How healthcare organizations can begin their journey to ESG reporting
An organization’s environmental, social and governance (ESG) priorities can include a broad and varied spectrum of practices and policies, around everything from emissions levels and waste management to employee safety and diversity, and ethical supply chain sourcing.
ESG reporting was first introduced in the finance world as a barometer for responsible investing, favoring organizations with solid ESG practices. But what started on Wall Street is trickling down to Main Street, and all businesses, including hospital systems, have to take ESG best practices and reporting into account.
“It has a ripple effect,” says Zoë Beck, Manager of Sustainability at HealthTrust. “It affects not only for-profit businesses that rely on investors, but it also makes everybody more aware of these principles.”
However, the structure around ESG reporting doesn’t yet have an exact roadmap. Healthcare organizations looking to incorporate this into their processes, policies and communications will have a learning curve as they navigate this new terrain.
Why focus on ESG in healthcare?
ESG considerations can be applied to virtually any type of organization. But they’re especially meaningful in healthcare, considering how hospitals play a crucial role in the well-being of the communities they serve and are often a major employer and economic epicenter.
For example, a focus on reducing emissions—one of the environmental factors—has far-reaching benefits. “As organizations focus on emissions, we continue to create communities with a healthier environment at the local level,” says Beck. “There are groups of marginalized people in certain communities that will see better health because of it. And, hospitals are often at the center of those areas.”
Financial gains are at play as well. According to Nasdaq, establishing these priorities can create value by allowing organizations to unlock competitive value, cut costs (through reduced energy use, for example) and attract and retain talent.
Highlighting important efforts
Whether they realize it or not, many hospitals are already focusing on ESG initiatives. Beck explains ESG is still a largely unexplored frontier in terms of collecting and managing the information around the work hospitals may already be putting in, especially when it comes to environmental and social factors.
“In the ‘environment bucket,’ ESG’s overall focus is really on emissions,” Beck says. “A lot of health systems are seeing that maybe their energy efforts can be publicized, which would be helpful in ESG reporting. Their existing efforts can be consolidated and turned into a report of value to the community at large, not just the world of investors.”
As for the social and governance components of ESG, hospitals are focusing on factors that include employee safety and equity within their organizations—and they’re also looking at the practices of the suppliers they partner with. “We need to make sure our suppliers are utilizing legal workforces, and that they are paying a living wage,” says Beck. “On the governance side, who’s leading a particular company? Stakeholders really want to know that now.”
Patient privacy, care quality and pricing transparency are also social elements hospitals can highlight as part of their ESG reporting—all of which may eventually play into patient choice and drive consumer change. “It’s not at that point yet,” Beck says. “Once hospitals return to operations outside of COVID crisis mode, and when patients are choosing their providers and their hospitals, I think ESG will become a contributing factor in choice—especially in larger markets.”
How HealthTrust can help
As ESG reporting is uncharted territory, Beck says that HealthTrust is stepping in to help members navigate the course. “There are so many frameworks for an ESG report,” she explains. “Part of the guidance on ESG reporting is, report out on what you can control—choose what’s material to your organization.”
HealthTrust can provide guidance at any point in the process by helping members understand the landscape and decide what matters most to them. “No matter what stage a member is in on their ESG reporting journey, HealthTrust can help provide a framework and some of the data they might need for their reports,” Beck says.
While the rules around ESG reporting are still a work in progress, its importance is likely here to stay. Healthcare organizations would benefit from paying attention now. “It’s going to be an evolution, for sure,” says Beck. “And we are evolving to better assist our membership.”
For more information on how you can structure ESG reporting for your healthcare organization, email Zoë Beck at zoe.beck@healthtrustpg.com
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