Planting Another Tree: Increasing ESG Weighting to 10% for Gartner’s Healthcare Supply Chain Top 25

My Grandpa Willie always said the measure of a person was if they “planted trees under which they would never sit in the shade.” I soon learned, of course, that this was earlier attributed by different sources to an Indian saying, a Greek proverb and a guy named Nelson Henderson. Still wise, though, and it applies to the evolution of our Healthcare Supply Chain Top 25 ranking and the growth of our ESG alignment weighting this year to 10%. Willie knew the value of sustainability on the farms he owned and operated for 60 years. It made business sense and was common sense to him. In our field, healthcare supply chain has the same opportunity to make an impact, just on a broader scale than Willie. We may even enjoy the shade if health systems continue to make real progress on this front in the next few years. The purpose of this blog is to announce that we are increasing the allocation to the ESG portion of Gartner’s Healthcare Supply Chain Top ranking to 10% in total by adding a component of sustainability through membership in Practice Greenhealth and increasing the weighting in aggregate. Last year, we successfully launched the ESG component with a 5% total weighting based on membership and increasing levels of commitment to the Healthcare Anchor Network (HAN). The ESG component, as an addition to our ranking, was well received by most health system supply chain leaders. The farthest-reaching component of that weighting was signing the Impact Purchasing Commitment that has a sustainability component as part of the pact but adding membership in Practice Greenhealth gives us an independent way to reward progress in this area. Our new ranking criteria will take another step to improve the focus on ESG for health systems (see figure below). We are taking 5% from the qualitative peer and analyst voting allocation. Ultimately, we believe that ESG will be 15% to 20% of our ranking someday, but we want to continue to be thoughtful and methodical in how we approach changing the ranking. All the other components of the ranking remain the same. Within the 10% allocated to ESG, we are keeping three areas consistent with 2022, adding membership in Practice Greenhealth as a component and rebalancing the percentages across each per the figure below. The areas remaining the same are in dark blue and the membership in Practice Greenhealth is in orange. We are equally weighting the components in ESG this year at 25%. This change accomplishes two primary objectives. It doubles the weight of ESG to 10% in our ranking. After our experience last year, the feedback was positive — we had so many organizations making progress, and sharing their experiences. Out of our Healthcare Supply Chain Top 25 health systems, 60% scored some ESG points in the ranking overall and 28% received full ESG credit. Supply chain has a huge impact on ESG overall for health systems impacting diversity, sustainability, economic development and even health equity. Adding membership in Practice Greenhealth puts added focus on sustainability as a component of ESG. Our 2023 Health System Supply Chain Organization Design Survey showed that sustainability maturity was the lowest of the five areas of ESG capabilities (see figure below). The Healthcare Anchor Network is an amazing partner on many of the components of ESG, but they partner with Practice Greenhealth for the Impact Purchasing Commitment. Adding another quality ESG partner for measuring engagement directly on sustainability makes sense to us. Practice Greenhealth is the member organization of Health Care Without Harm. “Founded in 1996, Health Care Without Harm is a global health and environmental not-for-profit organization mobilizing the healthcare sector, clinicians and health workers in work designed to transform healthcare worldwide so that it reduces its environmental footprint, becomes a community anchor for sustainability and a leader in the global movement for environmental health and justice,” according to the organization. “Practice Greenhealth currently works with about one-third of the U.S. hospitals to help identify and implement sustainability solutions, which make them more financially secure, improve the quality of care for patients and expand their mission beyond their four walls to address the inequities and upstream conditions that are making people sick in the first place.” Practice Greenhealth identifies 11 primary impact areas (see figure below). In 2022, Gartner was proud to plant a tree for ESG in healthcare with HAN. For 2023, we plant our second ESG tree with Practice Greenhealth. As an industry, we have some fertilizing, watering and nurturing to do, but the seeds are sown. Hopefully, future generations will benefit from the harvest. I hope somewhere out there that Grandpa Willie, the Greek and Indian proverbians, along with Nelson Henderson, are encouraged.   Eric O’Daffer VP Analyst Gartner Supply Chain eric.odaffer@gartner.com     Listen and subscribe to the Gartner Supply Chain Podcast on Gartner.com, Apple Podcasts, Spotify and Google Podcasts