INVESTMENT FRAMEWORKS

US Health care services

Our approach to essential environmental, social and governance (ESG) issues in the US health care sector is distinct and differentiated. 

Grounded in decades of experience

Our fixed income and equity analysts, averaging 14 years of experience,* created our health care services investment framework, which guides us as we analyse investments, track key ESG issues and engage with management teams.

Cheryl Frank, Capital Group portfolio manager and analyst, shares her perspective on the key issues that create and destroy value in the US health care sector.

Zeroing in on what matters

Our health care services analysts created this US-focused framework using their extensive global-sector experience, our proprietary research, issues identified by the Sustainability Accounting Standards Board (SASB), and engagement with companies and issuers.

Once they had a comprehensive list of ESG issues, our analysts determined the areas they believed were most material: consumer wellbeing and corporate governance.

Environmental

  • Climate change risk

  • Natural resource management

  • Pollution & waste management

  • Environmental opportunities

Social

  • Human capital management

  • Consumer wellbeing

  • Social opportunities

Governance

  • Corporate governance

  • Corporate behaviour

Consumer wellbeing

Our analysts concluded there are three critical factors when considering consumer wellbeing: safety, access and privacy.

Corporate governance

Our analysts prioritised governance issues that may affect the company's dedication to ESG: ethics, integrity and accountability.

Management quality, ethics and accountability

 

Relevance:

Management teams with steadfast integrity are essential to long-term success. Management ethics are a key lens through which to understand all other ESG issues.

 

Best practices:

  • Management incentives linked to patient outcomes

  • Commitment to regulatory compliance in letter and spirit

  • Culture anchored in community service and social wellbeing

Our evolving approach

As one component of our three-part approach to ESG, our investment frameworks are continually evolving. Through our monitoring process, as well as engagement and proxy, our analysts continuously gather and incorporate new information.

*Average years of experience for the seven equity and fixed income analysts who worked to create the health care services research framework. Calculated as at 30 June 2020.