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ESG trend in the health care industry

Climate change is a health crisis. The World Health Organization estimates that climate change will lead to an additional 250,000 deaths a year between 2030 and 20501. An expanding body of evidence is linking climate change phenomena to exacerbation of heart and lung diseases, increasing impact from infectious diseases, and malnutrition in vulnerable areas. Health care supply chain disruption, power outages and damage to health care infrastructure are seen with extreme weather events, and these disruptions are anticipated to escalate with time.

The global health community is now starting to recognize the threat. At the UN Climate Change Conference in Glasgow (COP26) in 2021, 50 countries have committed to develop climate-resilient and low-carbon health systems, of which 14 countries have pledged net zero goals for their national health systems2. In addition, 54 institutions from 21 countries, representing more than 14000 hospitals and health centres, have joined the UNFCCC Race to Zero campaign, striving to reach net zero emission before 2050.

A survey was conducted on the New England Journal of Medicine Catalyst Insights Council members in November 2021, involving clinicians, clinical leaders and executives at health care organizations around the globe. Of the 792 respondents, over half have high or moderate recognition of climate change health impacts, and 69% report that it is extremely or very important to them that their organization implements policies and processes to reduce its impact on climate change3.

The good news is that a multitude of practical green solutions exist, and many had reaped outstanding results by putting them into action. These solutions include energy conservation and efficiency programs, climate-sensitive waste management and device reprocessing, shifting to clean energy, leaner service models by rethinking service delivery and integrating technology into care pathways.

It is in this landscape, where environmental impact is being increasingly prioritized, and where health care providers are looking to add value to the community that they serve, that we need to embrace ESG reporting for the health care industry.

ESG reporting for health care delivery systems

ESG reporting is an excellent way to demonstrate an organization’s commitment to contribute to the health of the community and the planet. It demonstrates accountability, by disclosing its environmental and social impact, and how it is regulated. The organization can identify areas of opportunity from the report, formulate practical plans and track progress.

These are some of the common parameters that are included in ESG reports for health care delivery systems:

Some organizations would also report the cost analysis, and their health impact in terms of treatment outcome.

Medical equipment and supplies, biotechnology and pharmaceutical companies

Spurred by the Climate Change Act of the United Kingdom, their National Health System (NHS) had made a commitment for their operations to reach net zero emission by 2045. According to their report ‘Delivering a Net Zero National Health System’4, supply chain was their leading cause of greenhouse gas emission, and accounted for 62% of their carbon footprint. In order to reduce their supply chain emission, they are actively looking for low carbon alternatives, and requesting carbon reduction plans and transparency reports from suppliers. By April 2027, the NHS will no longer purchase from suppliers that have not aligned with their trajectory towards net zero operation.

It is anticipated that decarbonizing the supply chain will become a global trend. While this presents substantial risks to suppliers that have yet to demonstrate sustainable practice, these companies will also have valuable opportunities to differentiate themselves by going green.

ESG reporting is an important tool to relay the sustainable goals of the company to its customers and investors, and to show how the goals are being realized. Here are some parameters that are frequently included in the ESG reports of medical suppliers:

While climate change gives rise to considerable risks to the health care industry, these risks can be mitigated with timely action from its various stakeholders, united in the goal to better the health of mankind and the planet. ESG will be a powerful tool in advancing this cause and staying ahead of vulnerability.

1.World Health Organization: Climate Change and Health

2.COP26 Health Programme: Country Commitments

3.New England Journal of Medicine Catalyst: The Growing Link Between Climate Change and Health

4.Greener NHS: Delivering a Net Zero NHS,reduction%20by%202036%20to%202039.

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