Sustainability and environmental stewardship are transformational for each health care organization — and the sector as a whole. The business concepts “Create Value” and “Reinforce the Mission” help to show the importance of sustainability and decarbonization. Adapting these examples to your own organization and community will make an even more compelling case.
Sections
Create Value
A strong environmental stewardship proposition links to value creation in five essential ways.
Attract B2B and B2C customers with more sustainable products Achieve better access to resources through stronger community and government relations
Lose customers through poor sustainability practices (eg, human rights, supply chain) or a perception of unsustainable/unsafe products Lose access to resources (including from operational shutdowns) as a result of poor community and labor relations
Cost reductions
Lower energy consumption Reduce water intake
Generate unnecessary waste and pay correspondingly higher waste-disposal costs Expend more in packaging costs
Regulatory and legal interventions
Achieve greater strategic freedom through deregulation Earn subsides and government support
Suffer restrictions on advertising and point of sale Incur fines, penalties, and enforcement actions
Productivity uplift
Boost employee motivation Attract talent through greater social credibility
Deal with “social stigma,” which restricts talent pool Lose talent as a result of weak purpose
Investment and asset optimization
Enhance investment returns by better allocating capital for the long term (eg, more sustainable plant and equipment) Avoid investments that may not pay off because of longer-term environmental issues
Suffer stranded assets as a result of premature write-downs Fall behind competitors that have invested to be less “energy hungry”
Recognizing that health care is competitive in most markets, the value proposition to patients is higher quality care at lower cost with an organization that is promoting wellness in their community and mitigating harmful environmental effects.
Reinforce the Mission
The imperative:
Environmental factors can affect health and health care delivery, and hospitals deal with these types of impacts frequently. Reducing GHG emissions can help protect the health of patients, employees, and communities.
Mission alignment:
Health care’s energy intensity and carbon footprint are significant, and hospitals can benefit from reducing the impact.
Operational benefits:
Reducing energy and GHG emissions leads to cost savings and makes hospitals more resilient in the face of extreme weather events.
Source: Presented by Jon Utech and Jessica Wolf during CleanMed 2018, “Demystifying Greenhouse Gas and Goal-setting in Health Care”
Reinforce the Mission
University of Alabama Birmingham (UAB) commits to carbon reductions and clean energy for hospitals
“As UAB is a leading academic research institution, healthcare facility and the largest single employer in th estate —effective and sustainable operations are essential to UAB’s mission”
Ray Watts, President, University of Alabama Birmingham
Health Partners approaches Sustainability and Triple Aim simultaneously
“The Future of Health and the Future of Sustainability are bound Together”
Andrea Walsh, CEO, Health Partners
Environmental Risks to Hospitals
The harmful effects of the environment are experienced across the U.S., ranging from flooding to wild fires, and extreme temperatures that stress our infrastructure systems beyond their capabilities.
In 2020 alone, 22 environmental related disasters caused over $111 billion in losses. Over the last five years, a total of 86 billion-dollar events have totaled $451 billion. Hospitals have emergency response plans for these events, and might recognize the connections between the environment and carbon emissions.
These shocks and stressors add to the cost of care, disrupt operations that can prevent timely care, and present significant risks to the health care sector’s ability to serve the community.
In underserved communities, these shocks and stressors disproportionally affect people
who are least able to prepare for and recover from heat waves, poor air quality, flooding and other impacts.
Environmental awareness can help to improve hospital resilience and the community’s ability to absorb and recover from weather and environmental risks.
Recognize the Risks and Quantify the Impact
Risks, Opportunities, and Financial Impact
Identifying the near-future environmental risks to operations and quantifying the financial impact of an event allows leadership to incorporate risk management into strategic planning.
Environmental stewardship and sustainability projects may reduce the risk, which can be operationalized and support the business case.
Keeping the hospital open during weather events will be increasingly challenging, but environmental planning can position for success.
Immediate Action Steps
Health care executives and emergency planners have a responsibility to ensure their facilities are safe for staff, patients and visitors.
Identify priority environmental impacts specific to your operations/facilities.
Conduct/update hazard vulnerability assessment (HVA) to include these impacts.
Update system/facility-level surge plans.
Incorporate weather events into system/facility-level utility outage plans and alternative sources.
Work with supply chain partners to plan for emergency supplies to sustain operations.
Prepare all functions with clear, concise messaging to anticipate operational practices during expected events.
Questions to discuss the tangible impacts of weather and environment:
What are the new risks we are encountering related to the environment?
Will virus related changes affect the response?
Can building systems continue to meet temperature and humidity requirements?
Financial Sustainability
A 2022 Deloitte survey shows CFOs see their contributions as:
Supporting the business case for investments.
Meeting reporting disclosure standards and requirements.
Tracking progress with KPIs.
Investments, banking, and lending can have significant scope 3 emissions. CFOs are recognizing this and taking action.
Finance’s expected impact
Looking ahead, what do you believe will likely have been the most impactful change that you and/or your finance organization will have made to address sustainability? (N=53)
Investments and the Foundation
Investments can represent 20 to 30% of scope 3 emissions in health care operations, depending on investment strategies. The financial sector has recognized an interest in organizations wishing to build sustainable investments by offering some mechanisms for sustainable investing.
In addition, some health care foundations seek investments that actively support projects to help communities adapt to environmental factors and also have a desirable return on investment.
The Power of Asking the Question
Can you transform the marketplace by asking a question?
A free market economy self regulates with supply and demand. Innovations can reduce costs and give suppliers an edge. Customers can also drive innovation, but customers need to inform the marketplace of their interests. Asking suppliers if they can meet environmental stewardship and sustainability targets is a great place to start.
In the case of health care, medical supplies and equipment need to be cost-effective and meet specific criteria for their clinical use. Quality cannot be compromised in the interest of sustainability — and this is where opportunities exist for innovation.
The construction industry has a great example of transforming the marketplace by encouraging innovation with a clear goal: to reduce volatile organic compounds (VOCs) in paint. Glidden Company developed the first VOC-free coatings in 1992, but they had significantly higher cost. In the 2000s, the Leadership in Energy and Environmental Design (LEED) rating system incentivized construction projects to use low-VOC paint, so architects and contractors began asking the question, “Can you meet this target?”
Innovations to reduce carbon and improve sustainability are possible in health care. Health care systems should ask the question to inform and incentivize the market.
Banking, lending, insurance all have associated scope 3 emissions in health care. At your next opportunity, ask these partners:
How is their business addressing environmental stewardship through their internal operations?
Can their business offer any programs that promote environmental stewardship?
How is their business addressing environmental stewardship in their investments?
