By Peter Scialla

One of the most common buzzwords in business today is “ESG,” shorthand for environmental, social and governance. The Securities and Exchange Commission (SEC) wants to establish ESG disclosure requirements to increase transparency of companies’ ESG goals and commitments and help prevent them from misleading investors by overstating their ESG focus. Companies across sectors are scrambling to gather data about their carbon emissions and other ESG factors in anticipation of the change. 

Perhaps without knowing it, the senior living sector was in some ways ahead of the curve on ESG before the term became popular. 

Investing in ESG is essential for an industry that exists to protect and promote the health and well-being of older adults. Healthier living environments benefit human sustainability and social capital, and providing these environments can result in healthier, happier residents and a more profitable business. A growing number of companies within the senior living sector now see the connection clearly and are highlighting their ESG commitments. In fact, prioritizing both resident and employee health and well-being is becoming an increasingly important driver of investment decision making.

Sabra, a real estate investment firm with significant investments in senior living facilities, sees a direct link between ESG goals and a return on investment (ROI). A letter to investors in the company’s 2021 Sustainability Report put it this way:

“We believe our commitment to corporate responsibility creates value and promotes the long-term interests of our stakeholders – our investors, tenants, team members and the communities in which we invest.”

Another senior living ESG proponent, Brookdale Senior Living, created an internal multidisciplinary task force to advance its ESG goals. The company’s 2021 ESG Report calls ESG “central to the organization.”

The enhanced focus on ESG is driving investments in new programs and technologies that benefit the health and well-being of residents and staff – from indoor environmental quality improvements, to third-party certifications, to mental health and stress reduction programming. Supporting the health, safety and well-being of employees, customers and supply chain workers is critical to maintaining a sustainable and resilient business.

The pandemic increased recognition of the value of investing in human health and well-being as an integrative ESG strategy. An important ESG element in senior living facilities is the need for good indoor air quality – a must-have that became painfully clear during the pandemic. 

But ESG considerations go well beyond reducing airborne health threats. Proper lighting, access to green space, the allocation of space within the buildings and a host of other factors under the “S” category can have a substantial impact on the health and well-being of seniors. In the senior living industry, these investments are not just about checking a box or meeting metrics, they can have a material impact on the business, such as increased resident satisfaction or employee retention. 

Earlier this year, Delos joined forces with senior living companies to launch the Wellness Innovation in Senior Environments (WISE) initiative. The initiative is centered around research conducted with the Well Living Lab – founded as a collaboration between Delos and the Mayo Clinic – and focuses on innovations to meet the growing demand for safer and healthier environments for senior living residents and staff. This effort to advance wellness in the sector also helps to elevate ESG.  

The link between health and the indoor environment is well-established. Providing healthier indoor environments is absolutely essential for senior living residents, who are more vulnerable to the effects of environmental hazards – such as polluted air – and are likely to spend even more time indoors. It’s not just the right thing to do, it’s a business imperative for all senior living companies.  

Current research under the WISE initiative includes examining the impact of portable air filtration on indoor air quality in a skilled nursing facility, and the impact of circadian lighting on health and cognitive function among older adults in senior living communities. Future research is expected to focus on ways to reduce falls among residents and alleviate stress among senior living staff. WISE collaborators include Sabra and Harrison Street, a leading investment management firm exclusively focused on senior living and other alternative real estate assets.

The importance of health and wellness in the senior living sector is expected to increase as members of the baby boom generation continue to age and seek living arrangements that align with their desires and their lifestyles. 

Now is the time for senior living companies to embrace ESG and anchor it in their business strategies to benefit residents and staff as well as the bottom line.

Start improving your indoor environment today by speaking with a Delos Wellness Solutions Expert .

Peter Scialla is the president and chief operating officer of Delos.