Kathryn Unger is VP of Environmental, Social and Governance (ESG) at Boston Scientific. [Photo courtesy of Boston Scientific]
Kathryn Unger, VP of Environmental, Social and Governance (ESG) at Boston Scientific, joined the medical device developer and manufacturer in September 2022 to form the ESG team.
“The patient is and must be at the center of everything we do,” she said DeviceTalks Boston in May. “We’re constantly trying to ensure that we have the absolute best patient outcome, from a risk-to-the-patient perspective, period. That has to be our guiding principle, right? However, that’s not an excuse to not improve the design of our medical devices. … There has to be product stewardship that starts before you get to the manufacturing piece. And that design needs to be circular and consider the full life cycle.”
Unger had advice for companies that want to launch their own ESG function or get some traction, and encouraged the industry to take a cooperative approach for everyone’s benefit.
“We’re all learning together,” she said. “For example, we’re pretty far along on the E, but we’ve got a lot of work to do in product stewardship and other things like that. We’re all doing this together. If we’re not asking questions, challenging, wondering what we can do to accelerate this, it’s going to take so long.”
Where to start with ESG
“I’m so proud to say that ESG is not new to Boston Scientific,” Unger said. “At our company, it’s actually grounded in science, in tangible action and in accountability. And we’ve been doing it for over 20 years. … More and more people are aware of what we need to be doing and getting engaged.”
Even if an organization has never had a formal ESG function, there are likely already bits and pieces everywhere you look.
“Find out the work that’s already happening in your organization,” Unger said. “We have people calling us, sending us emails, talking about the work they’re doing locally, whether they’re doing it in the E space trying to calculate their own carbon footprint and we tell them, ‘Hey, we’ve got members of our teams who are doing that.’”
In 2017 — well before Boston Scientific hired Unger for ESG — the company pledged to go carbon neutral and has since made its science-based target commitment and had it validated. And back in 2010 when Boston Scientific set up shop in Costa Rica, the facility was designed with LEED (Leadership in Energy and Environmental Design) certification in mind.
“It was important to our facilities team at that time. That wasn’t a corporate initiative, that was a facilities-level initiative,” she said.
Engage — and reward — everyone
Boston Scientific’s ESG team now includes Senior Manager Jamie Mercurio and Senior Project Manager Marina Vornle von Haagenfels.
“Three people can’t do all of ESG throughout the organization,” Unger said. “It’s got to be an ESG mindset that permeates the organization.”
One way to do that is to set goals and communicate results to encourage progress, even if they’re small steps in the right direction.
“By setting a target, by holding yourselves accountable and measuring to that, and by communicating it company-wide, you get there,” Unger said.
For example, Boston Scientific publicly sets and tracks annual goals for increasing the share of leadership positions held by women and minorities.
At bonus time, incentive pay is partially tied to ESG: 5% for hitting targets related to increasing women and minorities in leadership, another 5% for employee engagement, and a final 5% for hitting environmental goals.
“So 15% of our total incentive is tied to our ESG scorecard,” Unger said. “And so by doing that, it’s not just the three of us working to get this done. It’s a whole company mindset and everyone’s engaged.”
Another key is to remember that ESG supports your company’s mission, and that’s a way to further engage the entire organization.
“At Boston Scientific, ESG and our business value are not mutually exclusive. They’re very intertwined,” she said. “As you’re building out your own ESG functions or trying to really accelerate on the E side, making sure that it is value-driving is really important because it’ll help bring the rest of the organization along with you.”
Enlist suppliers in the effort
Boston Scientific is aiming to completely eliminate nonrenewable electricity sources from its operations in a bid to eliminate greenhouse gas emissions from fossil fuel power like gas, oil and coal. The company is already at 100% renewable power in the U.S. and Europe, and 76% globally.
An even greater source of greenhouse gas emissions comes from Boston Scientific’s supply chain. Those are “Scope 3” emissions by assets that Boston Scientific doesn’t own or directly control, but that are influenced by the company’s operations.
“We’re looking at our suppliers from a number of different perspectives … Scope 3 actually equals more than what’s in our own house,” Unger said. “It’s the entire tail of our supply chain.”
Boston Scientific is asking its suppliers to reduce their emissions, and also asking the suppliers to ask the same of their own suppliers all the way upstream.
“We’ve got some credibility in having that conversation with them because we’ve done that ourselves. … Are we there yet? No, this is the beginning of that journey for us all,” Unger said.
Don’t assume opposition from investors
For those who wonder how to justify ESG to investors, Unger says she sees more buy-in from stockholders than opposition.
“Our investors are interested in what we’re doing in the E and the S. … We’re not exactly experiencing strong resistance,” Unger said.
Investors, she said, are more interested in “what are we doing, what’s our plan, when’s the right time to start each piece of this?”
“We’re having these conversations and making these choices. … It’s not having to convince investors or having to convince our leadership. It’s our customers pulling and us trying to keep up,” Unger said.
Listen to customers
“We are now really starting to unpack what it’s going to take to get to more sustainable design,” Unger said. “What has encouraged that? Candidly, look at everything coming out of Europe. We’ve got the EU Corporate Sustainability Reporting Directive, we’ve got Germany talking about, ‘Maybe we won’t buy single-use devices ever.’”
Customers are still driving the call for ESG more than new regulations, Unger said.
“Again, ESG and business value are intertwined. We’ve got our customers demanding this. … If your customer’s demanding it, and if 40% of your sales are outside of the U.S., then that’s a strong reason to do it from an outside-of-U.S. perspective,” she said. “And by the way, U.S. medical systems are now using some of the same tenders that we saw being used in Europe in the past. Our U.S. medical systems themselves are getting on board with reducing their own environmental footprint.”
An organization that has taken some of the big first steps — reducing nonrenewable energy consumption, for example — might then turn its attention to sustainable design. That could include the use of recycled or recyclable materials, or redesigning single-use, disposable devices so they can be safely reprocessed and re-used.
Hospital systems are asking Boston Scientific about standardizing the recyclability and disassembly of medical devices to streamline the process.
“I am a firm believer that standardization at the end of the day reduces cost and simplifies and makes it easier to adopt change no matter what,” Unger said.
She encouraged device makers to help customers manage their expectations, however.
“Don’t think that happens overnight, because the design has to be vetted and properly approved and all of those things take time,” she said. “But if we don’t start now, we won’t get there. And so we are starting.”
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