Our evolving journey into

Medline’s broader focus to meet evolving customer and regulatory requirements

CCompanies are embracing a broader view of what it means to be a good corporate citizen. They’re recognizing the responsibilities and benefits of addressing the environment, social equity and good governance. A commitment to these priorities is good business, and increasingly, a requirement for operating in the U.S. and throughout the world.

More than 10 years ago, Medline created a sustainability initiative that has since evolved into a comprehensive Corporate Social Responsibility (CSR) program with additional focus on global health equity and local community impact. “The work we’ve done to be a positive social and environmental steward has had a tangible impact on the health systems we partner with and the communities we serve,” said Francesca Olivier, vice president of Medline Environmental, Social and Governance (ESG).

With regulatory standards and customer expectations evolving, Medline has moved from a CSR to an ESG model, establishing “a broader, global and data-driven approach to measure our non-financial performance,” said Olivier.

Customers today routinely seek information and metrics on environmental sustainability, diversity, equity and inclusion (DEI), and ethical sourcing—ensuring that our products are made responsibly and respecting human rights throughout our supply chain. At the same time, lenders, investors and countries around the world are increasingly requiring ESG data disclosure, often relying on public, third-party ESG scores based on metrics.

“ESG, in a sense, is mandatory for the company to undertake. Regulatory compliance and customer expectations are driving us to do these things—we need to satisfy both,” said Alex Liberman, Medline General Counsel, who oversees the ESG effort. “We take a lot of pride in making Medline net positive in the world. Everyone involved is very sincere and energized about this undertaking.”

What makes ESG different?

While a traditional CSR program aims to make a company accountable for its larger societal responsibilities by focusing on a few key areas, an ESG program takes the CSR agenda further, fully integrating environmental and social responsibility into existing corporate strategy, paired with a strong governance framework. An ESG model also requires quantifiable targets and measurable impact assessments.

The Sustainability Accounting Standards Board (SASB) has outlined five dimensions within ESG:

• The environment. This includes emissions, air quality, energy management, water and wastewater management, waste and hazardous material management, and ecological impact.

• Social capital. Human rights, community relations, customer privacy, data security, affordability, product quality and safety, customer welfare, and selling practices and labeling.

• Human capital. Employee health and safety, and employee engagement, diversity and inclusion.

• Business model and innovation. Product design and lifecycle, business model resilience, supply chain management, materials sourcing and efficiency, and the physical impacts of climate change.

• Leadership & governance. Business ethics, competitive behavior, management of the legal and regulatory environment, critical incident risk management, and systemic risk management.

“Medline’s ESG program will include a new level of transparency and disclosure, requiring coordination across all regions and divisions, a greater commitment to diversity, equity and inclusion throughout our ranks, stronger due diligence around ethical sourcing throughout our supply chain, and a deepened commitment to good governance,” said Olivier.

“By embracing ESG now, we’re positioning Medline to succeed in the future,” said Evelyn Miller, Medline senior manager, ESG. “Beyond the importance of transparency and the need to satisfy regulatory and disclosure requirements, I can’t emphasize enough the link between ESG and positive business performance. Reducing operating expenditures and risk, improving resiliency, helping to attract and retain top talent, improving agility, enhancing brand image and driving revenue growth are all benefits of ESG programming and commitments.”

Determining customer needs

To gauge customer ESG interests and priorities, Medline conducted a comprehensive assessment in partnership with Practice Greenhealth, the leading sustainable healthcare member organization in the U.S. Decision makers at 46 health systems were surveyed on the extent to which ESG is incorporated into healthcare purchasing decisions. Recent requests for information also were reviewed to assess the number and nature of ESG-related requests.

According to the survey, 46% of customers said that supplier responses to ESG topics impact vendor selection and 62% said they incorporate supplier ESG responses into scoring criteria. In addition:

• 50% of customers have goals for greenhouse gas (GHG) emissions, eco-friendly products, waste, DEI, supplier diversity and product safety.

• Up to 50% of customers have goals for eco-friendly programs, eco-friendly packaging, water use, community engagement, ethical sourcing and supply chain resiliency.

• The top five ESG topics in supplier questions are: supplier diversity (63%), product safety (56%), environmentallyfriendly products (50%), diversity, equity and inclusion (47%), and supply chain resiliency (48%).

• The top five ESG topics that health systems look for in their suppliers are: environmentally-friendly products (65%), supplier diversity (65%), environmentally-friendly programs (55%), product packaging (55%), and product safety (55%).

Customer inquiries about ESG topics at Medline vary by geography, said Miller. “In the U.S., environmental sustainability, diversity, equity and inclusion, and supplier diversity are top priorities. In Europe, ethical sourcing is

—Evelyn Miller Senior Manager, ESG

more of a focus, while supplier diversity is hardly considered a concept.”

The path forward

Based on a comprehensive stakeholder analysis of ESG priorities and other benchmarking, Medline has developed an ESG strategy and internal infrastructure to guide future endeavors.

The strategy will include 17 focal areas across four pillars:

• Climate resilience and environmental action: GHG emissions, air emissions, waste management, and water & wastewater

• Responsible products: Sustainable products and packaging, product safety, product labeling and marketing

• People and communities: diversity, equity and inclusion, supplier diversity, access and affordability, community engagement, employee engagement, and employee health and safety

• Robust governance: responsible sourcing, business ethics, cybersecurity, climate-related risk

Each pillar is overseen by working groups charged to lead the alignment of ESG priorities with core business strategy and develop goals and key performance indicators (KPIs). The groups will also establish baselines for data mapping and develop implementation plans. Medline is currently prioritizing. diversity, equity and inclusion, ethical sourcing, GHG emissions, supplier diversity, and sustainable products and packaging.

The plan is to address immediate ESG drivers, while simultaneously launching the infrastructure to realize and sustain long-term performance, including data creation.

Evolving with us

“Over time, ESG priorities and principles will become more visible and embedded within the company culture and dayto-day operations,” said Liberman.

“What we’re doing will result, over time, in some financially positive operational changes,” Liberman continued. “The ESG drivers compel us to evolve more rapidly in some areas where we were already evolving, and to apply greater expertise in other areas. In addition, a big part of ESG is doing right by our employees. This will include enhancing DEI and employee engagement across divisions.”

Finally, because ESG ratings are public, “more and more customers, the media, and NGOs (non-governmental, nonprofit organizations) will look at us and assess who we are. We want to grade well in their eyes also. The changes to the organization will be impactful, but we’ll be incremental and intentional about how we go about this.” ■