December 17, 2018
In under two years, Anthem landed a top spot for the healthcare industry on the Dow Jones Sustainability Index.
The Drivers
Sustainability Roundtable, Inc (SR Inc) is pleased to serve Anthem as a multi-year Member Client. Anthem is an American health insurance company and the largest for-profit managed heath care company in the Blue Cross Blue Shield Network, which in just 3 years has moved to recognized leadership in Corporate Sustainability.
As part of Anthem’s multi-year membership in the Sustainable Business & Enterprise Roundtable (SBER), SR Inc has assisted Hakon Mattson, Anthem’s Director of CRE Sustainability, to identify Anthem’s current and desired future state on sustainable operations. Year over year, SR Inc has benchmarked Anthem’s management progress internally and against peer enterprises to develop a Member Advisory Plan, which identifies opportunities for efficient improvement. Further, SR Inc has helped Hakon and team to build a cross-departmental Sustainability Committee (with representatives from Investor Relations, HR, Finance, etc.) and develop a Management Scorecard, Roadmap, and Implementation Dashboard to identify and execute on practical steps to achieve its vision of success.
Through its confidential SBER Member Advisory Plan, SR Inc helped Hakon and team leverage existing resources and policies to better communicate with stakeholders through expanded sustainability reporting. Until two years ago, Anthem had never participated in RobecoSam’s Corporate Sustainability Assessment (CSA), the questionnaire used to determine companies’ eligibility for inclusion in the Dow Jones Sustainability Index (DJSI). However, when Anthem’s Board of Directors inquired about the company’s Environmental, Social & Governance (ESG) performance, Hakon saw an opportunity to develop and drive a more comprehensive program for the company.
Historically, most of Anthem’s Corporate Social Responsibility (CSR)-related efforts fell under the purview of The Anthem Foundation, the philanthropic arm of the company, as well as Anthem Inc.’s Human Resources programs for Diversity and Inclusion. Anthem sought to align and expand the important work of these programs through a more robust and formalized CSR program.
The Benchmark
As Anthem’s customers, employees and investors expressed growing interest in the company’s ESG practices, Anthem elected to expand its external reporting efforts to include submittals to key ESG index rankings, such as the Dow Jones Sustainability Index (DJSI). With approximately 58,000 employees, interdepartmental collaboration was central to data collection, and Hakon, a leader in Anthem’s Corporate Sustainability efforts, estimates that nearly 50 of his colleagues from HR, Ethics & Compliance, Legal, and other departments were engaged throughout the process.
Although it just barely missed the cutoff for ranking on the DJSI in its first year (companies scoring in the top 10% are ranked), Anthem gained valuable insight through the process into how the company could improve its score (and ESG performance more broadly) in future years.
Strategic Areas for Improvement
Some weak performing areas identified by the benchmarking report were relatively easy to improve – for example, developing policies the company hadn’t previously taken a public stance on. Others required more robust program development to address. Anthem’s corrective action plan focused on 4 key areas of improvement.
Materiality
SR Inc assisted Anthem in conducting its first materiality assessment, which engaged members of senior leadership as well as dozens of employees – through a combination of surveys and focus groups – to determine what issues are most important to Anthem’s business and key stakeholders. This process helped to inform Anthem’s go-forward strategic priorities related to ESG as well as the content for its first CSR Report developed in accordance with Global Reporting Initiative (GRI) standards. Publishing a GRI Report helped to organize Anthem’s CSR program priorities internally while also conveying to Anthem’s stakeholders that the company takes ESG issues seriously.
Supply Chain Management
To address the CSA’s questions on sustainability and human rights in the supply chain, Anthem developed a robust supply chain management program, creating a platform through EcoVadis to engage its top 200 suppliers on ESG issues. The platform benchmarks individual supplier performance and enables Anthem to develop corrective action plans for each supplier that scores below a certain threshold to educate and improve their performance on ESG issues.
Climate Strategy
Although Anthem has tracked its Scope 1, 2 and 3 emissions for multiple years, the CSA helped to organize and increase the ambition of the company’s climate strategy. Anthem joined the Science Based Targets initiative and is committed to reducing its emissions in accord with climate science. Anthem is also seeking innovative ways to power its operations with renewable energy.
Health & Wellness
Anthem has a board level mandate for LEED certification for all new construction and has chosen to pair LEED with Fitwel certification to ensure health and wellness considerations are elevated in the design and build process. The majority of Anthem’s healthy building efforts focus on existing buildings, where Anthem has committed to EnergyStar and Fitwel certification portfolio-wide. Because Fitwel is a self-scored system that lacks some of the credibility associated with 3rd-party verification, Anthem has developed a best practice strategy of pairing Fitwel certification with 3rd party performance audits by a contracted Industrial Hygienist. This Strategy allows Anthem to cost-effectively benchmark and certify all buildings across its portfolio.
Lessons Learned
Its second time completing the CSA, Anthem (led by Hakon) highlighted the improvements made to its CSR program, and the company leapt ahead to 94th percentile performance among over 50 participating health care companies, winning it a spot on the 2018 DJSI. Anthem’s Board-level support was highly beneficial in driving the cross-departmental engagement necessary to complete the CSA and drive development of programs that helped it get ranked on the DJSI (all in under 2 years.) Further, a proven track record of cost savings through successful energy efficiency projects helped to justify (and pay for) operational improvements done as part of this effort.
In under two years and with limited outsourced assistance, Anthem was able to leverage existing resources and internal support to win it a spot on the DJSI. As Hakon said:
“We are extremely proud of the progress we have made to date and are honored to be recognized as part of the 2018 Dow Jones Sustainability Index. Our goal is to continue to show year over year improvement on the RobecoSAM CSA ensuring Anthem remains a leader in Environmental and Social performance.”
This process has helped Anthem to identify and prioritize opportunities to strengthen its CSR program and send a powerful signal to investors that the company is strategically positioned for long-term success.
Anthem’s President & CEO, Gail Boudreaux, observed when Anthem was listed on the DJSI:
“Corporate Responsibility is integral to our success as a company. While we are pleased to be recognized for the work we do are doing today, we are focused on making an even greater impact and creating a healthier future for all Americans and the world around us.”
As Senior Manager of Research & Consulting, Kelsey Wallace supports members of SR Inc’s confidential, strategic advisory & support service in their move to more sustainable high-performance. With several years experience at the intersection of business and sustainability, Kelsey provides specialized program assistance to clients on a one-to-one basis, supporting all aspects of strategy development and implementation for management teams overseeing corporate sustainability strategies, policies and projects. Prior to joining SR Inc, Kelsey worked for The Cadmus Group, where she provided technical support to the Environmental Protection Agency and US Green Building Council on projects to improve the sustainability of federal infrastructure. Kelsey also devoted a year to national service with the AmeriCorps National Civilian Community Corps, where she worked on team-based conservation and community development projects throughout the Southwest United States. Kelsey has her B.A. in Environmental Studies from Connecticut College.
