How health execs can take the lead to drive impact in ESG reporting

We recently convened a group of health executives to discuss the accelerating environmental, social and governance (ESG) agenda.

With the focus on environmental, social and governance (ESG) and sustainability accelerating, health industry executives are trying to determine how to respond both immediately and in the long term with plans that communicate the value they bring to their communities and the planet. As they build that response, we brought together health executives for a conversation about both the challenges and opportunities the industry faces.

“Social responsibility is part of your DNA,” Joseph Oppong, EY Americas Health Sciences and Wellness Sustainability Leader, told the group. “Over the past several years, there has continued to be a lot of discussion of ESG/sustainability becoming a fiduciary responsibility, and that shared creation of value that is inclusive not only of profit, but of planet and people, is very important.”

The topic of ESG encompasses a broad range of activities, but with their historical investments into creating better health outcomes across the populations they serve, health organizations have an established ESG foundation from which they can continue to build. In the near term, aspects of the environmental and governance factors of ESG, such as tracking and reducing greenhouse gas emissions and new reporting requirements from regulators, may pose more of a challenge.

Health organizations are right to begin on an ESG journey now as “this is moving forward and the momentum is growing,” said Claire Mitchell, Ernst & Young LLP (EY US) Senior Manager, Sustainability Services, during the virtual session.

Most participants said they are starting to establish defined processes to capture data on their greenhouse gas emissions and considering what other information they may need to collect, but most of their organizations had not yet set externally communicated climate-related (e.g., net-zero) targets. The group of executives recognized that more regulatory change is likely to come. 

“While the SEC requirements most immediately impact public companies, they will have cascading effects on private entities,” said Mark Kronforst, EY US Partner, Professional Practice, SEC Reporting. As public companies file, “they’re going to start looking for information from anyone in their value chain, which can be private or public.” 

Questions health leaders should be asking themselves now

• Have you undertaken a process to prioritize the ESG issues that are most relevant to your business and your stakeholders?
• How do you integrate ESG topics within your business decisions?
• What are your ESG strengths? What are your ESG opportunities for improvement?
• Are your ESG risks integrated within your enterprise risk management (ERM) frameworks?
• Does management and/or the board have a good understanding of both the financial and nonfinancial measurements and impacts of ESG topics on the organization? Are you comfortable with how the data underpinning those measurements is collected and controlled?

Oppong reminded the group that while ESG may be a newer topic to some organizations, “the methodology and the processes that we can apply are things we have done in the past — determining materiality, defining goals and metrics, collecting the data and then determining how to implement internal controls to ensure it is complete and accurate,” he told the group. “Similar to other frameworks, it’s really around data, collecting the data, making sure we have processes and controls in place to verify the data.”