2025-09-09

In a recent ESG (Environment, Risk & Governance) Risk and Opportunity analysis of 20 listed Indian companies, 11 from Pharma and 9 Hospital Chains, we found both the Pharma and Hospital Composite ESG Opportunity scores, at 40.6 and 40.2 (out of 100) pointing to the “Emerging” nature of ESG maturity in the sector. Composite ESG Risk scores at 31 and 39.6 respectively showed “Low Risk” and “Medium Risk” categorisation. On ESG Opportunity, E scores were the lowest at 38.6 (Emerging Opportunity) and 22.5 (Limited Opportunity), whereas on ESG Risk, E risk was the highest at 37.9 and 55.5 respectively (both Medium Risk). This analysis validated by fifteen co-authors, all industry leaders, in the publication “Healthcare: An ESG Performance Framework” launched by Aspire Circle and Aspire Impact on 15 July in New Delhi highlights the imperative that our global star- Pharma, and Indian Hospitals, must come of age to compete in the 21^st century!

India’s healthcare sector, projected to reach $638 billion by 2025, is at a critical inflection point. The COVID-19 pandemic exposed vulnerabilities in our healthcare systems, from fragile supply chains to inadequate infrastructure and inequities in access to care. It also revealed how environmental mismanagement, social disparities, and governance failures can directly undermine public health. In this transformed landscape, for healthcare, pharmaceutical, and biotech companies, integrating Environmental, Social, and Governance (ESG) principles has become fundamental to building resilience, ensuring sustainability, and meeting rising expectations from investors, regulators, and society at large.

Healthcare is inherently connected to ESG values. Hospitals and pharma operations are resource-intensive, with significant energy and water usage, biomedical waste generation, and complex supply chains. Failures in governance, whether pricing disputes or drug quality lapses can have life-and-death consequences. Socially, issues of access and affordability remain acute, millions still lack basic care while drug pricing and distribution gaps fuel inequity. The industry’s close interaction with communities and constant public scrutiny demand a standardised, measurable, comparative, and transparent approach to ESG.

Post-pandemic realities have amplified these challenges. Climate-linked health risks, such as heat stress and vector-borne diseases, are increasing. Antimicrobial resistance (AMR), driven partly by pharmaceutical waste mismanagement, has emerged as a pressing global threat. Simultaneously, rapid digital transformation through telemedicine, AI-based diagnostics, and electronic records has introduced critical governance responsibilities around patient privacy and cybersecurity. These factors underline that ESG considerations are embedded in the very functioning of healthcare.

Therefore, in healthcare, pharma and biotech, where companies simultaneously face high environmental and governance risks but transformative opportunities to drive social impact as well, ESG measurement can be an engine of innovation and competitive advantage. Some of these ways could be:

• Green Infrastructure: Hospitals and pharma plants are transitioning to renewable energy, smart HVAC, and LED retrofits, cutting Scope 1 and Scope 2 emissions while reducing costs. Excess solar power is fed into grids, supporting India’s renewable energy targets.
• Water Stewardship: With water scarcity looming large, firms are deploying Zero Liquid Discharge (ZLD) systems, rainwater harvesting, and borewell recharge projects to conserve and recycle water while reducing community conflicts over shared resources.
• Waste and AMR Control: From Zero Waste to Landfill certifications to EPR-compliant plastic recovery, pharma companies are addressing biomedical and packaging waste. Strict adherence to the Common Antibiotic Manufacturing Framework ensures pharmaceutical residues don’t fuel antimicrobial resistance.
• Digital Transformation for Equity: AI-driven diagnostics, telemedicine, and cloud-based patient care platforms are expanding access to underserved areas while reducing the need for resource-heavy physical infrastructure.
• R&D and Green Chemistry: Research pipelines are incorporating green chemistry principles, cutting resource use and waste generation in drug development, while developing therapies targeted at climate-sensitive and emerging health threats.

By embedding sustainability in core operations, pharma and biotech companies can reduce risk exposure, unlock operational efficiencies, attract ESG-linked financing, and strengthen public trust.

India’s ESG reporting landscape is also evolving rapidly. SEBI’s reforms including tightening disclosure norms via BRSR Core, strengthening ESG rating credibility, and refining supply chain reporting requirements, signal that ESG compliance is moving closer to the rigor of financial reporting. At the same time, global investors are shifting capital toward ESG-aligned companies, demanding evidence-backed sustainability performance. Moreover, as India targets $385 billion in clean energy and resilience investments over the next few years, ESG-aligned healthcare companies stand to attract climate finance by showcasing their contribution to emissions reduction and community resilience.

Healthcare cannot remain a bystander in India’s sustainability transition. The sector’s environmental footprint, from energy use to waste disposal, has direct implications for both planetary and human health. ESG integration in pharma and biotech must be baked into strategy and governance. Boardrooms must prioritise ESG literacy, align executive incentives with sustainability outcomes, and embed accountability mechanisms that go beyond annual reporting.

Companies must also leverage sector-specific ESG benchmarks for sharper peer comparisons, drive transparency in pricing and supply chain ethics, and collaborate with regulators, investors, and civil society to build trust and resilience.

This is particularly urgent given that India’s healthcare sector is both a growth engine and a public good. A healthy workforce drives productivity, innovation, and economic competitiveness, making ESG integration not just a corporate agenda, but a national imperative.

Authored by Amit Bhatia, Founder of Aspire Impact & Aspire Circle, and Harpreet Kaur, Vice President & Chief Knowledge Officer at Aspire Impact.