ESG’s Growing Impact on the Health Care Industry

Updated on March 7, 2022

By Rick Kes, Health Care Senior Analyst with RSM US LLP


  • Aside from the obvious benefits to community, culture and environment, another reason health care organizations are focused on ESG is to attract financing.
  • Health care organizations will likely begin measuring and reporting ESG data as an evaluation tool for investors.

Over the past few years the world has increased its focus on environmental, social and governance issues, with consumers and investors alike seeking out companies that deliver on ESG promises related to community service, strong environmental protections, and interest in social justice, diversity and more.

As a result, the focus on ESG by executives across all industries has also grown. In RSM surveys of middle market business executives in the fourth quarter of 2019 and then again in the third quarter of 2021, the percentage of respondents who said they were very familiar or somewhat familiar with using ESG criteria to measure performance rose from 39% to 69% in just two years. Clearly, ESG is becoming top of mind for businesses. Further confirming this increasing interest, according to RSM’s ESG report, 66% middle market respondents said they had formalized plans related to their ESG initiatives.

Although, as reported by Modern Healthcare, health care organizations still lag in establishing and meeting goals related to diversity, inclusion and equity, many—in particular, nonprofit providers—deliver services to underserved and diverse communities. Some have boards actively involved in community service and other community-building efforts. For many health care organizations, ESG is a natural fit.

Health care industry outlook

Aside from the obvious benefits to community, culture and environment, another reason health care organizations are focused on ESG is to attract financing—with municipal bonds being one example. Many organizations are starting to include ESG data within their bond offering documents in hopes of securing financing opportunities. This has not gone unnoticed by the Municipal Securities Rulemaking Board, or MSRB. In fact, the MSRB recently issued a request for information to obtain details from market participants and the general public regarding ESG. The MSRB is curious to know how investors and the broader community look at ESG and which data elements they find meaningful.

We anticipate that this year the MSRB, and perhaps other regulatory bodies, will push for standardized reporting of ESG data. We also expect that if they have not already done so, health care organizations will begin measuring and reporting that data as an evaluation tool for investors. An open question is whether data demonstrating an organization’s successful ESG efforts will provide any sort of “greenium,” or bond discount; regardless of the answer, we anticipate that ESG data will likely become table stakes for bond issuances.

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The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.