Non-profit health systems are only as strong as the communities they serve. So, Environment Social and Governance (ESG) initiatives should be central to their core mission. For health systems, ESG initiatives will be critical and will play a major role in driving economic vibrancy, delivering value through effective engagement with all stakeholders, and achieving long-term sustainability.
Drivers of ESG as a burning platform include:
- Maintaining brand integrity: Public perception that money is more important than mission flies in the face of the fact that many health systems are genuinely committed to the highest possible health outcomes and patient experiences. Therefore, organizations should find ways to be more vocal about their efforts to serve their communities.
- Responding to investor scrutiny: There is increasing interest in environmentally conscious investing, with many investors demanding that companies are transparent and accountable when it comes to their ESG policies. While health systems may be a bit behind the eight-ball compared to some other industries, they are starting to tell their ESG stories in a more purposeful manner.
- Attracting a more socially conscious hiring pool: Millennials and members of Generation Z are apt to be drawn to organizations that can demonstrate their commitment to fair pay and hiring practices, tangible diversity and inclusion efforts, and community wellness
- Staying a step ahead of imminent regulatory mandates: Regulatory bodies are continuing to focus on encouraging, if not mandating, that healthcare up its ESG game. For example, SEC guidance will likely focus on not only climate change but also human capital and cyber-risk governance. And, while mandatory ESG reporting for not-for-profit health systems may not come to fruition with this regulation, it is inevitable that it will happen.
It is critical that healthcare organizations take a strategic approach to all aspects of ESG – from assessment to governance -- and to the collection and usage of relevant data. Increasingly, this will require collaborative, cross-functional engagement of professionals and leaders who can align on and own ESG goals. This paper presents the five steps healthcare organizations should consider as they as they pursue ambitious ESG programs with real impact.