The Rising Case for ESG and Sustainability in Healthcare | HCLTech
Life Sciences and Healthcare

The rising case for ESG and sustainability in healthcare

Environmental, Social and Governance (ESG) initiatives are increasing across the sector
5 minutes read
Souvik Bhattacharya


Souvik Bhattacharya
DGM - Solutions Group, Life Sciences and Healthcare
5 minutes read

Organizations continuously strive to align themselves for the future, and sustainability is one such strategic imperative. The environmental and social changes are complex, leading to a strategic focus on sustainability initiatives. Environmental, Social and Governance (ESG) refers to the three key factors used to assess the sustainability and ethical impact of a company's operations and practices. Over the past two years, more than $1 trillion has been invested in ESG funds, demonstrating the growing recognition of its business value. Increased pressure from governments, consumers and employees has underscored the immediate need for healthcare organizations to start investing in ESG. Embracing ESG opens substantial opportunities in the healthcare sector, including multi-trillion-dollar markets in precision medicine and AI-driven healthcare technologies.


Embracing ESG opens substantial opportunities in the healthcare sector which includes multi-trillion-dollar markets.


The COVID-19 pandemic served as a significant catalyst for ESG in healthcare. The crisis exposed vulnerabilities in healthcare systems worldwide, prompting a heightened focus on social responsibility and the need for building a resilient and sustainable healthcare infrastructure. This has accelerated the adoption of ESG practices within the healthcare industry, driving positive change and creating opportunities for innovation and long-term growth.

What ESG factors and imperatives are affecting healthcare?

There are multiple factors, both external and internal, that are compelling organizations to embrace ESG initiatives. Leading analysts and organizations are also benchmarking and assessing ESG practices. The S&P global healthcare report card serves as a benchmark for evaluating ESG performance. Additionally, the Health Sector Climate Pledge, launched by the Department of Health and Human Services (HHS), calls for healthcare organizations to reduce their carbon footprints and promote climate resilience. Some of the key imperatives are:

  1. Major push from governments worldwide to implement regulations around ESG practices. The UN has implemented its sustainable development goals – a call to action for all countries to address various social and environmental needs
  2. Corporate social responsibility (CSR) initiatives also enable healthcare organizations to inculcate more ESG factors in their strategic alignments
  3. Healthcare operations, whether healthcare providers or payers, are highly energy-consuming businesses, and greenhouse gas emissions and carbon footprints are much higher, leading to energy efficiency imperatives
  4. Massive amounts of waste – both hazardous and non-hazardous – are generated in life sciences and healthcare organizations, leading to the use of reusable products and digitization of operations
  5. Organizations are also attempting to be more socially responsible toward their clients and internal workforces, which is impacting their ESG objectives

How are providers and payers implementing ESG?

Providers have a unique opportunity to set trends in the marketplace on implementing ESG initiatives. Hospitals and providers are implementing smarter technologies, such as remote patient monitoring, which has a direct impact on the reduction of vehicular pollution and patient convenience. High usage of reusable materials in hospital operations is leading to a reduction in hazardous and non-hazardous waste. Healthcare organizations are increasingly leveraging digital technologies for hospital management processes and workflows for paperless operations. The usage of renewable energy sources by deploying solar panels and energy management systems in hospitals has a direct impact on contributing to ESG initiatives.

Payers are equally investing in their ESG deployment plans – for instance, many companies are reducing emissions by cutting back on travel and opting for remote meetings. Other parts of their efforts include exploring energy savings, green buildings, digital claims, analysis, approvals, risk management and other sustainable components in business operations.


In addition to specific practices, healthcare organizations can also utilize general frameworks to guide their ESG initiatives. One such framework is the global reporting initiative (GRI), which provides a comprehensive set of indicators for measuring and reporting ESG performance. Another framework is the United Nations’ sustainable development goals (SDGs), which provide a roadmap for addressing global challenges, including those within the healthcare sector. By aligning their practices with these frameworks, healthcare organizations can establish a robust foundation for their ESG strategies and contribute towards broader sustainability goals.

Key challenges to implementing ESG practices

It is easier said than done, of course, because deploying ESG strategy and actions across an organization brings several key challenges:

  1. Defining the right strategy for ESG deployment and developing governance structure in hospitals with well-defined action items is the single biggest challenge
  2. Implementing ESG practices in tracking progress as the data is generated across business functions and geographies – identification of key performance indicators (KPIs) holds the key
  3. Adapting supply chains to meet ESG goals can disrupt existing frameworks and can have a direct impact on revenues and patient services
  4. Financial risk arises from adopting ESG practices with slow ROI, but delaying implementation can also result in financial harm

Major enablers for achieving ESG goals

Below are some top technology trends in the healthcare sector to meet ESG goals.

1. Artificial Intelligence (AI): Healthcare companies use AI to improve supply chain efficiency with predictive analytics impacting ESG. Others are leveraging technology to automate health records, predict illnesses and improve overall drug effectiveness.

2. Innovative medical waste disposal and recycling techniques: As part of key trends in ESG practices, healthcare organizations focus on sustainable medical waste disposal and using recyclable materials in business operations. Newer technologies are being used for generating recyclable components.

3. Telemedicine IT applications: The rise in remote patient care, expedited by the pandemic, certainly led to an overall increase in system efficiency. Patients now experience shorter wait times and more availability to speak with their healthcare providers. This results in faster diagnoses and immediate access to the medications and patients’ needs.

4. Green energy sources, solar and EVs: By adopting solar and wind energy and usage of EVs, healthcare organizations can reduce carbon emissions, contribute to a cleaner environment and promote sustainable transportation solutions.

Benefits of having an ESG strategy

Implementing an ESG strategy in the healthcare industry offers multiple benefits.

  1. It enhances long-term sustainability by incorporating environment-friendly practices and reducing waste
  2. Additionally, it attracts investors who prioritize sustainability and ethical practices, leading to increased financial stability and growth opportunities
  3. An also promotes positive health outcomes by prioritizing social factors such as diversity and inclusion, fostering trust and improving patient care

How can the healthcare industry become the forerunner for sustainability?

Deploying ESG strategy and initiatives is a collaborative exercise. It needs a 360-degree approach by merging technology and people to deliver long-term value for the organization, environment and broader society. The healthcare industry has the highest potential to contribute to ESG and embeds these principles in day-to-day operations. Through initiatives such as sustainable waste disposal, utilization of green energy and renewables, digitization of processes and adherence to frameworks like the GRI and the United Nations’ SDG, healthcare organizations can minimize their environmental impact and promote social responsibility. By leveraging next-gen technologies, the healthcare industry has the potential to lead the way toward building a healthier and more sustainable future for all.


  1. Yes, Investing in ESG Pays Off
  2. United Nations Sustainable Development Goals
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