For a long time, ESG investing felt like a separate, box-checking exercise. That approach is outdated and misses the point entirely. Today, Environmental, Social, and Governance (ESG) principles aren't a constraint on returns; in my experience, they are a core driver of them. After deploying significant capital with ESG integrated into our strategy[30], I've learned a simple truth: in healthcare, doing good is just good business.
Beyond the Checklist
The real power of ESG isn't in compliance; it's in creating tangible business value. Environmental (E): For us, this is just operational efficiency. Reducing waste and energy use in our facilities isn't just a green initiative; it directly lowers operating costs. Social (S): This is the heart of it. Companies that create real value for their communities by expanding access to care or creating stable jobs earn a level of trust that becomes a powerful business advantage. Governance (G): Strong governance means rigorous clinical oversight and excellent compliance. This doesn't just prevent fines; it attracts better partners and commands higher valuations.ESG in Action
This isn't theoretical. Here's how it works in our companies: Expanding Access (Social): Every company we own is focused on improving care in underserved or rural markets. This has a clear social impact, but it also gives us a strong market position with deeply loyal patients. Creating Quality Jobs (Social): Our companies have created over 5,800 jobs, often in towns where such opportunities are scarce[31]. This creates local economic stability, which leads to lower employee turnover. Reducing Waste (Environmental): Our portfolio companies have implemented comprehensive waste reduction and energy efficiency programs. These initiatives have resulted in significant cost savings and reduced environmental impact across our facilities. When a business is built this way, it's just harder to compete with. Top talent wants to work there. The community becomes an ally. Regulators and payers trust you. The best healthcare investments have always created value for everyone: patients, employees, communities, and investors. Our experience has proven that these goals aren't in conflict. In healthcare, they are often one and the same.References
- Pharos Capital Group Assets Under Management, https://www.pharosfunds.com/impact.php ($1.0B AUM) ↩
- Pharos Capital Group Impact Report, https://www.pharosfunds.com/impact.php (5,800+ jobs) ↩
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