Tackling scope three: Real-world insights for mitigating carbon emissions in the healthcare supply chain
As the healthcare industry invests in efforts to reduce its carbon footprint, the supply chain has emerged as the area with the most potential for impact — and the most challenges.
Healthcare’s supply chain, also known as scope three, accounts for roughly 80% of the industry’s carbon output. Scope one (emissions directly from facilities) and scope two (emissions from energy) account for the remaining percentage.
Although tackling scope three emissions can make a significant difference in reducing the industry’s carbon footprint, doing so is difficult because individual healthcare organizations are not in direct control of all levers of the supply chain. For example, hospitals and health systems buy their supplies from manufacturers, who in turn have their own suppliers that help create the products. Scope three also includes transportation, investments and all indirect emissions from the healthcare system.
“Scope three is a bit of a black box right now,” said Jon Utech, senior director of sustainability strategy at Cleveland Clinic. “We have identified a number of decarbonization areas but have a lot of work to do to find more.”
Despite the barriers, some healthcare organizations are taking steps to mitigate scope three emissions. These steps include establishing goals, collaborating with others and embracing transparency.
A major focus right now among providers and group purchasing organizations is working with suppliers to share their carbon emissions and environmental impact, according to industry experts. Overall, suppliers are at various levels of maturity in their sustainability journey, with some able to provide detailed information about their carbon emissions while others struggle to do so.
“Healthcare has taken to pursuing carbon like a storm in the last couple of years, but it’s reasonably new. Why haven’t vendors been giving us the data? Because we haven’t been asking for it,” Utech said.
The pressure for suppliers to provide carbon data is growing. Vizient recently added to its supplier contract templates information about carbon emissions, said Cristina Indiveri, associate vice president of environmental sustainability at Vizient, the nation’s largest provider-driven healthcare performance improvement company. Vizient then makes the information readily available to providers, who can utilize the data to inform purchasing decisions.
The end goal is to enable Vizient to provide a sustainability performance metric for every supplier, contract and product, appearing alongside price, Indiveri said. “It’s meant to create informed, agile decision-making,” she said.
A current challenge for suppliers is data collection and sharing. Because there are many ways to define scope three, suppliers receive requests for information from customers that ask for different kinds of data sets.
Henry Schein, which provides dental and medical products and solutions worldwide, is seeing an uptick in customers asking for information about the environmental impact of their supplies, according to Jennifer Kim Field, Henry Schein’s chief sustainability officer. Ideally, she said, there would be agreement across the industry of what information suppliers are expected to provide.
“There’s a lot of effort happening by a lot of different consortium groups, but we’re looking for those healthcare product standards,” she added. For its part, Vizient established an environmental sustainability taskforce, which meets monthly with suppliers to discuss how to report carbon emissions and opportunities to standardize data collection, Indiveri said.
Current challenges with supply chain data collection do not need to prevent providers from addressing their scope three emissions now. Here are steps to get started today.
An important first step is for provider organizations to calculate the inventory of their scope three. Practice Greenhealth offers a tool that enables providers to make this assessment, which gives them a baseline to work with as well as areas of focus.
Northwell Health, based in New York, is one organization currently assessing its scope three emissions inventory. The health system signed the HHS Health Sector Climate Pledge, which involves reporting scope three emissions by the end of 2024.
“Quantifying scope three emissions will help us prioritize our mitigation efforts,” said Donna Drummond, chief expense and sustainability officer at Northwell.
Northwell is in a unique position because it has its own group purchasing organization, which establishes a strong relationship with suppliers. Northwell is speaking with suppliers individually and sent out letters asking them to provide carbon emissions data.
“We believe the partnerships we have built with our suppliers will position us favorably in support of the pledge,” said Phyllis McCready, senior vice president and chief procurement officer at Northwell.
In addition to making purchasing decisions based on carbon emissions data from suppliers, Cleveland Clinic is finding other areas to reduce scope three. For example, transportation is a major component of scope three emissions. Cleveland Clinic incentivizes employees to buy electric vehicles by offering a $1,000 rebate if they purchase a new electric vehicle and a $500 rebate for a used EV.
The system also encourages carpooling. At sites with parking fees, employees who carpool receive a discount. The transition to hybrid and remote work over the past few years has taken thousands of cars off the road as well, Utech said.
For its part, Northwell eliminated products containing mercury and Styrofoam, which are harmful to the environment. Additionally, Northwell has reduced the number of trucks needed to deliver supplies to its locations. Northwell has its own distribution center, so all products arrive there to be sorted and compiled for delivery to specific sites. This centralization eliminates the need for individual suppliers to drive to all Northwell sites delivering their products.
The vastness of what scope three entails can be overwhelming, particularly for smaller organizations. Indiveri advises providers to start with the low-hanging fruit, such as switching some products to reusable options as appropriate.
“It’s really about making sustainability a priority – it accelerates total value, it’s a strategic imperative and it’s fiscally responsible,” she said.
There are also opportunities to collaborate with suppliers, GPOs and providers. “This is a team sport,” Utech said. “You can’t address scope three alone.”
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