Human health has long been associated with nature. Hippocrates, the father of modern medicine, encouraged patients to walk in his forest to aid their healing.

Today, the link between the environment and human wellbeing is better understood. Perhaps for that reason, the healthcare and life sciences (HLS) sector is especially eager to pursue opportunities in sustainability, our global executive survey found.

Seven out of 10 senior decision makers in the sector say their organisation prioritises sustainability investments in areas that present the greatest opportunities for profit and growth – the highest proportion of any sector included in the study.

But while HLS businesses are not typically seen as the biggest polluters, they are wary of the reputational risks posed by sustainability. Patient centricity is the industry’s most cherished principle, and a breach of environmental or social responsibility that harmed health and wellbeing would be disastrous for an HLS brand.

This means that, while HLS companies are especially aware of the opportunities in sustainability, they are also more sensitive to some of its risks. For both reasons, the sector must manage its sustainability impact expertly.

The impact of public procurement and technology assessment

One risk comes from this sector’s dependence on government procurement and the approval of healthcare regulators, both of which are increasingly concerned with social and environmental sustainability.

For example, public procurement bodies in Europe are increasingly required to exclude suppliers from contracts if they are not up to date on their environmental reporting.

This might explain why the HLS companies we surveyed place greater emphasis on decarbonisation than any other sector: 68% of HLS respondents say decarbonising operations is a primary focus of their sustainability investments, compared with a cross-sector average of 58%.

Similarly, the regulatory bodies that approve drugs and medical devices pay growing attention to the environmental impact of these products.

France’s health technology assessment authority, HAS, announced last year that it will take environmental aspects into account when assessing new drugs and medical devices, including their packaging. HAS’s assessment is used to define the reimbursement price for medical technologies, meaning it has far-reaching commercial implications for manufacturers.

In Europe, regulatory scrutiny of the HLS sector’s social and environmental impact is set to grow, not only from the wave of cross-sector sustainability regulation that is currently in development, but also from a proposed new package of pharmaceutical regulation.

This draft regulation aims to limit the risk of medicinal residue leaking into the environment during manufacturing, use or disposal. Leakages of antimicrobial medicines could be disastrous either as contaminants or even increasing microbial diseases’ resistance to treatment. The regulation would mean stricter environmental risk assessments for HLS organisations.

Growing scrutiny means HLS companies are as cautious about the legal risks of sustainability as they are eager to capture its opportunities: the same proportion (48%) identify the prospect of legal penalties or litigation as their organisation’s greatest sustainability-related concern as those who say their biggest worry is missing out on opportunities by failing to invest.

Opportunities in the HLS sector’s war for talent

The greatest opportunity in investing in sustainability, according to HLS executives, is a chance to strengthen their hand in the war for talent. Not only does the industry require access to highly skilled healthcare professionals; it also needs engineers, data analysts and other technical talent, for whom it faces stiff competition from the TMT and financial sectors.

Social and environmental commitments boost the sector’s appeal, HLS executives believe. They rank attracting talent by making sustainability commitments (53%) and by improving their working practices/diversity and inclusion (51%) as the two greatest opportunities in sustainability. Fittingly, 72% identify diversity and inclusion as a primary focus for their sustainability initiatives, more than any other theme.

Biodiversity, by comparison, is much less of a priority. Only 33% of HLS respondents place this among their top five focus areas, compared with a cross-sector average of 48%. They are also less likely than average to be confident in their organisation’s understanding of biodiversity (57% vs 62% across sectors).

This could prove to be a dangerous oversight. Nature is a critical resource to the sector: according to the World Health Organization, 40% of pharmaceutical formulations derive from nature.

Failure to protect biodiversity could expose the HLS sector to reputational risk, regulatory penalties, or litigation. But more than this, it could also jeopardise its ability to develop much-needed new treatments in future.

To protect its reputation amid growing scrutiny of its sustainability impact, the HLS sector should follow Hippocrates’ lead, and ensure that health and nature are aligned.