Decarbonizing the Health Care Value Chain: A Call to Health Care Manufacturer, Distributor, and Industry Organizations
I. Background
Climate change poses serious risks to human health, exacerbating existing health threats and creating new public health challenges. Health impacts are being felt across the United States, from respiratory conditions due to increased wildfires and extreme heat events, leading to a greater number of days with poor air quality (an AQI value greater than 100), to the rise of vector-borne diseases (VBDs) carried by mosquitoes (e.g. West Nile Virus) and ticks (e.g. Lyme Disease), which are spreading with higher cumulative growing degree days, lower cumulative precipitation, and lower saturation deficit.
Important Definition
Value chain
Value chain refers to the full life cycle of a product or process, including material sourcing, production, transport, use, recovery and recycling, and disposal.
The health care sector is responsible for approximately 8.5% of the greenhouse gas (GHG) emissions in the United States. GHG emissions resulting from the health care value chain, categorized as Scope 3 emissions, account for approximately 87-88% of a health care supplier’s carbon footprint.
Large employers locally, and major manufacturers, distributors, and Group Purchasing Organizations (GPOs) globally, are uniquely positioned to lead in decarbonizing the value chain. By doing this work, health care sector executives can realize benefits on multiple fronts. In addition to the broad human and environmental benefits, decarbonization contributes to a more resilient supply chain, which is critical for uninterrupted health care operations and expanding access to health care in a world with increasing disruptions to the supply chain from climate-related impacts. Decarbonization may also elevate a manufacturer’s brand reputation and the way stakeholders view health care product manufacturers and distributors. Moreover, decarbonization can result in financial benefits through operational and production efficiencies and innovations that deliver reduction of related costs (e.g., savings through optimized use of raw materials, re-use of recovered/repurposed products and materials, and reduction of waste).
Coupled with the development of effective strategies for adapting to physical climate change impacts, the health care sector can greatly benefit from the identification and execution of effective, impactful, long-lasting systemic changes to decarbonize its value chain.
II. Call to Action to Health Care Manufacturers, Distributors, and GPOs
Health care manufacturers, distributors, and GPOs should consider the following actions to decarbonize:
1. Prioritize, as a corporation and/or board, the goal of decarbonizing the health care value chain. Empower sourcing leads to establish purchasing goals and targets that incorporate sustainability into broader business plans.
a. Ensure sustainable procurement is integrated into the organization’s annual strategic business plan with goals that are specific, measurable, achievable, relevant, and time-bound (SMART) and/or purposeful, actionable, continuous, and trackable (PACT).
b. Develop and institutionalize a sustainable purchasing policy that targets specific sourcing practices and establishes improvement metrics that are relevant to the organization within a dedicated timeframe. For example:
i. Establish a percentage goal of vendors that inventory their GHG emissions, establish emissions reduction targets, report on progress toward these targets, and actively reduce or have a plan in place to reduce their emissions. Focus initially on Scope 1 and 2 emissions, then expand to Scope 3 emissions.
ii. Include sustainability metrics as key performance indicators (KPIs) tied to vendor selection criteria, business reviews, and contracts.
iii. Identify vendors that have aligned sustainability priorities to further develop partnerships.
c. Integrate sustainability into value chain decision-making throughout broader enterprise governance structures (e.g., medical executive committees, operations leadership councils, value analysis, strategic and capital planning) to embed a focus on the environment.
d. Case Study: Kaiser Permanente has achieved significant success through a partnership between its supply chain and sustainability teams that evaluates all purchases against a defined set of Environmentally Preferred principles and ensures that the life-cycle impacts of all purchased goods and services are understood.
2. Establish a goal of reducing organizational GHG emissions by 50% by 2030 and achieving zero emissions by 2050 while designating an executive-level lead for this work.
a. Case Study: As of March 2024, over 130 organizations across the United States have signed the U.S. Department of Health and Human Services’ (HHS) Health Sector Climate Pledge, a commitment which aligns with the above goal.
b. Case Study: Medtronic has reduced its organizational GHG emissions by 35% since 2020, targeting a 50% reduction by 2025, and has set a goal to achieve carbon neutrality within its global operations by 2030, and net zero across its supply chain by 2045. Additionally, at the beginning of 2024 the Company appointed its first Chief Sustainability Officer to lead this work.
3. Participate in relevant industry coalitions to collaborate, build consensus, and take informed and strategic action on decarbonizing the health care value chain. There are ongoing initiatives focused on peer-to-peer learning and knowledge sharing, such as various industry-led collaborations and partnerships, which aim to address environmental impacts across operational and supply chain activities.
a. Case Study: NAM Action Collaborative on Decarbonizing the U.S. Health Sector is an initiative comprised of health care providers, federal agencies, suppliers, group purchasing organizations, and non-governmental organizations working to reduce GHG emissions across the health care value chain.
4. Leverage NAM resources for strategic guidance. The NAM Sustainability Journey Map & Resource Repository is a pivotal resource designed explicitly for health care manufacturers, distributors, and GPOs aiming to catalyze their efforts in decarbonizing the health care value chain. This comprehensive and interactive tool offers strategic insights and actionable steps across distinct stages of the sustainability journey.
a. Navigate the Journey Map to strategize and implement sustainable practices across the health care value chain, guiding decision-making and fostering resilience.
b. Determine the actions to take and challenges to overcome at each step, utilizing the identified resources within the stages to accomplish these.
III. Conclusion
There is an urgency for health care CEOs to dramatically reduce their businesses’ value chain emissions and associated environmental impacts. Collaboration across the industry and sector is imperative to mitigate the human and environmental health threats posed to current and future patient populations by climate change. Alignment around key action items will ensure a transition to a healthier, safer, and cleaner health care sector that upholds its commitment to do no harm.
Disclaimer: This document was prepared by Robert Ellsworth (Medtronic), Cristina Indiveri (Vizient), and Kim Makurat (Medtronic) who are members of the Supply Chain Working Group of the NAM Action Collaborative on Decarbonizing the Health Care Sector; and reviewed by members of the Action Collaborative. Statements in this document do not necessarily reflect the views of all members of the Action Collaborative; the NAM; or the National Academies of Sciences, Engineering, and Medicine (NASEM). The document is intended to help inform and stimulate discussion. It is not a report of the NAM or the NASEM. Copyright by the National Academy of Sciences. All rights reserved.
Questions? Contact us at [email protected]
Our Sponsors
Funding & Support
The funding support extended by the NAM Climate Collaborative’s sponsors makes work like this possible.
