Technology key to healthcare industry meeting global ESG Norms: Experts

New Delhi: ESG considerations related to environmental, social, and governance factors are increasingly becoming important for investors worldwide to invest in healthcare organizations that are not only profitable but also make positive contributions to society and the environment.

The adoption of technology and innovation is key for Indian healthcare players to improve their ESG score to global standards, experts have said.

Said Dr. Anurag Kashyap, Director – Business Strategy & Finance with Delhi-based TR Life Sciences, a leading hospital management consulting firm: “ESG guidelines enable organizations to integrate sustainability and social responsibility into their operations and decision-making processes. They have become a critical consideration for investors globally. While considerable progress has been made by Indian healthcare players in adopting these norms, including reducing energy consumption, minimizing waste, catering to low-income communities, and employee welfare, much more needs to be done by them to further advance ESG considerations to meet international standards.”

He added: “To make progress on the EST parameters, the Indian healthcare industry can benefit greatly from the use of technology, fostering innovation in EST-related areas, improving its data collection and reporting practices, incorporating ESG considerations into its investment decisions, and enhancing its governance practices. This would lead to a more sustainable and responsible healthcare ecosystem, attract socially responsible investors, and create long-term value for stakeholders.”

Giving examples of the steps that can be taken by Indian healthcare players like hospitals to improve their ESG score, Dr. Gopal Sharan, Managing Director, TR Life Sciences, said: “By leveraging electronic health records and tracking their energy consumption, healthcare organizations can reduce waste, improve patient outcomes, enhance data privacy, and identify areas for improvement in their environmental sustainability. A strong area of focus for Indian healthcare organizations should be incorporating ESG considerations into their investment decisions. As the adoption of ESG guidelines continues to grow globally, investors are increasingly seeking to invest in companies that are profitable and make positive contributions to society and the environment. Indian healthcare organizations should incorporate ESG considerations into their investment decisions to attract socially responsible investors, enhance their reputation, and create long-term value for their stakeholders.”

Dr. Anurag Kashyap added: “There is a strong need for more standardized data collection and reporting practices to better assess the ESG performance of Indian healthcare organizations. This can be achieved through the adoption of global reporting frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). These provide guidelines for companies to report on their ESG performance in a standardized and comparable manner. By adopting these, an organization can better understand its ESG performance, benchmark itself against peers, and identify areas for improvement. The Indian healthcare industry should also focus on improving its governance practices to ensure that it operates in the best interests of its stakeholders. Governance factors such as board diversity, executive compensation, and risk management are critical for ensuring transparency, accountability, and risk management.”

The three parameters of ESG are used to evaluate the sustainability and ethical impact of a company or investment. Environmental criteria focus on a company’s impact on the environment such as its carbon footprint, use of renewable energy, and waste management practices. Social criteria assess how a company treats its employees, suppliers, customers, and the communities in which it operates. This includes factors such as labor standards, human rights, diversity and inclusion, and community engagement. Governance criteria refer to a company’s leadership, management, and governance structures. This includes factors such as board independence, executive compensation, transparency, and accountability.