Value chain holds key to engaging healthcare sector on sustainability
Healthcare organizations should build a clear business case for action to improve sustainability along the value chain, according to a whitepaper published today by Trucost and BrownFlynn.
The whitepaper, entitled What Matters and Where: Managing Sustainability in the Healthcare Sector, finds that many healthcare organizations struggle to make the case internally to incorporate sustainability in business decisions because it is such a wide-ranging concept that is interpreted in different ways. It is also often difficult to translate sustainability-related benefits into business terms.
Nevertheless, experience shows that sustainability is a business imperative with a range of benefits such as reducing costs and improving return on capital, better patient and employee well-being, and more effective risk management.
Trucost and BrownFlynn outline how healthcare organizations can overcome these challenges by adopting a value chain approach. Research for the whitepaper shows that for every $1 trillion in revenue generated, the healthcare sector requires $28 billion in environmental resources — equivalent to 3% of annual revenue. Greenhouse gas emissions are by far the biggest impact, followed by water use and air pollution.
The vast majority of these impacts occur outside the direct operations of healthcare organizations. They come from the procurement of goods and services such as energy, pharmaceuticals and medical equipment, making sustainability an important issue for the chief procurement officer and the chief financial officer. By understanding the true extent of these impacts along the value chain, healthcare organizations can design strategies to effectively manage them.
The whitepaper outlines two tools that healthcare organizations can use to analyze their value chain impacts. BrownFlynn’s Impact MappingSM is a holistic approach to identify social and environmental issues across the value chain and assess their importance to the business. Among its many benefits are that companies expand their perspective and recognize issues that may have been overlooked; they understand precisely where in the value chain these issues need to be addressed; and it provides actionability by guiding a company towards the right solutions.
Impact MappingSM has been successfully applied by many companies including Dignity Health and Baxter International whose experiences are discussed in the whitepaper.
Natural Capital Accounting is a value chain analysis tool provided by Trucost. It enables a company to quantify – in monetary terms – the risks and opportunities associated with the environmental and social performance of its business. The many benefits of the tool include understanding environmental risk in business terms; being able to compare different impacts on a like-for-like basis; and integrating sustainability into business decisions.
The whitepaper discusses how Novo Nordisk and the UK’s National Health Service used Natural Capital Accounting to understand and manage environmental impacts in their supply chains.
Barb Brown, Principal and Co-Founder of BrownFlynn, said: “Sustainability in the healthcare sector has increasingly become a material issue to all organizations in the value chain – from hospitals to pharmaceutical companies to private practice. We are pleased to have the opportunity to partner with Trucost on this whitepaper, and we thank Baxter International, Dignity Health, and all the organizations who contributed their insights and expertise to this important piece.”
Libby Bernick, Vice President of Trucost North America, said: “This whitepaper shows sustainability managers how they can demonstrate that environmental issues are of central importance to the success of healthcare organizations, both in terms of protecting and improving public health, as well as enhancing business performance.”