Innovative financing strategies for health amid climate challenges

India faces a dual challenge in its response to the climate crisis: First, the health care infrastructure struggles to cope with the emerging climate-related health risks, with frequent disruptions from heatwaves, floods, and cyclones. Secondly, the health care sector itself significantly contributes to environmental degradation, accounting for approximately 2% of national carbon emissions, growing at 5% annually, with 81% emanating from the medical supply chain.

To effectively tackle these challenges, a comprehensive strategy prioritising investments in climate-resilient health systems and sustainable practices is crucial. However, the government's contribution of approximately 1.8% of the Gross Domestic Product (GDP) to public healthcare underscores a significant funding inadequacy. This deficit hampers the construction of climate-resilient health systems, as insufficient resources impede the integration of advanced technologies, infrastructure improvements, and sustainable practices. Increasing the healthcare budget is, therefore, essential, not only to enhance overall healthcare but also to strengthen the nation's capacity to address the health impacts of the climate crisis. Allocating resources to climate-smart initiatives in India can drive technological advancements, improve healthcare delivery, and ensure the urgently needed long-term environmental and public health sustainability.

Health-tech enterprises are pivotal in developing and deploying technologies essential to build climate-resilient health care systems. These enterprises innovate across various sectors, from sustainable infrastructure and advanced point-of-care diagnostics to efficient supply chain management. For example, Pluss' innovative Celsure containers, which use phase change materials, significantly reduce energy for temperature control, cutting 2,500 tonnes of CO2 emissions since 2016 and saving over 30% in HVAC energy. They maintain precise temperatures for up to 120 hours without electricity, optimising the transport of temperature-sensitive medical supplies.

Additionally, health tech enterprises are driving the adoption of Artificial Intelligence-driven point-of-care diagnostic tools, telemedicine, and sustainable logistics solutions like drone-based delivery systems – which are critical in ensuring supply to otherwise hard to reach regions, and waterless hygiene products. These innovations, tailored to diverse geographic and socio-economic contexts, ensure advanced health care access in remotest areas with minimal environmental impact. They support the reduction of India's health care sector emissions, aligning with the nation's goal of net zero emissions and promoting a sustainable economy and society. This approach is critical in making health care systems more sustainable, efficient, and equitable amid the climate crisis.

With the budgetary allocations to health care remaining steadfastly below 2.5% of the GDP, the government must unlock the doors for greater private investments to flow into the sector. This will entail blending traditional budgetary support with innovative financing mechanisms, such as green bonds, climate funds, and blended finance. These tools can attract widespread investments from a broad range of sources. Blended finance offers a powerful mechanism to maximise the impact of government and philanthropic funding in the health care sector. Using these funds as catalytic capital to de-risk private investments, making them more accessible for social health care ventures that often struggle to qualify for traditional funding. This approach enables these ventures to secure the essential capital needed for expansion, thereby enhancing their reach and impact. The government can further catalyse investments by providing tax incentives or subsidies for investments in climate-resilient health care infrastructure.

Propelled by leading organisations like United States Agency for International Development (USAID), the Rockefeller Foundation, and IPE Global, blended finance is swiftly gaining prominence as a potent mechanism for impact investment. Its significant role in funneling funds into the healthcare sector has garnered widespread acknowledgment, especially through initiatives like the Impact Investment Initiative (Triple I) for Global Health. This initiative, which was endorsed by G7 leaders at the 2023 Hiroshima Summit, underscores the remarkable capacity of blended finance to enhance the effectiveness of philanthropic funding in healthcare.

By allowing corporate social responsibility (CSR) funding for blended finance mechanisms, the budget can empower nascent and small health care enterprises to broaden their reach into Tier 2 and rural areas. Furthermore, the government must develop mechanisms to transition CSR funding from short-term projects to long-term systemic initiatives. Revising current regulations to allow CSR investment in developmental projects through pooled resources is crucial for catalysing comprehensive ecosystem-level reforms.

The recent listing of the first entity on India's Social Stock Exchange marks a significant milestone, opening a new pathway to bolster investment in climate-oriented health care solutions. This innovative platform can attract environmentally conscious investors, aligning financial interests with sustainable and socially responsible goals. The Social Stock Exchange, in essence, extends India's commitment to Environmental, Social, and Governance (ESG) measures, offering a unique opportunity for investors to contribute to transformative health care projects that address the urgent needs posed by the climate crisis. By increasing tax breaks for key climate-adaptive health care solutions, the funding sources for the sector can be further broadened.

Improving Indian policies and plans that acknowledge climate's impact on health is also imperative, particularly in terms of action-oriented implementation. While the National Action Plan on Climate Change (NAPCC) recognises the health impacts of the climate crisis, such as the spread of vector-borne diseases, it limits the scope to recommending further research. A more effective approach would involve concrete steps to strengthen health care infrastructure. This includes enhancing primary, secondary, and tertiary health care facilities and improving public health measures like vector control, sanitation, and clean drinking water supply. Budget allocations for green buildings and resilient facilities deepen the impact of flagship government programmes like the National Health Mission (NHM) and Ayushman Bharat.

The transformative potential of these initiatives rests on the synergy of government backing, creative financial strategies, and promotion of health tech enterprises. Together, they can build a health care system in India that is not only equitable and accessible but also resilient in the face of the mounting challenges posed by the climate crisis.

This article is authored by Himanshu Sikka, project director, SAMRIDH and chief strategy & diversification officer, IPE Global.