Why healthcare providers need to work together to steer towards sustainability

The healthcare sector - responsible for seven percent of all CO2 emissions in the Netherlands - has an important task to become more sustainable. The Integral Care Agreement contains agreements on this and there also is the Green Deal 3.0 'Working together on sustainable care'. Good developments, but both agreements are not binding.

In addition to these developments, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD) in November 2022. Now, most healthcare institutions are not among the NVs or PLCs with turnover above fifty million euros that will be obliged to report on their impact on people and the climate from 2025 onwards. But this does not alter the fact that banks and health insurers, which do start reporting on their sustainability efforts on a mandatory basis, will question healthcare institutions on their share of CSRD

Still unclear

"It is currently unclear exactly what questions banks and insurers will ask healthcare institutions in this area," says Wil-Jan van de Rijdt, audit partner healthcare and lead ESG reporting healthcare at Deloitte. "We are in talks through an umbrella organisation with the Dutch Banking Association and Health Insurers Netherlands about their transparency and information requirements and wishes. Healthcare providers should take into account that contracting and financing will become partly dependent on strategy and performance on sustainability (environmental and social) and reporting on it. There seems to be scope to agree on reporting requirements at the umbrella level."

Lotte Diender, manager of healthcare transformation and sustainability at Deloitte Consulting, says: "Sustainability will also play an increasingly important role in the procurement frameworks that health insurers use as the basis for their contract negotiations.

Expected liabilities

Healthcare institutions will therefore still have to deal with the CSRD. "The IZA and the Green Deal do offer directions for this," says Diender, "but both programmes are not binding and do not cover the full breadth of the CSRD. The Green Deal focuses on various aspects of sustainability, from prevention to sustainability. Parallel to the Integral Care Agreement (IZA) and the Green Deal 3.0 for healthcare, work has also been done at the European level on the obligation for organisations to get started with sustainability.

Although the obligations for healthcare institutions1 in this area do not (yet) go as far as for companies, they will undoubtedly have to deal with this European guidance. Banks and health insurers, among others, will question them more strongly about this. That is why it is important to work together and proactively provide them with the right answers, is the motto of Deloitte, which has also developed a roadmap for this. Why healthcare providers must work together to give direction to sustainability, limiting CO2 emissions, is not linked to concrete milestones or the question of whether they will be held accountable for them. Above all, the IZA is an invitation to the sector to work together more. The topic of sustainability is only discussed at the bottom of the list of tasks."

Van de Rijdt says: "The government is expected to come up with more concrete reporting requirements in the field of sustainability for the institutions, although these will be lighter than the CSRD and with a less heavy control burden. With the CSRD, accountants have to provide assurance about the figures, which will probably not be necessary for healthcare institutions for the time being. Nevertheless, it is smart if the healthcare sector does not wait for the government to come up with reporting requirements, but indicates itself after consultation with stakeholders what it wants to be held accountable for and focuses." Diender adds: "With a concrete strategy and action plans, not just reporting."

Roadmap

Deloitte has developed an ESG roadmap, the abbreviation for Environmental, Social and Governance, the themes on which NVs and BVs must report in the CSRD. "This roadmap has not been drawn up specifically for healthcare institutions," Van de Rijdt clarifies. "But as we have already indicated, they still end up - at least partly - in the same movement. The ESG roadmap helps them do that." The roadmap starts with a so-called double materiality analysis. This is an analysis of the materiality (relevance) of ESG topics. Diender explains: "It works both ways: from the outside in and vice versa. From the outside in means: what is happening outside our organisation that affects us? And which developments will cost us money or bring us money? From the inside out means: what is our impact on society, for example in terms of CO2 emissions or waste? But also: how do we keep employees vital through better working conditions?"

Digitisation

Digitisation is of enormous importance in the second area (from the inside out), says Van de Reist. "This allows you to relieve the workforce and simplify and support the work processes of employees. This boosts the S of ESG, the social side." But also the E for environment, Diender emphasises. "Sustainability is often not yet integrated into the primary and supporting processes in healthcare institutions. So, include sustainability KPIs in the organisation's digital strategy. Reducing travel movements for patients to and from the hospital by also offering care digitally, for example, contributes to the reduction of CO2 emissions."

There is still a lack of cooperation in the field of sustainability in healthcare, both argue. "The Environmental Platform for the Healthcare Sector provides direction and collects sustainability initiatives," says Van de Rijdt, "but here too, the focus on the role of ICT in improving healthcare processes in healthcare institutions - and its impact on ESG - is still an underexposed topic."

Collaborate

The materiality analysis is still new for most healthcare institutions. "Radboud university medical centre and the UMCG are among the few examples where such an analysis has already been made," says Van de Rijdt. "But there are differences in how they have done this and it would be good if their professional federation, the NFU, would initiate collaboration between the seven university medical centres.

We have been commissioned by one of the healthcare umbrella organisations to carry out a sector-wide materiality analysis. This allows you to achieve national uniformity with room for local customisation. A joint picture from the healthcare institutions to the banks and health insurers can offer these parties a clear perspective. This allows them to take targeted steps in terms of financing and contracting. So, don't be passive and don't reinvent the wheel individually."

The partnership of a number of top clinical hospitals, mProve, argues - as Diender puts it - for a 'CSRD light'. "The argument here is that the Dutch Association of Hospitals should play a role in this," she says. "We think that cooperation is indeed the right way to go. We know that mProve wants to avoid administrative burdens in the CSRD process. As parties, you make possible this by proactively working with ESG reporting and seeking cooperation at the front end.

Call to action

What call to action do Van de Rijdt and Diender have for healthcare providers? "Take ESG matters into your own hands," says Van de Reist. "Work together at the umbrella level on materiality analyses and ensure that the reporting is set up proactively." Diender adds: "Include sustainability integrally in the organisation, make it part of the strategy, governance, KPIs and plans. And work on the knowledge and skills needed to become more sustainable."

But do healthcare providers - in the midst of the staffing problems and financial vicissitudes they are facing - have the time to do so? "It's a fair question," says Diender. "We do see that this is a problem for them and that the subject often drops back on the priority list at the boards of directors. But the active enquiry of the banks and health insurers will certainly change this. It remains a balancing of interests, but the importance of a healthy planet also has everything to do with a healthy organisation and healthy employees. And everyone now sees the importance of sustainability."

Reference

1.With the exception of healthcare institutions that are run in the form of a BV or NV with a turnover > € 50 million.

This article was previously published in the December 2023 issue of ICT&Health.