Oct 15, 2021

Medtronic makes bold ESG commitments at inaugural investor briefing

Harnessing the power of bold environmental, social, and governance (ESG) initiatives to drive better outcomes for the world

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Medtronic is harnessing the power of bold environmental, social, and governance (ESG) initiatives to drive better outcomes for the world. In its first-ever ESG Investor Briefing, held Oct. 13, 2021, company leaders announced new ESG targets on key sustainability focus areas and highlighted advancements in environmental sustainability, people and communities, patient safety and product quality, and corporate governance.

Chairman and CEO Geoff Martha summed up the importance of ESG during the briefing. “Our focus on ESG is not because it’s the latest trend, but rather because ESG is at the core of who we are as a company.”

More than 250 investors and financial analysts tuned in to hear presentations from several Medtronic executives, a roundtable discussion, and live Q&A with sell-side analysts.

The briefing covered key topics from the Medtronic 2021 Integrated Performance Report: Engineering Impact, including goals to achieve carbon neutrality in its operations by FY30 and further minimize the company’s environmental footprint in the coming years:

  • Reduce greenhouse gas emissions intensity by 50% (FY25)
  • Source 50% of energy from renewable and alternative sources (FY25)
  • Reduce packaging for certain high-volume products by 25% (FY25)
  • Reduce paper use for printed Instructions for Use (IFUs) by 35% (FY27)
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“We’re dedicated to minimizing our environmental footprint because we recognize the connection between a healthy planet and human health,” said Ginny Cassidy, Director of the Medtronic sustainability program. “Our efforts include finding innovative ways to reduce our operational carbon footprint, cut water usage and waste, and build sustainability into product design.”

Speakers also outlined plans to build a more diverse and inclusive workforce. Starting in FY22, Medtronic is tying compensation for executive leaders to inclusion, diversity, and equity goals. “These goals make up 15% of the annual incentive opportunity (for executive leadership), and we intend to expand this incentive component more broadly across the organization in future years,” said Ken Fairchild, Vice President of global rewards.

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“We have doubled down our efforts to build an even more inclusive and diverse workplace – recognizing that diversity fuels innovation, growth and creativity,” added Carol Surface, Chief Human Resources Officer. “By now, it’s also fairly well-known that diversity contributes to stronger financial results,” she said, noting recent studies from McKinsey and Credit Suisse.

Surface revealed new inclusion and diversity goals for FY26, including:

  • 45% of global management roles to be held by women
  • 30% of U.S. management roles to be held by ethnically diverse talent

She also shared additional ways Medtronic is marking progress – such as tracking levels of engagement and inclusion across the enterprise, the impact of supplier diversity efforts and philanthropic engagement with diverse community partners.

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Medtronic leaders also outlined goals to accelerate innovation, serve more patients, and further enhance product quality. FY25 targets include:

  • Generating 20% of company revenue from products and therapies released in the prior 36 months
  • Serving 85 million patients per year (up from 72 million in FY21)
  • Reducing the aggregate product complaint rate for specified product families by 10%

“We recognize that patient safety and product quality are critical – and foundational – to the success of our company,” said Noel Colón, Senior Vice President and Chief Quality Officer. “The greatest commitment we can make to our patients, clinicians, and customers is to consistently design and produce safe and reliable healthcare technology that creates better outcomes.”

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Colón outlined the Medtronic systems that monitor product safety, analyze product quality, and respond in the rare case of product issues. He also discussed a new product security strategy aimed at guarding against cyber threats.

Finally, leadership touched on transparency, accountability, corporate governance structure, and the board of directors’ involvement in ESG issues.

Analysts increasingly focus on a company’s response to ESG concerns, because data indicates that strong ESG commitments drive financial results.

Several of the investors who attended responded positively after the event.

“Overall, we believe investors support and see value in MDT’s ESG initiatives and believe the sustainability strategy supports MDT’s LT (long-term) financial objectives,” wrote Ryan Zimmerman of BTIG. “While it may take time for MDT to achieve its targets… the collective efforts should support value creation longer-term.”

“Our Mission is to alleviate pain, restore health and extend life,” Martha concluded. “Our environmental, social, and governance efforts, combined with the passion of our 90,000+ employees in over 150 countries, help advance measurable impact for a healthier society, a healthier planet, and a healthier business.”

For more information, watch a replay of the briefing.

In 2020, McKinsey found that companies in the top quartile for ethnic and racial diversity on their executive teams - were 36% more likely to show above-average profitability than those in the bottom quartile . Companies with greater gender diversity were 25% more likely to financially outperform peers - a finding reinforced by Credit Suisse in its Gender 3000 report.