Conversation with Adrian Wain: The Future of ESG Reporting in Health and Life Sciences

Q: What's driving the growing urgency for health and life science companies to develop more comprehensive ESG strategies?

A: For many companies, the view on ESG reporting has shifted from a secondary task to maximizing opportunity and mitigating risk.

On the opportunity side, there are two primary drivers. The first is access to care. By prioritizing affordability and accessibility, health and life science companies can expand their reach into more healthcare systems and underserved patient markets. Pharmaceutical companies began this trend, working to make drugs more affordable, and the trend is expanding into medical devices and services. For example, lowering the cost of a magnetic resonance imaging (MRI) scan allows more patients access while enabling the healthcare company to reach more consumers.

The second is waste reduction and circularity. These principles introduce significant potential to enhance business models in multiple dimensions. Medtech companies can innovate single-use devices so they're recoverable or multiuse and design larger equipment for remanufacturing and life extension. Extending the lifespan of equipment such as an MRI machine can help reduce the cost of the machine, lowering the overall cost of the service. The cost reduction allows the service provider to decrease patient costs and increase patient access, playing back into the social metric of the ESG equation.

On the risk side, healthcare is a major contributor to climate change. Medical device manufacturing accounts for a notable share of sector emissions, making decarbonization a key risk-mitigation priority. There are also persistent concerns around long-lasting pollution from discarded devices. Addressing these risks and turning them into innovation opportunities is becoming a core part of competitive business strategies.

Q: How do you see ESG expectations evolving over the next five years?

A: Regulation is no longer the primary driver. We've seen a slowdown in some areas, such as a pause in U.S. ESG-related regulations and the EU's Corporate Sustainability Reporting Directive (CSRD). The pressure for progress in reporting is coming from the market and a continued regulatory push in other countries.

In the U.K., the National Health Service (NHS) has set clear net-zero and sustainability goals. In the U.S., the largest healthcare providers continue to prioritize ESG in supplier relationships. So even if regulation lags, market demand is pushing ESG forward. Looking ahead, there are three forces shaping ESG expectations:

• Regional divergence - While the U.S. and EU may slow down, the Asia Pacific region is pressing ahead with more ambitious ESG regulations.
• Competition for resources - The global push toward electrification is creating a "resource rush," which will make circularity and material recovery even more important.
• Greater transparency - The frameworks and data structures for consistent ESG reporting already exist, so expect more consistent and comparable disclosures from health and life science companies.
• Market demand - Companies that have integrated ESG reporting into their daily operations are seeing financial benefits, and consumers and investors are generating external pressure.

Enabling safety, compliance and sustainability for medical innovation

Q: For companies just beginning their ESG journey, what's a realistic first step toward decarbonizing supply chains and addressing Scope 3 emissions?

A: Most mid-size companies are earlier in the journey than large multinationals; they've had less regulatory pressure and fewer resources for ESG reporting. That's changing quickly as stakeholders push for action.

The starting point is visibility. Companies can establish a baseline by mapping their Scope 3 emissions to see where they are concentrated and look at:

1. Supplier requirements - Integrate carbon-reduction expectations into supplier codes of conduct and contracts and align them with science-based targets.
2. Supply chain optimization - Evaluate whether shifting production or suppliers to regions with cleaner energy grids, different logistics or manufacturing processes can materially reduce emissions.
3. Product design changes - Incorporate recycled materials in non-patient-contact components, design devices for disassembly, and implement remanufacturing programs to reclaim valuable components.

Companies can take these steps sequentially or run them in parallel for faster impact.

Q: What are the most significant operational or organizational barriers to ESG reporting in the health and life sciences?

A: There are four main challenges:

1. Organizational alignment - ESG needs to be embedded in the core business strategy, not siloed in a side office. When reporting is treated as business-critical and overseen by the CFO or CEO, the process becomes much more effective.
2. Fragmented reporting standards - Until recently, ESG reporting frameworks were fragmented. Now, we have greater interoperability between standards like the Global Reporting Initiative (GRI) and International Financial Reporting Standards (IFRS).
3. Complex data collection - ESG touches procurement, operations, design, human resources (HR) and sales. Modern data platforms can help companies centralize and streamline reporting, reducing the friction of consistent operations wide data collection.
4. Proving the value case - Historically, leaders questioned returns on ESG efforts. Now, evidence shows strong correlations between ESG governance and financial performance, strengthening the business case.

Q: How is ESG reshaping the assessment and management of supply chain risks?

A: Knowing if a supplier's factory is in a floodplain or an area with high climate risk can be just as important as knowing their pricing and quality record. ESG insights are helping companies plan for resilience and continuity of supply.

Q: How can artificial intelligence (AI) support ESG in medtech?

A: AI has the potential to accelerate ESG progress in several ways, including:

• Data transparency - Automating the collection and analysis of supplier sustainability data can help reduce the need for manual outreach and processing. For example, a health and life sciences company could use AI to monitor supplier data and flag suppliers by reporting inconsistencies or gaps as potential business risks.
• Predictive demand planning - AI models can forecast demand for medical devices like insulin pumps or diagnostic kits based on epidemiological trends and hospital usage data. This forecasting helps avoid overproduction, reducing waste and minimizing the environmental footprint of manufacturing and logistics.
• Predictive maintenance - AI can monitor equipment like MRI machines or robotic surgical systems to predict when parts need replacement based on usage and performance data. AI-enabled monitoring helps extend the life of capital-intensive devices and reduces electronic waste, aligning with circular economy principles.

While the health and life sciences industry is still in the early stages of applying AI to sustainability, these examples show how it can improve resource efficiency, streamline reporting processes and support more responsible innovation.

Q: Do you see equal access to healthcare becoming a bigger ESG priority?

A: Yes. Access to care is a clear social component of ESG, and health and life science companies are recognizing that affordability is key to market growth and patient impact. Lowering the cost of using a device through product design, business model changes or remanufacturing can help companies expand access and align with business and ESG goals.

Q: If you had to summarize the most important mindset shift for health and life science leaders, what would it be?

A: ESG expectations in the health and life sciences are being shaped as much by customers and market forces as by regulation. Companies that invest early in data transparency, supply chain decarbonization and socially impactful innovation are finding it easier to meet stakeholder demands and unlock new market opportunities.

Use ESG reporting to identify business opportunities, manage strategic risks and strengthen resilience. Companies that can integrate ESG as a core part of their business strategy will be better positioned to compete in an increasingly sustainability-driven market.

Within UL Solutions we provide a broad portfolio of offerings to all the medical device industries. This includes certification, Approved/Notified Body and consultancy services. In order to protect and prevent any conflict of interest, perception of conflict of interest and protection of both our brand and our customers brand, we have processes in place to identify and manage any potential conflicts of interest and maintain impartiality. UL Solutions is unable to provide consultancy services to EU MDD, MDR or IVDD Notified Body, UKCA MD Approved Body or MDSAP Customers.