By James Gregson, UK LSHC Lead Partner, Deloitte LLP, and Dylan Powell, Research Analyst, Centre for Health Solutions

Hero

Climate change is one of the biggest challenges facing humanity with harmful impacts already visible today. Companies across the globe are introducing net zero targets and aiming to cut carbon emissions by ingraining more sustainable practices into their operations. Deloitte’s latest CxO Sustainability report, Deloitte’s 2022 CxO Sustainability Report: The Disconnect Between Ambition and Impact, published in January 2022, found that business leaders’ apprehensions about the global climate have increased significantly over recent months, but they’re also more optimistic that immediate action can make a difference.1 Nevertheless, despite higher awareness and concern over climate change, there remains a disconnect between CxO’s ambition, actions and results. In this week’s blog we explore how the responses from life sciences leaders compare with the report’s main findings; what the life sciences and healthcare (LSHC) industry needs to do and how fast it needs to do it.

Drivers of change: Impacts felt closer to home

Between September and October 2021, Deloitte polled more than 2,000 C-suite executives across 21 countries to examine leaders’ and companies’ concerns and opinions on climate change and environmental sustainability. This poll took place shortly after the Intergovernmental Panel on Climate Change (IPCC) published its sixth assessment report: Climate Change 2021: The Physical Science Basis; providing irrefutable evidence of global heating affecting every region on Earth, described as “a code red for humanity”.2,3

Fifty-seven per cent of the LSHC CxOs who responded to the Deloitte survey said their companies are very concerned about climate change and 76 per cent consider the world is at a climate change tipping point (a total of 208 LSHC CxOs responded). While 76 per cent of LSHC CxOs say they’ve been personally impacted, 88 per cent were optimistic that ‘with immediate action ‘we can limit the worst impacts of climate change’ (an increase from 61 per cent eight months previously). Despite 97 per cent of LSHC respondents believing their companies have already felt negative impacts from climate change, they also believe their companies are slightly less concerned about climate change than the global average (see Figure 1). Nevertheless, 57 per cent still have a high focus on incorporating climate into their strategy over the next three years.

Figure 1. How LSHC executives response compare to the overall responses on climate change

Inline 1

Source: Deloitte CxO survey of 2,000 C suite executives (208 from LSHC) conducted between September and October 2021

Despite LSHC CxOs being slightly less likely than the global average to have been personally impacted by climate change over the past 12 months (76 per cent compared to 81 per cent globally), they cite extreme heat and more frequent and powerful storms as the top impacts. This corroborates findings in the IPPR report which was published during a period of, ‘deadly flooding in western Europe and China; uncontrollable fires in the Mediterranean and the western United States; and extreme heat in the Pacific Northwest of North America’.4

Notably, leaders’ top concern (both overall and LSHC CxOs) was the operational impact of climate-related disasters (countries citing the most operational impacts were: Australia, China, Japan, UK, US, and Canada). The second was uncertainty caused by the shifting regulatory and political environment. Countries citing regulatory impact as a top concern were the Netherlands, Italy, UK, France, and Germany. Importantly, more than a third of global CxO’s, and almost half of LSHC CxO’s, said climate change is affecting their employees’ physical and mental health further increasing the urgency to respond.

The current disconnects between ambitions and impact

Despite the growing optimism and recognition that drastic change is required to combat climate change, there is still a disconnect between CxO’s ambition and delivered results, with a lack of consensus on how to prioritise the most pressing changes. Narrowing the gap between ambition and impact will require compaies tp develop more mature and complementary strategies to incentivise substantive ‘needle moving’ impacts such as those identified in Figure 2.

Figure 2. The main actions currently being taken by LSHC CxOs compared to CxOs globally

Inline 2Source: Deloitte CxO survey of 2,000 C suite executives (208 from LSHC) conducted between September and October 2021

Increasing stakeholder pressure: Moving to purpose led strategy and Environmental Social Governance (ESG)

Although the findings suggest that most companies, including those in the LSHC industry, are more focussed on incorporating companywide sustainability strategies over the next three years, the precise metrics, approach, and confidence differ between nations and industries, including differences between the LSHC and global responses. For example, LSHC companies appear to feel less pressure to act on climate compared to the global average which is reflected in there being less focus on developing new climate friendly products, lagging the global average by five per cent (see Figure 2 above).

