ESG

Article 03.12.2025 Autumn Hines

As we move into 2025, the manufacturing industry faces a rapidly evolving landscape shaped by technological advancements, workforce challenges, and economic pressures. Businesses that proactively address these risks while capitalizing on emerging opportunities will be better positioned for long-term success. From strengthening supply chains to navigating AI integration and sustainability initiatives, manufacturers must stay agile and forward-thinking to remain competitive.

Risk	Description
Smart Supply Chains	– Create more connected supply chains through digitizing that help overcome global geopolitical issues and global pandemics. – Digitization will be essential as it will allow companies to diversify where they source and make their goods. – Growing emphasis on supply chain visibility and resilience over pure efficiency. – The combination of smart technologies, automated systems, and sustainable practices creates opportunities for innovation.
Talent Competition and Adaptability of the Workforce	– Manufacturers should focus on retention by concentrating on long-term strategies that support employee development and allow their workforce to adapt. – More emphasis placed on outsourcing. This will involve retraining and reskilling the current workforce – Immigration policy could significantly impact the manufacturing sector with the new administration in office.
Cybersecurity	– Cybersecurity assessments are a must to identify critical information and intellectual property that needs to be protected. – Data demands and growing connectivity will prompt the need for greater security.
Artificial Intelligence (AI), Generative AI, and Smart Manufacturing	– Enhance predictive maintenance by optimizing supply chains, increasing productivity, and improving cost savings. Controls around AI, including ethics. – Investing in appropriate infrastructure that supports moving to data-driven operations and decision-making. – Businesses that become leaders in AI and have an “AI First” mentality will have the advantage.
Sustainability and Environmental, Social & Governance (ESG)	– Legislation has emphasized green/clean technologies (tax credits, grants, government financing). – Decarbonization will likely need to become a bigger priority for manufacturing companies.
Economic Environment	– Expect constraints on global finance and investment. – Will result in a high-cost environment in the near future. – Increase in tariffs

While the manufacturing sector faces significant challenges in 2025, it also presents numerous opportunities for innovation and growth. Companies prioritizing digital transformation, workforce adaptability, cybersecurity, and sustainability will gain a competitive edge in an increasingly complex global market. By staying ahead of economic shifts and regulatory changes, manufacturers can build resilience and drive long-term success in the industry.

Article 09.21.2022 Dean Dorton

Environmental, Social and Governance (ESG) programs have become an important topic for entities of all types. Stakeholders at all levels including investors, employees, and customers want to invest, work, and buy from sustainable entities that are both environmentally and socially aware. ESG programs bring structure to these consumer demands and allow businesses to both improve and boast successes in these areas.

What makes ESG programs unique? They work in any industry. Certain industries like healthcare and higher education have already seen great success by being on the forefront of these programs.

All ESG programs are built around four main pillars:

When establishing an ESG program entities should first review overarching goals and core values of the business and explore how those core values are tied to the four pillars of ESG. To get started many entities will research examples of successful, well established programs outside of their place of business, but we encourage you to search your operations internally as well. You may be pleasantly surprised at what programs and initiatives are already in-place, working towards ESG specific goals. When trying to establish your first program it’s best practice to explore sustainability programs on public company websites to get additional ideas. In fact, the Sustainability Accounting Standards Board (SASB) has industry-specific ESG metrics that can assist with establishing your first set of goals.

Measurements around greenhouse gas emissions, diversity (including employee, board, and suppliers), and safety statistics are basic ESG metrics that will help you get started. It’s important to first establish baseline metrics and then work to set goals that will improve those metrics moving forward.

Keys to Success

Here are a few things that are sure to get you off to a successful start in ESG:

Reinforce the entity’s mission – Mission alignment is critical when establishing or optimizing a new or existing ESG program. To gain buy-in from key parties within the organization, your program must align with the main values of the entity.
Make ESG a priority in reporting – Allocating resources to measure and report on ESG will help you leverage statistically backed marketing for stakeholders. Numbers drive business, and by prioritizing key metrics you will have a baseline of information to motivate teams to reach goals. To begin, start with one metric for each pillar. Once your program matures, you can add additional and more details tracking metrics.
Work with passion – Working towards environmental, social, and governmental goals can ignite the passions of your workforce. Keep your team involved and informed with your progress and you will see more impactful results.

Frameworks

As of now, most entities are not under required ESG mandates, in fact, entities have a lot of latitude in how and when they establish their plans. Due to the lack of regulation there are several reporting frameworks that currently exist, but there is belief that consolidation of reporting metrics and real regulations and requirements could be coming in the near future. In fact, on August 1, 2022, the IFRS Foundation completed a consolidation with Value Reporting Foundation as they move closer to comprehensive global sustainability disclosures for capital markets.

