Open the sustainability report of almost any large healthcare company and you will find the same furniture. A photograph of solar panels on a distribution centre. A chart showing falling emissions from company buildings and vehicles. A diversity statistic for the board. A page on community volunteering.
Much of it is true. Much of it is beside the point.
In 2019, Health Care Without Harm and the engineering firm Arup estimated that the health sector’s climate footprint was equivalent to 4.4 percent of global net emissions. If health care were a country, they wrote, it would be the fifth-largest emitter on the planet. The same report found that 71 percent of those emissions came primarily from the supply chain: the manufacture, transport and disposal of the goods and services the sector buys.
That single figure explains what is wrong with a lot of healthcare ESG reporting. The thesis: healthcare companies report most confidently on what they control directly and what matters least, while the material issues for the sector, supply-chain emissions and whether their products reach the people who need them, sit in the parts of the report that are vaguest.
The scope problem
Emissions accounting divides a company’s footprint into scopes. Scope 1 covers direct emissions, such as fuel burned in a company’s boilers or vehicles. Scope 2 covers purchased electricity. Scope 3 covers everything else in the value chain, from raw materials to the use and disposal of the product.
Scopes 1 and 2 are relatively easy to measure and to cut. Switch the power contract to renewables, electrify the fleet, and the chart bends downward. Scope 3 is hard. It depends on thousands of suppliers, estimation methods that vary widely, and decisions the company does not fully control.
For health systems, pharmaceutical companies and medical device makers alike, Scope 3 is where most of the footprint lives. A report that leads with falling Scope 1 and 2 emissions while presenting Scope 3 as a rough estimate with wide caveats is technically honest and substantively misleading. The reader comes away thinking the company has made progress on the problem, when it has made progress on the smallest part of the problem.
Why companies measure the easy things
It would be comforting to blame this on greenwashing. Mostly it is something more ordinary: the incentives inside a company reward the numbers that move.
A sustainability team has a budget, a reporting deadline and executives who want to show progress. Scope 1 and 2 cuts can be bought. A renewable power purchase agreement is signed once, and the next year’s chart improves. The team gets credit, the chief executive gets a slide, and nobody has to renegotiate with a supplier in another continent.
Scope 3 offers the opposite deal. Cutting it means changing what the company buys, from whom, and how the product is designed. That requires procurement, research and development, and commercial teams to accept higher costs or slower timelines. The sustainability team rarely has the authority to demand that. So it reports what it can control, estimates the rest, and writes careful footnotes.
Measurement methods make it worse. Many Scope 3 figures are calculated from spending, multiplying the money spent in a category by an average emissions factor for that industry. Under that method, a company that buys the same goods more cheaply appears to have lower emissions, and a company that switches to a genuinely lower-carbon supplier who charges more can appear to have higher ones. The measurement cannot see the change the company actually made. Until suppliers report their own product-level emissions, the most important number in the report is also the least responsive to real effort.
A worked example: where the carbon actually sits
Consider an illustrative hospital group. These proportions are assumptions for the arithmetic, broadly in line with the sector pattern Health Care Without Harm describes, not the figures of any particular organisation.
Suppose its total footprint is 100,000 tonnes of carbon dioxide equivalent a year, with 70,000 tonnes in the supply chain: pharmaceuticals, medical devices, food, single-use plastics, contracted services. The remaining 30,000 tonnes come from its buildings, vehicles and electricity.
Over five years, it switches to renewable power and electrifies its vans, cutting Scopes 1 and 2 by half. That is a genuine achievement and a 15,000-tonne reduction. The sustainability report says, accurately, “operational emissions down 50 percent.”
Meanwhile, patient volumes grow and the supply-chain footprint rises by 10 percent, adding 7,000 tonnes. The net result is a total fall of 8 percent. The headline says 50. The truth is closer to 8, and the gap is precisely the part of the footprint the report treats as an estimate.
This is not hypothetical accounting mischief. It is what happens when the easiest metric is also the one printed largest.
The social pillar that isn’t there
There is a second, more uncomfortable gap. For most industries, the S in ESG covers labour practices, community relations and human rights in the supply chain. Those matter in healthcare too.
But a healthcare company’s most significant social impact is its core business. Whether its medicines are affordable in the countries where people need them. Whether a device maker keeps supplying a low-margin product that hospitals depend on. Whether a company’s products are safe, and how quickly it acts when they are not. Whether a health system provides equitable care to the communities it serves.
These are rarely the centrepiece of an ESG report. Access programs appear, often as case studies of donations or tiered pricing in selected countries. Pricing decisions in the company’s largest markets, which affect far more patients, seldom do. The result is a report that treats the company’s social footprint as something that happens alongside the business, rather than as the business itself.
