“Responsible investment is an approach to investing that aims to incorporate Environmental, Social and Governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns.”
Environment : Relates to a company’s interaction with the physical environment (e.g. climate change, gas emissions, air and water pollution, water scarcity, deforestation.)
Social : Focuses on company’s practices that have a social impact on a community or society (e.g. working conditions including slavery and child labour, health and safety, human rights, impact on indigenous communities)
Governance : Factors that relate to how a company is governed (e.g. executive compensation, Board independence and composition, shareholder rights, transparency)
ESG is the next digital –it has already changed the rules of business; yet more disruption is coming, bringing new upsides and equally downsides
Value of a Corporation is driven only by a progressive and resilient ESG transformation path
- ESG must be embedded in the mission: Cannot do business without ESG
- Performance, not compliance: Need to show clear track record on high-materiality issues vs. credible targets (rating is not the objective)
- No-green washing or tactical actions
- ESG drives value in the middle-term: Avoids risks and creates platform for both market development and operational efficiency
Sustainability in Healthcare
It’s ironic that the health care sector, which guides medical practitioners’ actions with the ethic “first, do no harm” (“primum non nocere”), is not leaving this world unharmed. Due to health systems’ round-the-clock operations, extensive use of air conditioning and refrigerated storage, and specialist medical equipment—and because many hospitals and care facilities are aging and poorly designed for energy efficiency – health care can be seen as a major contributor to the climate crisis.
The world’s health care systems account for 4% of global carbon dioxide emissions, more than aviation or shipping. If the health sector was a country, it would be the fifth-largest emitter of greenhouse gas (GHG) emissions on the planet. According to conclusions from the study Health Care’s Global Climate Footprint:
- Health care emissions make up a varying percentage of each country’s climate footprint. They range from highs in the United States (7.6%), Switzerland (6.7%) and Japan (6.4%), to lows in India (1.5%) and Indonesia (1.9%). While China is the number one absolute greenhouse gas emitter in the world today, this study finds that the United States far surpasses it in terms of absolute health care emissions.
- Emissions emanating directly from health care facilities make up 17% of the sector’s worldwide footprint. Indirect emissions from purchased electricity, steam, cooling, and heating comprise another 12%. And the greatest share of emissions—71%— are primarily derived from the health care supply chain; the production, transport, use, and disposal of goods and services that the sector consumes.
A recent study determined that the US health care industry is responsible for roughly 10 percent of the country’s greenhouse gas emissions.
It is time for health care leaders and their organizations to extend the “do no harm” ethic to the environment— to measure, manage, and set targets to reduce the sector’s carbon footprint to fight climate change.
The sheer magnitude and complexity of environmental, social, and governance challenges can be overwhelming. Where should health care organizations start, and what might the journey look like?
Mitigating and adapting to climate change presents a global opportunity to remake the foundations of health care and introduce new operational models for resilience and sustainability. An organization’s response to climate change should not be an “add-on” initiative; it should be integrated into a transparent, comprehensive planning and decision-making process.
To begin the journey, sector leaders should set aside existing frameworks and preconceptions about what the health care sector—and their organization’s place in it—should look like and assess, instead, their role in a sector that is likely to be reconfigured as it moves toward a low-carbon footing.
Among actions to consider:
Develop a business case to show the economic benefits of reducing health care’s waste and carbon footprint. Health care leaders typically focus on access, quality, and cost when identifying and assessing enterprise-level improvement opportunities. It’s time to add a fourth dimension to deliberations: environmental sustainability. While this doesn’t mean an organization will always choose the (sometimes pricier) sustainable option, there are ways to address the needs of multiple
priority areas to achieve clinical, financial, and environmental objectives. For example:
The health care ecosystem encourages healthy behaviors, such as reducing meat consumption and biking over driving, which have a positive downstream climate impact.
Micro-interventions build over time to prevent disease from developing in the first place, which reduces demand for carbon-intensive health care infrastructure.
- Health recommendations that are personalized and extend beyond traditional care delivery improve health systems’ ability to target “hot spots” and effect greater change.
- Right-sized care is less service- and carbon-intense due to improved baseline health across a population. Understand where value is likely to be created in a low-carbon future. Value drivers in a low-carbon health care economy include using less; emitting less; regenerating, restoring, and repairing; and measuring, verifying, disclosing, valuing, and tracking. Specific action items could include implementing energy efficiency and renewable energy to get to net-zero energy usage; reducing water consumption and reuse; investigating sustainability ratings for hospitals and other facilities; designing energy efficiency into new buildings; procuring sustainable and ethical materials and equipment; and employing models of care delivery that avoid unnecessary or duplicative testing and treatment. Creative thinking can uncover virtually limitless opportunities for value-creation in a low-carbon future.
Adopt systems thinking to address climate change. Every public and commercial health care entity has both an individual and a collective role to play in accelerating the transition to a low-carbon economy. Start with the basics of understanding your carbon footprint and identifying the major levers you can pull to introduce change. Adopting a systems-thinking approach can help leaders look beyond their organization’s carbon-reducing initiatives and answer questions that can unlock critical,
interconnected opportunities. How might emerging technologies such as virtual health and increased computing power from cloud, artificial intelligence and machine learning be combined with new business models to create more resilience in health care systems?
Organizations that put sustainability at the heart of their business strategy will be better prepared to respond to the volatility triggered by unpredictable future challenges. That’s because they will be best positioned to demonstrate and measure value in ways that matter not just to shareholders but to ALL stakeholders.