Accountability and Assurance

To date, most ESG programs have not been subject to third party assurance procedures. Without assurance validation the concept of “greenwashing” has emerged as entities use their ESG programs as a marketing vehicle to promote themselves without any regard for accountability. Embellishing numbers and tracking is unacceptable and could be subject to audit if new governmental requirements are established.

All of the value of an ESG program will be lost if the program is used without regard to integrity, further stressing the importance of establishing reliable tracking earlier in your program launch.

Bill Kohm, CPA, MBA| Assurance Director
bkohm@deandorton.com
859.425.7625

Article 01.7.2022 Dean Dorton

Environmental, Social and Governance (ESG) has transformed the landscape for health systems over the past few years. Stakeholders have expanded their expectations beyond financial results. Healthcare facilities should be proactive and identify meaningful ESG metrics that will resonate with their stakeholders and employees, which will vary depending on your size, location, and more.

Human resource departments should play an active role in this endeavor as ESG should be used as a retention and recruitment tool. People want to work for institutions that have a sustainable future. Additionally, the purchasing department needs to be part of the ESG team due to the impact of the supply chain on ESG metrics. Your healthcare organization needs to ensure that your third parties share in your commitment to ESG to maximize the benefits as well. For example, you may choose to place product orders with other groups that also have ESG programs, versus those who do not.

Here are some ESG areas that healthcare facilities should consider measuring and reporting:

“Environmental” refers to the impact of the facility’s operations on the environment. This includes environmental factors such as energy use, waste management, and water conservation. By tracking and reporting on these metrics as part of their ESG strategy, healthcare facilities can identify opportunities to reduce their environmental impact, improve sustainability, and enhance their reputation among stakeholders.

Some of the key environmental metrics that healthcare facilities should consider measuring and reporting on to support their ESG initiatives include:

Greenhouse gas emissions
Water consumption
Recycling
Materials, including plastic use

The “S” in ESG stands for “Social” and refers to a company’s commitment to ethical and social responsibility. It includes areas such as employee welfare, community involvement, diversity and inclusion, and human rights.

In the healthcare sector, social responsibility is particularly important as it involves the care and well-being of patients and the impact healthcare organizations have on the communities they serve. By addressing social factors, healthcare facilities can enhance their reputation, improve employee retention and recruitment, and ultimately improve patient outcomes.

Below are some of the social factors that healthcare facilities can include within their ESG framework:

Safety
Community impact and integration
Diversity and inclusion
Investment policies

The “G” in ESG stands for “Governance” and refers to a company’s commitment to transparency, accountability, and ethical leadership. In the healthcare industry, governance is critical and is probably already a part of most organizations’ everyday monitoring. This includes the responsible management of resources and maintaining high standards of patient care in health services.

By addressing governance factors, healthcare facilities can strengthen their relationships with stakeholders, improve financial performance, and ensure regulatory compliance. Included within these governance factors are:

Supply chain management
Board diversity
Policies
Long-term strategy

Examples of ESG Principles at Work in Healthcare

Institutions have begun to update investment policies to divest from fossil fuels, divert funds to green initiatives and focus on investments that lean towards diversity measures.

Baptist Health South Florida has focused on sustainability. Their green initiatives include:

Green building practices
Recycling more than 20 tons of waste per month
Paperless purchases
Sustainability educational and training events
Community outreach to market the importance of sustainability activities

UnitedHealth Group’s Sustainability Report has the following social pillars:

Expanding access to care – 85% of members to receive preventive care services annually by 2030
Improving health care affordability – 55% of outpatient surgeries and radiology services will be delivered at high-quality, cost-efficient sites of care by 2030
Enhancing the health care experience – established a training program with the American Academy of Family Physicians to help family physicians change the culture of health care organizations and improve physician wellness using operational improvements and change management tactics. 200 family physicians will undergo training to lead change for improved clinical well-being.
Achieving better health outcomes – close 600 million gaps in care for members by the end of 2025
Advancing health equity including equity and diversity in the health workforce – actions include funding scholarship programs for students of color pursuing careers in healthcare, supporting STEM programs in high schools focused on girls and Black and Hispanic/Latino students and using innovation to help hard-to-reach communities receive needed care including improved access to telehealth, mobile medical units, home visits and school-based care programs.
Building healthier communities – committing funds to build new homes for seniors and families, all with connections to health and wellness services and social supports.

UnitedHealth Group has a variety of ESG metrics in 2020 including:

6 million employee volunteer hours
41% people of color (U.S. workforce)
37% of female in top management positions
627 diverse suppliers with average spend of $849,000 per year
2 directors of color out of 10 directors
6,709 metric tons of waste transferred
19,647 MWh renewable energy use (5% of total energy consumption)

No matter what ESG direction you choose, you need to ensure that your ESG metrics align with your institution’s mission. Additionally, boards should hold management accountable to measuring ESG metrics accurately and for providing regular ESG reports to the board.

