Healthcare Metrics Matter: Going Vertical With ESG
Feb 4, 2022
In the last five years, businesses across industries and scales have witnessed a steady uptick in the significance of an ESG-positive corporate strategy. However, the spotlight has focused almost entirely on carbon management. Is there more to ESG than carbon? Yes, most certainly. Is decarbonization irrelevant? Absolute not. The fuzziness of ESG surprisingly offers a host of advantages that businesses can effectively benefit from, and part of the task relies on widening the scope of the concept without diluting its relevance. We admit that this is a challenging responsibility – one that would no doubt require a collective willingness to navigate organizational turbulence under less-than-ideal operating conditions.
The key to navigating the business terrain of the present and future lies in how companies conceptualize ESG at two critical scales – first, at the level of the individual business, and second, at the level of global business paradigm(s). The distinction between the two is an essential component of successful ESG strategies. We are interested here in adding to conversations that can aid individual businesses make meaningful contributions to their global networks.
Companies have only to turn to a fundamental blueprint of industry verticals to be able to identify solutions that best suit their capabilities and objectives. For instance, quite a few health systems and pharmaceuticals companies have been at the forefront of efforts to reduce their organizational carbon footprints. These have focused on a suite of in-house operations under the category of Scope 1 and 2 emissions.
A useful approach taken by many large health systems such as NYU Langone has been the targeted reduction of facility-level energy consumption through infrastructural transformations and smart automation systems; notable examples such as the Cleveland Clinic have installed recycling and composting capabilities which effectively reduce the diversion of waste to landfills. However, these are directly linked to a central concern with carbon and greenhouse gas emissions, which have in turn informed organizational understandings of environment and ESG.
Now is as good a time as any to revisit our initial questions: is carbon the determinant of ESG performance? No – it is a critical link along a wider chain of activities and components that collectively constitute the concept. But the latter require structure to translate into tangible goals. Here are two helpful illustrative scenarios.
Hospital X was established in 1990 with the goal of being a leading provider of multispecialty services. The underlying promise of the hospital was to provide a personalized level of care with a focus on in-patient services. They built up a roster of leading medical experts and with time pivoted to being an environmentally conscious organization that produced annual carbon footprints data to further optimize their activities. However, X ran into a problem three years ago when a patient filed a complaint with the Joint Commission (previously JCAHO) over the hospital’s alleged role in hiring unqualified staff. The hospital responded to the complaint with remedial actions which were formally acknowledged by the commission. In the same year, the hospital decided to revise its ESG metrics but modified these only in so far as they reflected improvements to the monitoring of direct carbon emissions.
Hospital Y was established in 2001 and focused on providing specialized psychiatric care to young adults. It soon gained the reputation of being a highly regarded facility with innovative practices in psychiatric services along with an additional suite of counsellors. However, they realized they were unable to cater to their large base of Spanish-speaking patients owing to the absence of on-call translators. In the same year, Y reported major reductions in their facility-level power consumption and the establishment of an on-site vegetable garden managed by local community partners. The hospital reported these gains as ESG achievements.
In both instances, the hospitals overlooked two key factors that were central to their ESG metrics — negligent credential verifications amounting to compliance violations, and ancillary patient services. On the face of it, these scenarios are very distant from carbon reduction practices, but they pertain to social and governance metrics that are equally significant to how healthcare organizations measure their performance. While these scenarios are specific to healthcare, a similar overview of a very different industry such as apparel manufacture would include metrics to monitor worker education and welfare, exposure to physical harm, and family support services. An expansion of the methodology underlying the measurement of organizational ESG advancements is the first step in the creation of international norms for authentic and authoritative metrics.
The most meaningful template is evidently one that reinforces the specifics of an industry’s verticals – after all, you know your business best. The metrics you choose are ones that best represent your company’s knowledge and capabilities. Carbon is one element, but what else can businesses work toward? The options are all right before our eyes, waiting to be explored.