RESEARCH & INVESTMENT FRAMEWORKS IN ACTION

Checking the pulse on U.S.
health care services

What are the material environmental, social and governance (ESG) risks and opportunities that our investment professionals are mindful of in the U.S. health care services sector?

Zeroing in on what matters

Our health care services analysts created a U.S.-focused framework using their extensive global-sector experience, our proprietary research, issues identified by the International Sustainability Standards Board (ISSB), and engagement with companies and issuers.

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

Once our analysts had compiled a comprehensive list of ESG considerations, they determined the areas they believed were most material: consumer well-being and corporate governance.

Our U.S. health care services ESG framework

Environmental

  • Climate change risk

  • Natural resource management

  • Pollution and waste management

  • Environmental opportunities

Social

  • Human capital management

  • Consumer well-being

  • Social opportunities

Governance

  • Corporate governance

  • Corporate behavior

Consumer well-being

Our analysts concluded there are three critical issues when considering consumer well-being: safety, access and privacy.

Corporate governance

Our analysts prioritized three key governance issues: 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 well-being

ESG fueled by the power of 3

Our integration approach enhances our research by incorporating material ESG risks and opportunities. Through our monitoring process, as well as engagement and proxy, our analysts continuously gather and incorporate new information.

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