Chief financial officers and financial leaders are seen and considered as one of the drivers for their organisations' environmental, social, and governance (ESG) initiatives.
With this in mind, financial leaders must take into consideration the current market and organisational trends across various industries to maximise their financial planning and analyses, thereby benefiting the company as a whole.
For the medical technology industry, companies in the Asia-Pacific region are increasingly prioritising their ESG initiatives, according to a survey jointly conducted by Bain & Company and the Asia Pacific Medical Technology Association (APACMed).
The survey, which included 120 customers and over 800 employees and executives from medtech companies across six Asia Pacific markets, revealed that more than 70% of medtech customers from Australia, China, India, Japan, South Korea, and Vietnam said their organisations had already defined ESG strategies.
Such strategies involve adopting ambitious objectives, precise metrics, and quantifiable targets in the ESG side of the business. In comparison, 60% of medtech employees reported that their companies have established ESG ambitions and set specific targets.
According to the survey, 53% of customers in the region expect that the significance of ESG criteria in their organisation’s supplier selection will rise over the next two years, with 69% expecting a further increase in importance over the next five years.
Australia and China lead, with 85% and 60% of customer respondents, respectively, predict their organisations will prioritise ESG factors in their key purchasing criteria within two years. More than 90% of surveyed customers in the two markets possess well-defined ESG strategies.
Australia stands out as a leader in ESG maturity, according to Bain, having implemented comprehensive regulations and a wide range of policies related to environmental matters at both state and national levels.
China, Japan, and South Korea have also made significant progress in environmental policies over the past five years, emphasising the reduction of energy intensity and the pursuit of carbon neutrality. Circularity initiatives around sustainable material use and waste management are gaining traction with increased adoption expected in the years ahead, according to Bain.
On the other hand, Bain observes that countries such as India and Vietnam remain in the nascent stages of environmental development. These markets are currently creating more environment-specific rules, including those designed to address the unique needs of the medtech sector.
In addition to the challenges in maneuvering through the diverse and constantly evolving environmental policy landscape in Asia Pacific, Bain points out that medtech companies must also deal with the absence of comparable and reliable data crucial for making well-informed ESG-related investments and business decisions.
Customer requirements also affect the medtech industry’s response to ESG concerns. Surveyed customers revealed that they still prioritise product quality and cost over environment when selecting third-party suppliers. However, the importance of environmental factors is expected to increase in the next two years, with 30% of surveyed customers ranking it as a top-three criterion when selecting medtech suppliers.
Environmental factors are increasingly influential in supplier selection for customers in Australia, as electronic waste management and product circularity are rated as the most important criteria for supplier selection. In contrast, only 18% of surveyed customers in Vietnam and South Korea rate environmental factors as one of their top three purchasing criteria.
Meanwhile, over 90% of surveyed employees in India and Vietnam consider environmental factors important in their daily lives and their companies’ operations. About 78% of surveyed employees in these two markets agree that environmental stewardship is a crucial driver for attracting talent.
Medtech companies have launched numerous initiatives including energy-efficient manufacturing, supply chain engagement, recycling, waste reduction, remanufacturing, and eco-material adoption, with a focus on improving healthcare access, community engagement, diversity, and inclusion.
Further acknowledging the importance of ethical business practices and transparency, medtech companies in the Asia-Pacific region have restructured their standard operating procedures and offered supplementary compliance training for employees.