Abstract

This article emphasises on the importance of sustainability frameworks in the healthcare sector. It highlights the availability of multiple frameworks and tools that help companies in developing and disclosing their environmental, social, and governance (ESG) strategies. They enable companies to enhance their resilience, attract low-interest financing, and meet the expectations of stakeholders.

While the frameworks are sector-agnostic, they can be applied to specific characteristics of the sectors, as would be the case for the healthcare sector.

Introduction

The SEBI (Securities and Exchange Board of India), the national stock exchange, have established a framework to assist in the management of hospitals, whether they are corporate chains or standalone healthcare units. This framework facilitates the connection of various aspects and enables the implementation of a comprehensive sustainability strategy. This highlights the significance of such frameworks.

The availability of ESG Frameworks and Tools for Enhanced Corporate Sustainability in India

Globally, many Environmental, Social, and Governance (ESG) frameworks and standards have been developed by private and public organizations to help companies, including those in the healthcare sector, in developing robust ESG strategies. These include the United Nation’s Global Compact, Global Reporting Initiative’s (GRI) Sustainability Standards, the International Sustainability Standards Board’s (ISSB) General Requirements for Disclosure of Sustainability-related Financial Information, the draft European Sustainability Reporting Standards, Carbon Disclosure Project’s (CDP) environmental disclosures, and the Financial Stability Board’s climate-related financial disclosures.

In India, the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) have introduced ESG frameworks. MCA’s National Guidelines on Responsible Business Conduct (NGRBC), is a framework of nine principles that cover all aspects of E, S, and G. Although the NGRBC is voluntary in application, they are complemented by SEBI’s Business Responsibility and Sustainability Report (BRSR) that serve as a disclosure framework aligned with the MCA guidelines. The BRSR disclosure requirement mandatorily applies to the top 1000 companies listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

These frameworks play a pivotal role in demanding and evaluating ESG performance from companies.

The frameworks are designed to be sector-agnostic, making them applicable to companies across sectors. This adaptability allows companies to tailor these frameworks to their specific sectors and geographical locations.

Given the vast size and unique national challenges of a country like India, healthcare companies and other businesses may encounter distinct issues. These factors enable companies to customize the generic frameworks, aligning them with their specific sustainability requirements and addressing their unique situations effectively.

Furthermore, when collaborating with companies in developed countries, it becomes crucial to consider different geographical and business contexts.

These frameworks play a pivotal role in assisting management in developing sustainable business strategies that effectively address sector-specific ESG issues without compromising the overall significance of ESG. Within the realm of ESG, specific environmental and social issues merit additional emphasis, such as green infrastructure, proper management of biomedical waste, sustainable packaging for cafeterias, responsible procurement of office supplies, and improving energy efficiency and consumption. Notably, they enable companies to enhance resilience to future risks, improve business prospects, and attract low-interest rates financing.

In the financial sector, diverse lenders and social impact investors extensively rely on ESG data to screen potential investments. The healthcare sector, in particular, has witnessed a notable influx of social impact funds, where investors increasingly consider the ESG performance of healthcare companies.

These funding options and the utilization of ESG data in investment screening highlight the growing recognition of the financial and strategic value associated with sustainable practices. By embracing these frameworks and addressing pertinent ESG issues, companies can position themselves for long-term success while making a positive impact on the environment and society.

On the social front, there are several critical issues within the healthcare sector that warrant attention. These include community health concerns, promoting diversity within the organization, including representation on the board and in top management positions, upskilling the workforce to adapt to technological advancements in healthcare, and ensuring workplace safety for employees.

In terms of governance, key ESG considerations in the healthcare sector encompass sustainability reporting, the development of ESG strategies, conducting community and health needs assessments, safeguarding patient data privacy and protection (which is particularly significant given the growing reliance on data analytics in healthcare), ethical marketing practices, and the provision of independent and trustworthy health services. Addressing these governance issues is essential to establishing and maintaining public trust.

Conclusion

Within the healthcare sector, sustainability frameworks play a vital role in guiding companies towards the development of comprehensive ESG strategies. These frameworks allow companies to address sector-specific issues while maintaining a holistic approach to sustainability. By using these frameworks, healthcare companies can not only attract financing but also meet the expectations of stakeholders and build public trust. The integration of ESG considerations within the healthcare sector is crucial for achieving sustainable practices and positive outcomes. Collaboration with the financial sector further strengthens the pursuit of sustainable healthcare practices, ensuring that financial institutions also prioritize ESG factors. By leveraging sustainability frameworks and fostering collaboration, the healthcare sector can pave the way for a more sustainable future, delivering both social and environmental benefits.