Leighton Barnish, Head of Stakeholder Engagement at Emperor, discusses the ESG challenge facing healthcare firms.
Why is sustainability such a high-profile topic for healthcare companies at the moment?
The world has reached a tipping point; the issues we face can’t be denied anymore. We know that climate change is real, that there is a social equality problem, that the bumblebees are dying – and that it all matters.
What does it mean for healthcare companies?
I spend a lot of time talking about ‘carrots’ and ‘sticks’. The ‘stick’ is the growing raft of policy and legislation, the anger of people demanding change – getting it wrong can result in huge fines, being accused of being unethical, or in extreme cases delisted.
From the ‘carrot’ side, there is much to be gained from having a good social purpose or being good corporate citizens. Beyond the positive impact on society, people want to work for companies that are responsible and take a stance on issues. The amount of money that gets invested in ESG (environmental, social and governance) funds or companies recognised as being sustainable is growing all the time and companies that get sustainability right often benefit financially.
And this is backed up by the research. For example, I read a survey from ACCA Global that found 67% of investors always consider non-financial information in their investment decisions. Also, a study by Bank of America Merrill Lynch found that companies with a high ESG score are less likely to go bankrupt over the next five years, less likely to have large price or earnings declines or increased EPS volatility, and deliver three-year returns significantly better than their peers.
We know investors study indices such as the FTSE4Good Index and the Dow Jones Sustainability Index closely, and we always encourage companies to work hard at being included. ESG is a crucial indicator and needs to be treated as such.
Where should a company looking to improve sustainability work start?
Start with a gap analysis: understand where you are and where you should be – according to your stakeholders, your business model, your ambition and your strategy. Figure out what ‘good’ looks like and what you need to do to bridge that gap.
Don’t peddle ‘greenwash’: waffle about how people are your number one priority or how CSR (corporate social responsibility) is at the heart of your strategy, without any substance behind it. It has to be evident in the business model and the strategy, risks have to specifically identify sustainability issues, plans need to be developed and realistic targets set.
It has to be talked about with authenticity.
What is the key to good investor relations and communications around sustainability?
It is important to acknowledge that there are different audiences for your IR and communications. From very technical specialists who want to read every decimal point of your carbon emissions, but aren’t interested in the charity bake…CONTINUED…sale you had to potential employees or customers who may be interested in the top line information and case studies, in order to get a flavour of the business, but don’t need complex detail.
However, too often companies try to approach it with a broad brush. There is no one-size-fits-all. Different stakeholders read information in different ways and through different channels – whether social media, websites, reports or advertising. Some people like films and animation, some prefer the written word. It’s difficult – but important – to get the balance right.
The first thing we undertake in any sustainability exercise is to profile who your stakeholders are, what kind of information they are looking for, and then, what is the best way of getting it through to them.
How is sustainability going to develop in the future?
I recently had a conversation about generation Alpha, which is anyone born after 2010, and how they are already exerting influence. We’re seeing school march outs, kids pushing their parents on sustainable consumer habits – they are already activists. But this cascades up the value chain, from consumers at one end, all the way to manufacturers, providers and heads of companies at the other. And it shows the future will be even stronger on sustainability – and that can only be a
good thing.
For more information email
leighton.barnish@emperor.works
