The need for sustainable strategies to conduct business responsibly and ethically has prompted healthcare IT industry players to invest in ESG practices. Robust ESG policies can foster innovation, build trust, minimize risk, reduce costs and boost trust among stakeholders. Regulators and industry leaders are assessing the demand for ESG in the healthcare sector, which can play an invaluable role in enhancing healthcare access and fostering environmental justice, diversity and workplace safety. Prominent companies have furthered their emphasis on patient access, service distribution and quality of care with a focus on social issues and sound governance.
Stakeholders, including patients, employees, shareholders and bondholders, expect ESG to have a compelling impact on the healthcare sector. Soaring demand to minimize environmental impact and bolster product quality, labor management, access to finance and human capital development have played a pivotal role in reshaping the industry. Moreover, good corporate behavior, anti-competitive practices and transparency have remained catalysts in the landscape.
In a bid to bring medicine and vaccines to save and improve lives, increasing access to healthcare may partly depend upon a commitment to ESG performance. The prevailing dynamics can foster sustainable value for society and business.
ESG action integrated into business strategy has gained ground as climate resilience garners headlines to build future healthcare organizations. Low-carbon sustainable health systems have become the talk of the town amidst the healthcare sector being infamous as a major emitter of GHG and other pollutants. For instance, Philips has been at the forefront as it has aligned its goals with UN Sustainable Development Goal 13, “Take urgent action to combat climate change and its impacts.” Overconsumption of resources, pollution, waste and soaring demand for healthcare have furthered the need for strong ESG performance.
Philips focuses on a more agile and simplified operating model, supply chain reliability, patient safety, and quality. The company is also investing in products that consume less energy and materials and contain recyclable substances. Rising adoption of digital technology, shifting consumption patterns and transition to value-based care provide opportunities for leading players to underpin solutions that enhance people’s health and protect the planet.
Employee safety risks, soaring costs of care, access to healthcare and privacy & data security have spurred the need for a robust social pillar in business operations. Reported health disparities and the prevalence of behavioral and mental health issues have compelled organizations to infuse funds into digital technology in healthcare. For instance, WELL alluded to zero reportable data breaches in 2021 in its inaugural ESG Report.
Harnessing the insights and knowledge of a diverse workforce and a strategic approach to employee development and workplace inclusion need bullish social goals. Notably, 70% of senior executive team members represented a visible minority at WELL as of June 2022. Meanwhile, Cardinal Health has fostered its diversity, equity and inclusion efforts with the representation of a 71% female and 14% ethnically diverse workforce in its executive leadership team (according to its FY 2022 ESG Report).
Incumbent players have raised the bar with investments in corporate governance, board diversity, accounting, ethics and corporate behavior. An emphasis on ESG priorities can help build trust and make informed decision-making. Notably, the healthcare sector has evolving regulatory requirements, prompting prominent companies to underscore the regulatory aspect. In FY 2022, McKesson integrated regulatory excellence into its business strategy playbook as a major foundational discipline. It has also upped its investments in traceability and transparency. The company is gearing up for the next stage of the Drug Supply Chain Security Act (DSCSA), which is slated to be witnessed in November 2023. The prescription drugs are expected to be serialized in the U.S. and need to be traceable throughout the supply chain.
ESG will continue to gain ground in the mission-driven nature of the industry as its integration into the core of the business will be pronounced in the ensuing period. Forward-looking companies have furthered their focus on organic & inorganic strategies, including but not limited to collaboration, mergers & acquisitions, technology advancements and innovations. For instance, in November 2022, the GE Board of Directors approved the spin-off of GE Healthcare. Under the ticker “GEHC,” the company was expected to start trading on Nasdaq on January 4, 2023. These trends suggest the global healthcare IT market could witness around 29.3% CAGR during the forecast period.
About Astra – ESG Solutions By Grand View Research
Astra is the Environmental, Social, and Governance (ESG) arm of Grand View Research Inc. – a global market research publishing & management consulting firm.
Astra offers comprehensive ESG thematic assessment & scores across diverse impact & socially responsible investment topics, including both public and private companies along with intuitive dashboards. Our ESG solutions are powered by robust fundamental & alternative information. Astra specializes in consulting services that equip corporates and the investment community with the in-depth ESG research and actionable insight they need to support their bottom lines and their values. We have supported our clients across diverse ESG consulting projects & advisory services, including climate strategies & assessment, ESG benchmarking, stakeholder engagement programs, active ownership, developing ESG investment strategies, ESG data services, and building corporate sustainability reports. Astra team includes a pool of industry experts and ESG enthusiasts who possess extensive end-end ESG research and consulting experience at a global level.
Need expert consultation around identifying, analyzing and creating a plan to mitigate ESG risks related to your business? Share your concerns and queries, we can help!