Roche: ESG and Access to Healthcare

In May 2022, Roche Group, one of the largest healthcare companies in the world, hosted its first ESG investor event focused exclusively on its efforts to impact access to healthcare. While Roche had recently set an ambitious goal to double the number of patients that had access to its innovative medicines and diagnostic solutions within ten years, it was not at all clear how the firm should structure its resource allocation criteria, performance evaluations, reporting and incentive systems to align efforts internally toward these goals. Group CFO and CIO Alan Hippe was presented with two options, none of which he was particularly enthusiastic about. One was to lower the hurdle rate for projects related to ESG issues, thus relaxing profit expectations. The alternative was to incorporate a set of minimum ESG requirements in all of Roche’s new project proposals. In this case, however, the risk was to reduce the focus on ESG from a strategic priority to a compliance exercise. In the presentation shared with investors at the ESG event, access to healthcare had been positioned as Roche’s greatest contribution to society. This type of public commitment required more than a compliance-level of effort. In September, Alan Hippe would sit down with the executive committee to chart a path for integrating ESG issues into Roche’s project selection and business planning. Hippe went on to define three objectives for ESG at Roche, “we need to align on targets, we need to get resource allocation right, and we need to report both internally and externally.”