Supply reliability belongs here too. When a manufacturer withdraws an old, unprofitable sterile injectable and a shortage follows, patients bear the consequences. That decision is a social impact by any sensible definition. It almost never appears in the social section of a sustainability report.
Regulation has been an unreliable driver
For a while, European regulation looked set to force more rigour. The EU’s Corporate Sustainability Reporting Directive requires companies to report on their impacts, including across the value chain, using detailed standards and a “double materiality” test that asks both how sustainability issues affect the company and how the company affects people and the environment.
Then the timetable moved. In April 2025, the EU adopted the so-called Stop-the-Clock Directive as part of its first Omnibus simplification package. It delayed reporting obligations for the second wave of companies by two years, so that large companies not already reporting would first report in 2028 on financial year 2027. At the same time, work began on simplifying the reporting standards themselves.
Whatever one thinks of the policy, the signal to companies is clear: reporting obligations can be renegotiated. Firms that built their sustainability work around compliance deadlines now have a reason to slow down. Firms that built it around what actually matters to their business do not.
The strongest counterargument
The best defence of current practice runs like this. Scope 3 data are genuinely poor. Asking companies to lead with a figure that could be off by a wide margin invites false precision and, worse, legal risk. Better to report what can be audited and improve the rest over time. And access and pricing are commercial matters, contested and politically sensitive, that do not fit neatly into a sustainability framework.
Some of that is right. Leading with a shaky number, presented as exact, would be its own kind of misleading. Auditability matters, and a report stuffed with estimates can become unreadable.
But the argument proves less than it claims. Uncertainty is a reason to state the method and the range, not a reason to push the largest item to the back of the report. Financial statements handle uncertain estimates all the time, from pension liabilities to legal provisions, without pretending they are small. And the claim that access is a commercial matter rather than a social one is exactly the problem. For a medicine maker, the commercial decisions are where the social impact lives.
Second-order effects of getting this right
If healthcare reporting did shift toward Scope 3 and access, the effects would travel.
Suppliers would face a flood of data requests, each hospital group and drug company asking for emissions per product in its own format. Without shared templates, that becomes a compliance tax that small suppliers, including the thin-margin generic makers the sector already struggles to keep, may not be able to pay. Standardisation is not a detail. It is the difference between better data and more paperwork.
Procurement would become the sustainability department’s main lever, which changes who holds power inside a health system. The people who write tenders would matter more than the people who write the report.
And honest access reporting would expose uncomfortable comparisons between companies. That is the point, but it would also make some firms retreat into vaguer language rather than publish numbers that competitors can use against them. Investors and regulators would need to insist on common definitions to prevent that.
What each actor can do now
Hospital and health-system chief executives can put their largest purchase categories, not their buildings, at the top of the sustainability agenda, and give procurement a formal emissions target alongside its savings target. Health systems are huge buyers. Their tender criteria can do more for supply-chain emissions than their own solar panels.
Payers and public purchasers can ask for product-level emissions and supply-reliability data in tenders for high-volume categories, starting small with the products that make up most of the spend.
Investors reading healthcare reports can ask one simple question of each company: what share of your footprint is Scope 3, and what specific supplier changes will reduce it? Vague answers are informative.
Pharmaceutical and device companies can report access in their core markets, not only donation programs in low-income countries, and disclose how many sites make each critical product and what happened when one failed.
Founders building carbon accounting or supply-chain tools for healthcare should notice where the real gap is. Buildings are already measured. The unmet need is credible product-level data that flows from manufacturer to buyer in a common format.
Ministries of health that run national procurement can do what private purchasers struggle to: set one data standard for suppliers and require it across the system, sparing each supplier dozens of different questionnaires.
What to watch over the next two years
Watch the simplified European reporting standards as they are finalised, and whether value-chain reporting survives in a meaningful form or is trimmed until it says little. Watch whether large health systems publish procurement criteria that reward lower-emission products, and whether suppliers respond with product-level data. And watch whether any major drug maker leads its sustainability report with access and pricing in its largest market. That would be a small editorial choice with large implications, and the first company to make it will set the bar for the rest.
The takeaway
ESG reporting in healthcare will not be judged by how polished the reports look, or even by whether European deadlines slip. It will be judged by whether it describes the problems that are genuinely the sector’s: a carbon footprint dominated by what it buys, and a social impact defined by who can get its products. Lead with Scope 3, stated with its method and uncertainty. Report access where most patients are. Use fewer, harder metrics that are audited and comparable year to year. Until the reports do that, they are describing the car park, not the hospital.
If you read healthcare sustainability reports for a living, which single metric do you wish every company had to publish? Tell us in the comments.
