As the impacts of climate change intensify, so do risks to essential services and infrastructure, including healthcare systems. Recent research found that one in 12 hospitals worldwide could be forced to close because of extreme weather events by the end of the century – that’s 16,245 facilities. At the same time, healthcare systems face increased demand due to the negative health impacts that climate change are expected to bring.
Climate change causes floods, hurricanes and wildfires, all of which threaten people and create additional urgent healthcare demand. This is why adaptation, as well as mitigation, is becoming an urgent imperative. “There is a clear need for more pre-emptive climate adaptation in healthcare,” says Jennifer Wu, Global Head of Sustainable Investing at J.P. Morgan Asset Management. “Factoring future physical climate risks into the design and operation of healthcare facilities could help to mitigate future harm, but it will take significant investment.”
Currently, however, less than 0.5 per cent of multilateral climate adaptation funding has explicitly targeted the healthcare sector. The private sector can play a role in scaling this up.
Companies looking for finance include those adapting their business models to take account of climate change risk, and those developing specific products and solutions to combat climate-related risks to health. These products and solutions can span multiple sectors: healthcare system finances, for example, can be made more resilient through insurance products that incentivise climate risk management while also ensuring provision for financing in the event of climate-related disasters.
“Investors can gain access to the healthcare adaptation theme via investment in private sector companies across the entire healthcare value chain – and beyond,” Wu says.
Water everywhere
One important area of focus, especially in lower-income countries, comprises projects that provide reliable clean water – a critical platform for good health everywhere. Efforts collectively known as WASH (water, sanitation and hygiene) may actively seek to leverage private investment through changes to regulations and new financial instruments. The Indian government, for example, has classified WASH with “Priority Sector Lending” status, and mandated commercial banks – which were previously unwilling – to fund microfinance institutions that offer WASH financial products.
And interest is growing. By some estimates, investment opportunities totalling $125bn will open up to the private sector by 2030 if the world is to meet the UN’s Sustainable Development Goal 6: Clean Water and Sanitation. Another priority area, and one brought into sharp focus by the Covid-19 pandemic, is the need for investment to accelerate vaccine development, notably for diseases that will become more prevalent as the climate changes. A cornerstone of public health provision for decades, the vaccine market is shifting as climate change leads to the wider spread of water-, food- and vector-borne infectious diseases such as cholera, malaria and typhoid. A 2022 study on 375 infectious diseases worldwide found that more than half had been exacerbated by climate change, including those spread by insects.
Wu highlights many other examples of opportunities for investors across the healthcare value chain, from disease surveillance and heat and air pollution early-warning systems to the cold chain technology essential for transporting and storing medicines in warmer weather conditions.
Flying doctors
One high-flying technology – the adoption of which is growing fast – is the use of drones to deliver medical services and supplies, especially in remote and hard-to-reach areas. According to business research firm Roots Analysis, the medical drones market is expanding significantly, with a projected growth rate of 15 per cent up to 2035. The impact of climate change could be a significant factor in its future expansion.
“As environmental shifts result in more frequent and severe natural disasters, traditional healthcare infrastructure faces increasing challenges,” says Pemba Lahmo, Associate Principal at Roots Analysis. “Medical drones may serve as a crucial solution, providing swift and efficient responses to emergencies and delivering essential medical supplies to inaccessible or disaster-affected areas.”
Garuda Aerospace, an Indian start-up, has successfully used drones to deliver medical supplies to regions impacted by heavy rainfall. Companies operating in this field have collectively raised more than $3bn since 2016, but need significant additional funds to improve and optimise the technology to cope with heavy rainfall and other extreme weathers. “To develop the necessary cutting-edge technologies for efficient medical drone deliveries in challenging conditions, industry players are seeking investments and funding from key investors,” Lahmo says.
These and many other adaptation-related investment opportunities in the healthcare space have flown beneath the radar so far. Even where they are recognised as opportunities, their connection with climate adaptation and how this could influence their future potential is generally under-appreciated. But Wu says canny investors are adding such projects to their portfolios, sometimes drawn by the “triple dividend” of adaptation.
“This refers to the way that adaptation solutions can help to avoid future economic losses and deliver positive economic returns, as well as providing additional social and environmental benefits,” she says.