Historically, evaluating investments focused solely on financial returns. However, with the growing significance of climate change, the concept of “triple bottom line” or financial, environmental, and social impact has been gaining traction. This push to look at investment decisions more holistically has given rise to ESG (Environmental, Social, and Governance) practices and policy.
ESG measures the societal and sustainability impact of every business activity. Investors are now looking to responsibly invest in companies that manage their impact on the environment and society at large. To serve this need of investors.
ESG rating agencies use analysts to measure the performance of various companies and compare them through ratings and rankings, this does not always show the full picture as the rankings can sometimes be as old as 6-12 months.
ESG Analytics is a platform that uses artificial intelligence and alternative data (data outside of corporate disclosures) to benchmark company ESG performance, this allows for more company coverage, real time insights and the ability to look beyond a score to determine whether a company meets the ESG criteria you are looking for.
We took a look at the Health Care industry, to understand the best performers. Read on to learn how industry leaders like Cigna Corporation, Centene, Humana Inc, McKesson Corporation and PerkinElmer Inc demonstrate a well managed company, with low ESG controversy risk.
How were these companies selected?
Each day, ESG Analytics processes millions of documents to identify and manage ESG risk using our proprietary Natural Language Processing (NLP) algorithms. Once we identify a material event, we classify it according to the industry leading SASB framework (26 different ESG topics) and then run sentiment analysis to determine how positive of negative the event is. This chart below shows the ESG Pulse of companies in the Health Care sector. For accuracy, we excluded companies that did not meet a minimum threshold of events.
Here is the full list :
1. Cigna Corporation
Cigna is a global health service company, offering health, pharmacy, dental, supplemental insurance and Medicare plans to individuals, families, and businesses.
Cigna's ESG Pulse is a 0.98 out of 1, indicating a well managed public profile, free of ESG controversy. They have also had several events that are material to the Health Care industry such as Access and Affordability
Some of its recent initiatives this year include:
- Cigna Expanding Small Businesses' Access to Affordable Health Plans in California
- $5m grant through the Cigna foundation that will go towards the health and well being of children.
Cigna has been recognized by asset managers globally as a company with a high degree of social responsibility and is included in ESG funds such as the iShares USA ESG Select ETF.
Centenne Corporation operates as a multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States.
Centenne has an ESG Pulse of 0.99 out of 1, a standout performer using ESG Analytics AI based methodology. Their business model has an embedded social focus in bringing services to underrepresented individuals. Some initiatives over the last year include:
- Centene Announces New Community Investments To Address Social Determinants Of Health
- Centene Launches Youth Impact Award for Vaping Prevention
- Centene and Samsung Team up to Enable Virtual Care Options for Underserved Communities
Centenne is also a member of the Bloomberg Gender Equality Index (GEI) which tracks tracks the performance of public companies committed to disclosing their efforts to support gender equality through policy development, representation and transparency.
3. Humana Inc
Humana Inc., together with its subsidiaries, operates as a health and well-being company in the United States. It operates through Retail, Group and Specialty, and Healthcare Services segments. The company offers medical and supplemental benefit plans to individuals. It also has contract with Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program; and contracts with various states to provide Medicaid, dual eligible, and long-term support services benefits.
Humana has an ESG Pulse of 0.98 out of 1, and is not included in any negative screens. This pulse score highlights an extremely low controversy risk, and a well managed company from an ESG perspective.
Some initiatives over the last year include:
- Humana Foundation Invests 5.4 Million in Eight Communities to Address Social Determinants of Health
- Louisville Nonprofits Receive $2.2 Million through Humana Foundation’s Community Partners Program
- Humana’s 2020 Bold Goal Progress Report Details Improved Mental and Physical Health Among its Population
4. McKesson Inc.
McKesson Corporation provides pharmaceuticals and medical supplies in the United States and internationally. It operates through three segments: U.S. Pharmaceutical and Specialty Solutions, European Pharmaceutical Solutions, and Medical-Surgical Solutions. The company distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs, as well as other healthcare-related products; and offers practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices, as well as solutions for life sciences companies.
McKesson lands an ESG Pulse of 0.92 out of 1, and has a low amount of contraversies.
They are not immune however, for example, there is an ongoing class action lawsuit that revolves around the intent to collude on price fixing of certain drugs by McKesson and other industry peers.
5. PerkinElmer Inc.
PerkinElmer, Inc. provides products, services, and solutions to the diagnostics, life sciences, and applied services markets worldwide. The company operates in two segments, Discovery & Analytical Solutions and Diagnostics. The Discovery & Analytical Solutions segment offers a suite of solutions, including reagents, informatics, and detection and imaging technologies that enable scientists to enhance research breakthroughs in the life sciences research market, as well as laboratory services. It also provides analytical technologies, solutions, and services for the environmental, food, and industrial markets that enable its customers to understand the characterization and health of various aspects, including air, water, and soil.
PerkinElmer has a ESG Pulse of 0.99 out of 1, and has no material ESG controversies of note.
Some initiatives they have launched include:
- PerkinElmer Joins Accenture’s Life Sciences Ecosystem to Help Drive Innovation in Drug Discovery and Scientific Research
- Creation of a global diversity and inclusion board to identify global and local champions
PerkingElmer generally has low risk from external ESG providers, and their executive compensation is well within the acceptable ranges of their peer group.