ESG (Environmental, Social, and Governance) in Healthcare – Thematic Research

ESG is more important than ever Sustainability or environmental, social, and governance (ESG) is one of the most important themes for both 2021 and the next decade. Sustainability used to be just about saving the planet. Today it has morphed into an umbrella term covering all ESG issues. Citizens, governments, regulators, and the media are turning the spotlight on corporations and demanding action. Social inequality, corruption, tax avoidance, and a lack of action on climate change are all issues that companies must now address directly, in full public view. All aspects of ESG are important, and across the healthcare industry, companies must excel across all three categories.

A GlobalData poll of pharma industry professionals found that over 40% of respondents believed that environmental issues were the most important issue to be addressed, followed by approximately 30% for social issues and 25% for governance issues.

The COVID-19 pandemic has led to a greater focus on ESG across the healthcare space. As the world endures the ongoing effects of COVID-19, ESG needs to be at the core of any company or institution that wants to continue to provide quality care and services with ever-increasing healthcare costs and economic uncertainty. The heroic efforts of healthcare providers and hospitals during the COVID-19 pandemic and the rapid development of vaccines and tests have transformed public opinion of the healthcare industry. This is particularly true for pharma, which has struggled with a poor reputation for years due to high drug prices and unethical business practices.

What are the ESG factors impacting the healthcare sector?

Environmental factors

Environmental performance measures how corporate activity contributes to climate change, pollution, biodiversity, and the depletion of the world’s natural resources. Environmental sustainability is important, as issues such as climate change and increasing pollution levels can significantly impact the health of local and regional populations worldwide. An ongoing GlobalData poll of pharmaceutical industry professionals shows that 70% of 343 respondents believe that the pharma industry is not doing enough to be more environmentally sustainable.

Social factors

Social performance assesses a company’s engagement with its workers, customers, suppliers, and the local community. The effects of corporate actions on society are only now being fully realized. Healthcare providers and payers must continue to ensure adequate community health protection and maintain healthcare costs as low as possible. Key areas to consider are protecting personal health data, as well as ensuring adequate employee and patient health and safety. Social issues in pharma and medical devices include pricing, market access, ethics, labor, and health and safety.

Governance factors

Governance assesses how a company’s internal controls are used to inform business decisions, comply with the law, and meet moral obligations to all stakeholders. The pharmaceutical, healthcare, and medical devices sectors are all highly regulated, but they still face controversies. As more firms are called upon to confront social inequity, corruption, tax avoidance, and a lack of security, healthcare, pharma, and medical device businesses will need to do the same.

What are the key technology trends impacting the ESG across the healthcare market?

Artificial intelligence (AI)

The pharma companies are found implementing AI tools to transform their supply chains and better manage their operations. With predictive analytics, AI can provide complete visibility of entire supply chains, improving transparency around costs, logistics, warehousing, and inventory. Data are collected from each stage and then analyzed by algorithms to generate ways to increase efficiency and productivity. Additionally, AI can help to improve the patient wellbeing by automating health records, predicting illness, and enhancing treatment efficiency.

Three-dimensional (3D) printing

For pharma and medical device companies, 3D printing of drugs and devices can reduce costs, waste, and environmental burden, as 3D printers only deposit the exact number of raw materials required.

Cybersecurity

Initiatives by leading cybersecurity companies has helped to keep hospitals and healthcare providers safe during the pandemic. However, the pandemic has highlighted gaps in the cybersecurity measures of many healthcare organizations. Hospitals and providers were found investing in stronger cybersecurity strategies to prevent the attacks. During the pandemic, telemedicine limited the risk of COVID-19 transmission. However, healthcare providers must not overlook privacy and security issues in their rush to offer telemedicine services. Additionally, blockchain technology can mitigate cybersecurity risks by preventing unauthorized access to assets such as networks and clinical data, ensuring systems are efficient for healthcare professionals and patients.

Access to medication in developing countries

According to the World Health Organization (WHO), almost two billion people lack access to essential and basic medicines. Improving access to existing medicines could save 10 million lives each year, four million of them in Africa and Southeast Asia. The United Nation’s (UN’s) 17 Sustainable Development Goals (SDGs) include providing access to affordable essential drugs in developing countries in cooperation with pharma companies. Fortunately, the leading pharma companies are doing more to improve access to medicine.

Which are the leading companies focusing on ESG theme in healthcare sector?

Major healthcare companies focused on ESG include GlaxoSmithKline (GSK), UnitedHealth Group, Philips, Roche, CVS Health, Thermo Fisher Scientific, Eli Lilly and HCA Healthcare.

Market report scope

Scope

• ESG thematic research offers a detailed analysis of the various sustainability factors that are of importance to stakeholders and why businesses throughout the value chain should focus on improving their ESG responsibility. The research includes insightful industry analysis of ESG factors and key use cases highlighting how healthcare players are integrating sustainable initiatives.

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