4 Reasons ESG Priorities are Becoming More Important in the Life Sciences Industry
Environmental, social and governance (ESG) imperatives are transforming the way clinical trials are conducted.
Environmental, social and governance (ESG) imperatives impact every aspect of the work of clinical trial operations. ESG is a collective term that measures a business’ impact on the environment and society at large, and how robust and transparent its governance is in terms of company leadership, executive pay, audits, internal controls and shareholder rights. All companies are deeply intertwined with ESG concerns.
“Every company uses energy and resources,” said James Man, a Managing Director for Consulting at Syneos Health. “Every company affects, and is affected by, the environment. Every company operates within a broader, diverse society. Every company requires governance to function, operate and exist.”
There are four factors that have converged, making ESG concerns a priority for life sciences companies today:
- A greener world. The world is moving towards a “green” economy—meaning that investors, financial institutions and the general public all want to see evidence of ESG activities associated with the money they make available to organizations. Effectively, no ESG will mean no investment.
- Reputation matters. A business’ reputation is increasingly defined not just by how effective its products and customer service are, but also by how invested it is around ESG. This has secondary effects, such as being a deciding factor for potential customers and talent.
- ESG efforts are now a decision-making factor for companies, aligning with their ESG priorities. Companies with strong ESG credentials and ambitions must work with other companies on a similar path if they are to achieve their targets. Further, while currently voluntary, ESG will likely become a regulatory requirement in the future. That means a business’ license to continue operating is tied up with ESG. Therefore, investing in ESG activities now is crucial in preparing for the future and reducing your exposure to risk.
- It makes good business sense—reducing waste can lower costs and reduce the bottom line. “When companies are looking to be more efficient and more cost effective, ignoring the long-term savings of actions such as reducing your carbon footprint would be irresponsible,” said Man.
ESG will have a profound impact on how clinical operations work is performed. It will add complexity and make it more challenging to deliver the clinical study program successfully. Clinical operations leaders have an opportunity to take an industry-leading position if they address these issues proactively.
If you are looking to better understand the importance of ESG in the life sciences industry, you can read our experts’ analysis in the Syneos Health Sustainability Report.
Managing Director, Syneos Health Consulting