Integrating ESG into healthcare

The three pillars

Although Vietnam’s healthcare industry will benefit from integrating ESG into operations, the level of adoption remains uneven, with significant room for improvement in all three ESG pillars.

From an environmental perspective, the country’s hospitals and clinics contribute substantially to waste generation and energy consumption.

Medical facilities have high energy demands and produce around 350 tonnes of medical waste annually, 10% of which is classified as hazardous, with disposal representing a significant environmental burden. Some hospitals, such as the University Medical Center in Ho Chi Minh City, have implemented energy-saving measures and improved waste management practices, but such initiatives are far from widespread.

On the social front, healthcare institutions face the dual challenge of ensuring patient safety and addressing employee welfare. Patient safety remains a top priority, but, particularly in rural areas, many lack access to essential healthcare services. The healthcare workforce also often faces high levels of stress, long hours and exposure to infectious diseases.

Governance, ESG’s third pillar, is crucial in ensuring transparency, accountability and ethical decision-making. While governance frameworks are evolving, many hospitals still struggle with issues such as financial transparency and the ethical management of patient data. Effective governance in healthcare should focus not only on compliance with local regulations but also on adopting best practices to prioritise patient welfare and long-term sustainability.

Meanwhile, around the world, ESG highlights include the following:

• Cleveland Clinic in the US is reducing carbon emissions, using renewable energy, and developing sustainable infrastructure, and is committed to achieving net-zero emissions by 2027.
• The NHS in the UK aims to become the world’s first healthcare system to achieve net zero by 2040, reducing emissions from operations, pharmaceuticals and transportation.
• Kaiser Permanente in the US achieved carbon neutrality in 2020 and is now focusing on clean energy usage and waste reduction.
• SingHealth in Singapore’s plans include medical waste management, energy efficiency and improvements in working conditions.

Standards and regulation

Globally, healthcare institutions are beginning to align their operations with international ESG frameworks such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), which provide comprehensive guidelines on how to report on ESG impacts in a transparent and accountable manner. The World Health Organization (WHO) has also issued guidelines for managing healthcare waste and improving environmental sustainability within the healthcare sector.

In Vietnam, the Law on Environmental Protection 2020 mandates stricter controls on waste management and resource consumption. And, at the COP26 climate summit in Glasgow in 2021, Vietnam pledged to achieve net-zero emissions by 2050 with an ambitious expansion of its renewable energy capacity.

However, there is a lack of specific guidance on how healthcare institutions should report on their ESG performance. It highlights the need for clearer policies that incentivise the adoption of ESG practices, alongside greater collaboration between public and private stakeholders.

Drivers of adoption

To drive ESG adoption in Vietnam’s healthcare sector, a multifaceted approach is needed in the short and the long term.

• Additional activities and programmes to enhance the knowledge and awareness of the importance of ESG are needed from governing bodies such as the Ministry of Health.
• Specific guidelines and regulations on ESG are needed, including regulations on annual action programmes, annual ESG reports and ESG accounting standards.
• ESG needs to be embedded in the day-to-day operations of hospitals and clinics, with bite-sized deployments that are able to track progress and impact.
• Specialised personnel or professional organisations to advise on ESG should be employed, especially for data and reporting capacity building. Most healthcare organisations are SMEs, for which serious ESG investment is clearly a challenge.
• ESG culture must come from business leadership, and all employees must be on board.
• The initial ESG-related tasks should be rigorous. This may impact daily operations and lead to complaints, but it will make subsequent ESG implementation much easier.

Integrity and growth

The adoption of ESG presents a vital opportunity for Vietnam’s healthcare sector to enhance sustainability, equity and ethical governance. There are challenges, particularly in regulatory guidance and adoption, but there are also clear steps that institutions can take to integrate ESG into their operations. Doing so will let the sector not only improve its environmental and social impact but also build trust with patients, employees and the wider community.

In integrating ESG, it is crucial to avoid paying lip-service or greenwashing. A clear strategy and measurable criteria will demonstrate commitment to investors and stakeholders. For Vietnamese companies aiming to join global value chains, the trustworthiness of ESG reporting is simply non-negotiable. Transparent and consistent ESG reporting is vital for competing globally and accessing international finance. It’s time for ESG to be more than just a core value, by driving actionable business strategies that deliver growth as well as integrity.