4 actions for healthcare leaders to advance sustainability through ESG

As climate-related disasters and health conditions rise in prevalence across the country, it will be providers who respond. Therefore, a focus on environmental efforts aligns with healthcare’s overall mission to not only improve health outcomes for patients and communities but to help prevent certain illnesses in the first place.

Some healthcare organizations have demonstrated leadership in advancing their environmental, social and governance (ESG) programs; others have spent the last few years educating themselves about ESG. While the healthcare industry’s adoption of ESG has been varied, there is a new sense of urgency among the entire industry.

Throughout this journey, many healthcare organizations have found their mission-driven activities align with the social arm of ESG, as they make inroads to improve health equity in their communities and diversity, equity and inclusion within their workforces. Now, changes on the horizon, including regulations and efforts aimed at addressing social determinants of health, are motivating healthcare organizations to focus their attention on the environment.

Regulators such as the U.S. Securities and Exchange Commission are proposing requirements for companies to report their environmental impact. Last year, the Department of Health and Human Services launched the Health Sector Climate Pledge, in which more than 100 healthcare organizations voluntarily committed to cut carbon emissions by 50% by 2030 and achieve net-zero emissions by 2050. Additionally, there are growing expectations among consumers, employees and other stakeholders for companies to provide greater transparency on their impact on the environment. These expectations may have an outsized effect on the healthcare industry.

To successfully implement environmental initiatives, there are key steps healthcare providers can take:

• Establish buy-in at the top: Reducing carbon emissions requires investment, so the board and C-suite should be spearheading the effort, allocating resources and capital. Moreover, because healthcare organizations have various competing priorities, boards should have a dedicated plan to receive frequent reports on the organization’s ESG progress, as well as a timeline to share the information publicly with employees and the community. This approach positions ESG to stay top of mind.
• Create a mission-driven ESG strategy: Before starting, evaluate which ESG issues impact your organization’s mission, business priorities and key stakeholders. By going through this exercise, leaders can create an ESG strategy that is relevant and, therefore, much more likely to be executed.
• Form a cross-functional team charged with ESG: ESG impacts virtually every facet of a healthcare organization’s operations, from supply procurement and patient experience to construction and design. Complying with ESG regulations and establishing trust with key stakeholders through transparent reporting is too large a job for one person. Instead, by forming a team with representatives from different departments who are responsible for creating and executing ESG goals, leaders can better integrate ESG across the organization.
• Invest in the right data: It can be challenging to capture an accurate understanding of your organization’s environmental impact. Healthcare organizations should evaluate whether data exists or can be relied upon in their current reporting systems and invest in new capabilities if needed. Additionally, reporting structures should be put in place that enable easy and timely access to the information and have processes and controls built in to stand up to future independent assurance requirements.

These crucial actions will help healthcare organizations create a sustainable and impactful ESG strategy that positions them to meet changing expectations ahead.

For additional resources on how to integrate ESG at your organization, read this report from PwC.

Alex Vaughn is a PwC Trust Solutions partner serving clients within the Health Industries sector. His responsibilities include serving as an ESG Partner Champion for healthcare entities.

Thom Bales is a principal with Strategy&, PwC’s strategy consulting business, and the leader of PwC’s Health Services Sector. He has more than 17 years of management consulting experience, originally with Booz Allen Hamilton/ Booz & Company, which merged with PwC to become Strategy&.