The Wates Principles and the $1.8 billion opportunity for pharma
In December, the Wates Principles were published as new guidance for large private companies, reiterating the need for them to behave in a way that benefits society as well as the economy, building trust and confidence among all stakeholders.
It is an important moment, recognizing the impact of the private business sector, and sits alongside the revised UK Corporate Governance Code for listed companies. Both documents place expectation on leadership teams to think long-term, so will they be the tipping point for companies turning their purpose into sustainability practice?
Improving health is the core purpose of the pharmaceutical industry, but there is an urgent need for businesses to think beyond their products and ensure that every aspect of their business is behaving in a way that benefits society.
If the new corporate governance approaches are not enough, then companies just need to look at the wider operating environment to see why they need to act fast. The relationship between patients, healthcare providers and medicines is rapidly changing as purchasers are looking for ‘whole person’ solutions that consider prevention and quality of life as part of the purchasing decision.
Dominic King, who leads the health unit of Deepmind, recently called on the health service to “move to value-based and outcomes-based reimbursement”1.
The win-win of tackling the Sustainable Development Goals (SDGs) has been much discussed since the $12 trillion market opportunity was identified by the Business and Sustainable Development Commission2.
Health and wellbeing accounts for $1.8 trillion2 of the market, which is a huge opportunity for the pharmaceutical industry. While pharmaceutical businesses are aware of the need to actively demonstrate access to medicine, few genuinely see sustainability as a growth opportunity.
Opportunities for companies leading the way
Finding your purpose as a business has become a call to action in itself. The purpose word is used 10 times3 in the UK Corporate Governance Code and it is an important starting point for many board directors to articulate the value their business adds beyond profit.
But however well-constructed they are, purpose statements and the values that support them are just words on a page without programs to bring them to life. As statistics from PWC’s report on meeting the challenge of the Sustainable Development Goals show, 72% of companies mention the goals in their reporting but only 23% disclose key performance indicators and targets which show they are taking action and monitoring performance4.
The more progressive pharmaceutical companies have strong CSR programs with a humanitarian purpose that maximizes the health knowledge gained through their work, but the majority appear to be keeping sustainability at arm’s length from their core business.
Health and wellbeing solutions direct to the public are already being driven by the FMCG sector, with Unilever (LSE: ULVR), for example, promoting health and wellbeing on a massive scale. As part of the Unilever Sustainable Living Plan, Unilever has set itself the goal of helping more than one billion5 people take action to improve their health and wellbeing, through programs on handwashing, safe drinking water, oral health and self-esteem.
A program run by its Lifebuoy brand, the world’s number one antibacterial soap sold in nearly 60 countries, aims to change the handwashing behavior of a billion people by 2020 across Asia, Africa and Latin America. This is one of the world’s largest hygiene promotion programs.
Since 2010, around 337 million 6 children, parents and new mothers have been reached by its targeted ideas encouraging people to wash their hands. Lifebuoy has developed a special approach for primary schools to make handwashing fun and engaging, so millions of children in poor and rural communities get the benefits of better hygiene.
Lifebuoy is one of Unilever’s Sustainable Living Brands, which were together responsible for almost half Unilever’s growth in 2015, when they grew 30%5 faster than the rest of the business.
So what’s stopping some pharma companies?
The issues of sustainability and purpose have reached most board tables but, while some global organizations are setting ambitious targets, other senior leaders are stalling. Some are confused about where to start and others afraid of taking action in case it doesn’t work.
Conversations we have had show that many are paralyzed by a desire for instant perfection and sustainability solutions are getting stuck in complex planning loops.
Leaders need to release themselves from the need for a ‘big gesture’ and recognize the power of starting small. To go back to their innovation roots and get others involved from across and beyond the business. Look at what competitors, peers and leaders in other fields are doing and adapt initiatives to address issues relevant to their business. Think the impossible and then find partners who can help turn it into reality. Test and learn, inspire and share, start the conversation.
Without evidence of action, the Wates Principles and UK Corporate Governance Code cannot be truly fulfilled. Perhaps this year, as pharmaceutical leaders consider their responsibilities alongside the reality of progress against the SDGs, the focus will shift from a reliance that ‘we are’ to looking at actual behaviours and a recognition that ‘we do’. Perhaps the new principles and code can finally crack the barriers to action.
1 The Times, Pay NHS providers based on results, says Deepmind’s chief clinician, at https://www.thetimes.co.uk/article/pay-nhs-providers-based-on-results-says-google-s-deepmind-chief-bn0t3h9xj [last accessed January 2019]
2 Business Commission, Sustainable business can unlock at least US $12 trillion in new market value, and repair economic system, at http://businesscommission.org/news/release-sustainable-business-can-unlock-at-least-us-12-trillion-in-new-market-value-and-repair-economic-system [last accessed January 2019]
3 FRC, The UK Corporate Governance Code, at https://www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/2018-UK-Corporate-Governance-Code-FINAL.pdf [last accessed January 2019]
4 PWC, SDG Reporting Challenge 2018, at https://www.pwc.com/gx/en/services/sustainability/sustainable-development-goals/sdg-reporting-challenge-2018.html [last accessed January 2019]
5 Unilever, Unilever Sustainable Living Plan helping to drive growth, at https://www.unilever.com/news/press-releases/2013/13-04-22-Unilever-Sustainable-Living-Plan-helping-to-drive-growth.html [last accessed January 2019]
Places to start
- Developing health and wellbeing led behaviour change programs that focus on prevention: This is being done by consumer brands across the board but with all the expertise available to the pharma industry they can and should be leading the prevention agenda.
- Addressing the challenges around packaging: There is a critical need to develop a circular economy overall and to demonstrate a commitment to reduce, reuse and recycle packaging. From the World Economic Forum Circular Economy programme to the UK Plastics Pact run by WRAP, there are clear opportunities to get involved, drive change and build trust.
- Supporting social mobility: Social mobility is a critical issue for all businesses and one that the pharma industry can openly support, helping to secure talent for the future.