ESG on the balance sheet

Stakeholders’ increased focus on ESG will present immense business opportunities for organizations. Health equity and sustainability are two areas in which healthcare organizations would be wise to invest, given their potential to impact the balance sheet. During a webinar on June 22, speakers Dr. John Balbus, Interim Director of the Office of Climate Change and Health Equity within HHS; Dr. J. Nadine Gracia, President and CEO of Trust for America’s Health; Jon Utech, Senior Director of the Office for a Healthy Environment at Cleveland Clinic; and Tensie Whelan, Clinical Professor of Business and Society and Director of the NYU Stern Center for Sustainable Business, discussed these topics and more.

1The connection between climate change and health

There is strong evidence pointing to the impact of climate change on health. Extreme weather events, poor water quality and air pollution can exacerbate cardiovascular disease and asthma, lead to injuries, viruses and allergens, and even impact mental health and well-being. Additionally, climate change is more likely to impact those with socioeconomic challenges. There is also research from Trust for America’s Health and Johns Hopkins Bloomberg School of Public Health showing states that are most vulnerable to the health impacts of climate change are least prepared to protect residents.

2 How HHS is involved

An executive order by the Biden administration has led to the newly formed Office of Climate Change and Health Equity, which has the goal to protect U.S. citizens from the health impacts of climate change, with a particular emphasis on those most vulnerable. A priority of the office is encouraging healthcare stakeholders to sign a pledge to reduce emissions by 50% by 2030 and achieve net zero emissions by 2050. HHS recognizes these are ambition goals, Balbus said, and is working to help the sector achieve them. HHS has assembled four drivers to focus on: surface the gaps and barriers, identify evidence-based solutions and innovations, introduce support to healthcare sector stakeholders and explore incentives and standards.

3 Building blocks of ESG

Commitment to sustainability and ESG as a whole is the next wave of good management, Whelan said, with more companies seeing it as a way to improve overall performance. In fact, research across industries shows a positive correlation between ESG investments and corporate financial performance. There are several actions an organization should take to start on their ESG journey. First is to do a materiality matrix to identify your organization’s ESG issues. Next is working with internal and external stakeholders to identify priorities for investment. Finally, organizations should align incentives internally to ensure metrics and targets can be met. Whelan said this can be a challenge if the only incentives are financial.

4 Make ESG goals public

At Cleveland Clinic, the system has saved $75 million due to its energy efficiency efforts. In order to see similar meaningful results, Utech said he recommends healthcare organizations make public and bold goals related to sustainability and health outcomes. This tactic helps ensure the organization is accountable to ESG efforts despite competing priorities. After the clinic externally shared its sustainability goals, it drove investments internally and commitment from leadership, Utech said.

5 ESG commitment requires reporting

Cleveland Clinic reports all aspects of its ESG work. Utech said reporting ESG is tied to Cleveland Clinic’s dedication to transparency and has helped accelerate progress. The health system reports ESG activity yearly, divided into five areas: patients, caregivers, community, environment and governance. It uses the United Nations Global Compact and Goal Reporting Index (GRI) as reporting frameworks. This allows Cleveland Clinic to clearly track its ESG goals and prioritize what is most important for the system to focus on through a tiered framework.

Watch the webinar on demand at www.modernhealthcare.com/ESG