The main obstacles common among LSHC CxOs were problems measuring their climate impact, the need to focus on near-term business issues and inefficient supply of sustainable inputs. This emphasises still further the gap between ambition and impact. These disparities aside, the report did find higher consensus among LSHC CxOs on the regulation requirements needed compared to other industries, with LSHC executives recognising the importance of the role of national governments and regulation in mitigating the impacts of climate change. This reinforces the need for require greater collaboration and harmonisation as part of a purpose led ESG strategy across global governments, business, and industry, if a sustained and meaningful impact is to be realised.

Recommendations to ‘move the needle’ and get the LSHC industry back on track

The results from the CxO survey reinforce the importance of driving systems-based change but there is still hesitancy for action with a need for more understanding of the benefits arising from embedding sustainability into business strategies. To tackle the complex multifaceted problem of climate change will require a deep cultural change in every organisation’s mindset and approach, together with a focus on innovation, investment, and a strong creative strategy, as a necessary precursor to action (see Figure 3).5

Figure 3. Actions to keep LSHC companies on track in improving sustainability

Inline 3

Source: Deloitte’s 2022 CxO Sustainability Report: The Disconnect Between Ambition and Impact

Moving forward sustainability and purpose led agendas will be essential in maintaining a competitive advantage for LSHC companies, especially if they are to yield more than just philanthropic gains. The rise of ESG structured frameworks may help to simultaneously reduce health inequalities and combat climate change. Similarly, the recently announced Sustainable Medicines Partnership, which we will explore in more detail in a future blog, is a key step forward and exemplifies a newfound commitment across the LSHC ecosystem to mitigate the impacts of climate change for economic, environmental, and public health benefit.6

As the CxO research data show, not all businesses are at the same stage in their climate journeys, but all will soon need to decide what to do and how fast they need to move to take climate action. While ‘bold actions resulting in measurable impact will be needed to accelerate the pace of intervention, there’s still time to limit the damage’.

James Gregson headshot

James Gregson, Partner, Consulting

James is a Partner within Deloitte’s Consulting practice. He leads the Deloitte’s Life Sciences and Health Care Industry in the UK, with a focus on ESG, Sustainability, Enterprise Transformation, Cost Reduction and Post Merger Integration. Over the past 25 years he has led a number of large Cost Reduction and Operational Transformation programmes across several industries, with experience of Operating Model Design, Integrated Business Planning, GBS/Outsourcing, and Technology Implementation. He is passionate about healthcare, and role of Deloitte in impacting the wellbeing of patients, society and business. James is also Deloitte’s Global Life Sciences and Healthcare ESG Lead.

Email | LinkedIn

LSHC blog 7 Jan 2022 author

Dylan Powell, Research Analyst, UK Centre for Health Solutions

Dylan is a Research Analyst at the Centre for Health Solutions. Prior to joining the centre, Dylan’s professional background as a Physiotherapist has spanned the NHS, professional sport, and the armed forces. His doctoral work in Computer Science (Northumbria University) is exploring the use of wearables in remote monitoring & objective healthcare assessment. Dylan holds a Bachelor of Science degree in Human Biosciences (University of Exeter) and a Master of Science degree in Physiotherapy (University of Cumbria).

Email | LinkedIn

______________________________________________________________________________

1 https://www2.deloitte.com/global/en/pages/operations/articles/deloitte-cxo-sustainability-report.html?id=gx:2or:3pr:4cxosurvey2022:GC1000053:6oper:20220118:pressrelease

2 https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Full_Report.pdf

3 https://www.un.org/press/en/2021/sgsm20847.doc.htm

4 https://www.weforum.org/agenda/2021/09/how-boards-can-lead-climate-change-fight-governance-esg-metrics-deloitte/

5 https://www.ft.com/partnercontent/deloitte/healthier-climate-healthier-us.html

6 https://www.ft.com/partnercontent/deloitte/healthier-climate-healthier-us.html

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.