, appreciated by 235% compared to the S&P 500 Index appreciation of 159% over a 6-year simulation period.4

Although the correlations in these studies do not necessarily confirm that health promotion is the cause of increased corporate financial value, it is clear that companies who have invested in their employees’ health and well-being are consistently yielding better value for their investors.

One of the leading ways that companies invest in their employees’ health and well-being is through corporate wellness programs. Eighty-five percent of large companies in the United States routinely offer wellness programs.5 This suggests that effective, comprehensive, and measurable corporate wellness programs may be the next big strategic opportunity for organizations to manage risk and increase financial value.6 Although health investment may be leading trend for companies, when it comes to ESG, measurement and comparison of such programs presents significant challenges for investors.

The Right Metric

How then should ESG evaluate and compare investments in corporate wellness programs? Beyond the initial investment, there are also questions about the effectiveness and utilization of this investment over time. For example, many company wellness programs struggle with low participation rates, or offer only piecemeal interventions that don’t comprehensively address their employees’ health. For example, smoking cessation programs are offered by 77% of wellness programs,5 but only 15.1% of the U.S. population is a chronic tobacco user,7 and only 7% actually utilize the benefit.5 Other programs rely on financial incentives, with the U.S. outspending other countries with financial incentives, but still facing challenges with low participation rates.8

Another approach to help increase utilization of workplace wellness program investments would be to use passive interventions (i.e., changes to employees’ circumstances that make unhealthy decisions harder or impossible to make, and healthy options easier and more attractive) instead of active interventions (measures that help motivate each individual to change their own behavior). Implementation of passive, environmental interventions that have been scientifically shown to support human health and well-being offers a promising method to improve participation and address whole-person health. New programs, tools, and assessment strategies are helping bring transparency to this strategy.9,10

The GRESB Health & Well-being Module – launched in 2016 – is a key tool for systematic assessment, scoring and benchmarking of health and well-being in real estate. This 10-question survey provides investors and property companies with insight into leadership, needs, and implementation of health and well-being features in the built environment. The module can help investors and companies understand where they currently stand in terms of health promotion for both their own employees, and for their tenants and customers through products and services.

Participating in the module also encourages companies and funds to start collecting health and well-being data that will likely be more and more frequently requested by investors and other reporting agencies. Pilot respondents may be some of the first to unlock an entire new realm of value understanding for investors by getting a jump start on addressing any privacy, measurement, or data collection challenges that may initially arise through the process.

Performance-based building certification is also emerging as a comprehensive way to identify and implement strategies toward health promotion in companies worldwide. Building standards – such as the WELL Building StandardÔ – may act as a comparable and standardized ESG metric for employee health and well-being that can potentially help investors predict long term growth of corporate financial value.

We encourage proactive investors, companies, and funds to get in front of the emerging ESG research on health and well-being and become leaders in this space.

If you would like to learn more about the latest research and key services for health and well-being in the built environment visit


This was originally posted on the GRESB Insights Blog.


  1. EY. Is Your Nonfinancial Performance Revealing the True Value of Your Business to Investors?; 2017.
  2. Friede G, Busch T, Bassen A. ESG and financial performance: aggregated evidence from more than 2000 empirical studies. J Sustain Financ Invest. 2015;5(4):210-233. doi:10.1080/20430795.2015.1118917.
  3. Fabius R, Loeppke RR, Hohn T, et al. Tracking the Market Performance of Companies That Integrate a Culture of Health and Safety. J Occup Environ Med. 2016;58(1):3-8. doi:10.1097/JOM.0000000000000638.
  4. Grossmeier J, Fabius R, Flynn JP, et al. Linking Workplace Health Promotion Best Practices and Organizational Financial Performance. J Occup Environ Med. 2016;58(1):16-23. doi:10.1097/JOM.0000000000000631.
  5. Mattke S, Liu H, Caloyeras J, et al. Workplace Wellness Programs Study. RAND Corporation; 2013. Accessed January 30, 2017.
  6. Malan D. Health Reporting and a Healthy Bottom line. 2015.…. Accessed March 22, 2017.
  7. Jamal A, King BA, Neff LJ, Whitmill J, Babb SD, Graffunder CM. Current Cigarette Smoking Among Adults United States, 2005-2015. MMWR Morb Mortal Wkly Rep. 2016;65(44):1205-1211. doi:10.15585/mmwr.mm6544a2.
  8. Willis Towers Watson. Employee Health and Business Success.; 2016.
  9. Delos Living LLC. The WELL Building Standard. NY; 2016.
  10. Malan D. Reporting On Health: A Roadmap for Investors, Companies, and Reporting Platforms. 2016. Accessed March 23, 2017.