Wondering how to get started with ESG for your hospital, physician practice, or medical clinic? Contact us to learn more.

Sources: https://baptisthealth.net/non-indexed-content-folder/old/greening-our-future
https://www.unitedhealthgroup.com/content/sustainability/en.html

Adam Shewmaker, FHFMA | Healthcare Consulting Director
ashewmaker@ddafhealthcare.com
502.566.1054

Article 08.17.2021 Dean Dorton

A focus on sustainability is changing all aspects of our world. What is your company doing to promote sustainability? How are you measuring the effectiveness of your sustainability program and ensuring accuracy in reporting? Have you made commitments to consumers regarding sustainability and are you transparent with reporting actions taken to follow through on those commitments?

As we’ve discussed before, many public and private companies have seen the need to implement Environmental, Social and Governance (ESG) programs. There is an increase in ESG activity including transparency about current impacts and plans for the future.

Here are some example recent stories:

University College Dublin is using Artificial Intelligence to validate companies’ environmental claims. Greenwashing means disingenuous claims of being environmentally friendly to outright falsehoods. The group places companies in one of several categories: green leaders, hidden green champions, green incrementalists or potential or probable greenwashers. The group’s results show a high likelihood of greenwashing in 95% of statements they analyzed.
Samsung to eliminate plastic from its smartphone packaging by 2025. Other goals include incorporating recycled material in all new smartphone products, achieve zero waste to landfill and reduce the standby power consumption of its smartphone chargers to below 0.005W when a device is fully charged.
Prague is building its first 3D printed playground which will feature recycled concrete. China has recently constructed a 3D retractable bridge. The Bluetooth-controlled bridge is comprised of 36 3D printed triangle panels. The Netherlands features the country’s first 3D printed stainless steel bridge.
Stanford creates new school for study of climate and sustainability which will open in the fall of 2022. The school will foster innovating new technologies to solve energy, climate and sustainability challenges.
The Big 3 pledge 40-50% Electric Vehicle sales by 2030. GM aspires to be fully electric by 2035.

While these examples of ESG are on the larger scale, even small and medium businesses can make impactful sustainability goals aligned and reported on through the ESG metrics.

To find out more about the metrics and how we can help you achieve ESG success, click the button below.

More about the metrics

Article 06.8.2021 Dean Dorton

Public companies have seen the need to implement ESG programs to enhance stakeholder value through the company’s commitment to the future. Investors have been factoring into investment decisions the presence of an ESG program that focuses on sustainability. To help companies attract investors, Nasdaq launched an ESG Advisory Program in 2019. The program lays out ESG metrics that provide investors a clear understanding of the company’s sustainability objectives.

In 2020 Nasdaq rolled out an ESG platform for public companies that allows a portal to input ESG factors and the service generates meaningful ESG metrics and accommodate the different sustainability frameworks that rating agencies and stakeholders expect.

“Our clients face several challenges with the ESG reporting process, including the lack of control over data management and survey fatigue due to the variety of raters and reporting frameworks,” said Nelson Griggs, President of the Nasdaq Stock Exchange. “We believe that we are uniquely positioned to solve for these challenges given the thousands of clients who rely on Nasdaq for counsel on a range of sustainability and governance-related issues. The new platform will broaden our strategic collaboration with corporates who are seeking new ways to bring efficiency and simplicity to the ESG reporting process.”

The Big Four accounting firms have developed a set of 21 metrics for companies to use for ESG reporting internationally. The metrics are built around four pillars: governance, planet, people, and prosperity.

“The disruptions of 2020 have underscored the critical importance of organizations managing and reporting their impact on the economy, the environment and society, and their increasing connection to long-term enterprise value creation,” said Deloitte Global CEO Punit Ranjan in a statement. “Deloitte is pleased to have led the development of the Principles of Governance pillar and collaborated on this project with so many respected organizations. We hope our work supports organizations as they move toward consistent reporting of ESG metrics and disclosures in mainstream annual reports, as ultimately, this is how the business community will make greater progress against the Sustainable Development Goals.”

Companies view the importance of social, climate and other non-financial factors as crucial for long-term viability and success. A survey by the World Economic Forum found 86 percent of executives agreed that reporting on a set of universal ESG disclosures is important and would be useful for financial markets and the economy. Separately, however, the Securities and Exchange Commission recently approved by a vote of 3-2 changes in a shareholder proposal rule, significantly raising the ownership thresholds required to file and resubmit proposals to corporate boards on ESG issues such as climate change, diversity and excessive pay. The Council of Institutional Investors blasted the move according to Accounting Today’s article last fall.

More about the metrics

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