Why Healthcare Organizations Need ESG and Climate Action Plans

by | Aug 27, 2021

(Credit: Pixabay)

Today’s healthcare organizations face a rapidly accelerating suite of climate and ESG-related challenges, including rising energy costs, physical disruptions, and a list of ever-increasing expectations from investors and regulators as well as doctors, patients, and communities.

Until recently, ESG and sustainability topics felt secondary to the core missions of patient care and organizational survival, but it’s become increasingly clear that these topics are intimately linked to the success of those core missions.

Climate and ESG Topics Cannot Be Ignored

The healthcare industry is a major source of carbon emissions, and recent research by The World Bank and Health Care Without Harm estimates the sector’s emissions at over 2 gigatons, or roughly 4% to 5% of the world’s total. In turn, these emissions can be important social determinants of health, aggravating respiratory and cardiovascular disease, causing injuries from natural and weather-related disasters, altering the distribution of food resources, and changing patterns in illness and infectious diseases. More immediately for healthcare organizations, these climate-driven physical disruptions can also create new resilience challenges — straining health systems, their infrastructure, and their ability to provide care.

Developing a robust ESG approach, including a climate action plan (CAP), can reduce these effects while also supporting the goals of many healthcare organizations — creating healthier communities, assisting vulnerable populations, and spurring innovation around healing. In addition, a CAP can also create opportunities for cost-savings through transitions to more efficient facilities and technologies to optimize energy use. The question, though, is how to get started.

Understanding the Barriers

While many of the world’s leading organizations have heeded the calls for climate action, healthcare organizations are newer to this work. On the plus side, this creates a clear opportunity for the industry to leverage the learnings, approaches, and technologies that other sectors have already vetted. On the more challenging side, climate action planning requires a diverse set of competencies to succeed — technical knowledge of decarbonization, senior executive strategy and communication, specific greenhouse gas (GHG) data management tools and approaches, corporate finance fluency, stakeholder engagement, and organizational design and change management.

Transformational decarbonization endeavors for healthcare organizations are complex, requiring long-term investments for truly impactful measures such as changing energy consumption patterns, improving energy efficiency, upgrading fleets and buildings, and changing human behaviors. Supply chains, too — a major source of emissions — are deep, tiered, and dispersed, involving thousands of vendors and suppliers, each with their own economic pressures and business priorities. But the rising tide of ESG capital and other incentives can make the transition financially feasible.

Unpacking this complexity to understand where to focus resources, how to deliver impact, and how to communicate success is all critical, but it can feel daunting and risky in terms of failure.

Starting the Journey

Creating a robust CAP relies heavily on technical planningand an understanding of the organization’s norms and systems, but also on creating a connection with the organization’s stakeholders that resonates and can drive momentum and excitement for the move toward a more sustainable future. The key to creating a foundation for demonstrable change is a clear, five-step plan — one that’s informed by data, backed by science, and tailored to the organization’s specific goals and ambitions.

Step 1. Baselining
Before any actual planning can begin, organizations must take stock of their activities, pressures, and impacts. This includes understanding ESG pressures, measuring their existing greenhouse gas footprint, and assessing current activities and organizational structures. By engaging stakeholders and executing data analysis, including benchmarking peer activities, the team can better understand current sustainability efforts and to look for gaps and opportunities.

Step 2. ESG and Climate Goals and Strategy
With good data in hand, the organization’s leadership can set their ambition and strategy, prioritizing key ESG topics and placing others further out on an ESG roadmap.The strategy may include a bold climate reduction target, which should be underpinned by solid forecasting and planning.

Step 3. Abatement and Execution Planning
The next step requires identifying the specific initiativesand action plans to deliver the organizations uniqueclimate action goals. These might be technology and efficiency solutions, as well as organizational, behavioral, and financial unlocks. It’s also important to develop specific action plans and financing plans for how the organization will execute on its ESG and climate action plans.

Step 4. Implementation and Operations
After the steps above have been completed, it’s time to launch. In this step, the organization implements the actions to manage the effects of climate change on its sites and value chain. Announcing plans through a targeted communications campaign can keep the momentum going and help stakeholders stay engaged as the organization begins to deliver on its climate-related activities.

Step 5. Reporting
As implementation begins, the team should make sure it has processes and software tools in place to house data, track emissions, and provide visibility into progress. These types of tools can help leaders identify when things are going smoothly, or if course corrections may be needed. Reporting on the strategy and performance of actions and improvements is an essential part of the journey to keep organizations accountable and motivated, and to keep stakeholders informed.

Leading by Example

While the challenge of implementing a sustainability program may seem daunting, the risks — and the rewards, like unique opportunities to harness new technologies, engage the workforce, deliver savings, and increase resilience — are too significant to ignore. As momentum around climate change action grows, hospitals and health systems have the opportunity to drive meaningful change and serve as examples to other organizations and industries that have yet to embark on their own journeys.

By Britt Harter, partner, and Derek Rushing, director, Guidehouse

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