Reducing scope 3 emissions across global supply chains will be key to successful climate action in the healthcare sector. Image: Philips
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- One of the most important questions businesses must ask themselves is: how can we scale climate action fast enough?
- Part of the answer lies in reducing scope 3 emissions, which typically represent the lion’s share of total value chain emissions.
- Shifting focus to reducing scope 3 emissions could help some companies have an expected impact that is seven times greater than simply lowering CO₂ emissions from their own operations.
In a world increasingly impacted by climate change – and with 2023 the hottest year on record – we all have a responsibility to urgently step up and help create low-carbon, circular and resource-efficient economies and societies.
The key question is: How can we scale climate action fast enough? It seems everyone is struggling with scope 3 emissions, those not produced by the assets a company owns or controls but that they indirectly affect through their value chain. In the case of hospitals, for example, that might mean emissions from the medicine, food, equipment, and waste treatment services they use.
Scope 3 emissions from global supply chains and the use phase of products typically represent the lion’s share of total value chain emissions. On the upside, it may also be an indication that more and more companies are aware of their scope 3 impact, and are stepping up efforts to reduce them.
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Healthcare systems globally suffer from climate change, but at the same time account for 4.4% of net global CO₂ emissions. That’s more than aviation or the shipping industry. Of these emissions, 71% of them are in scope 3 of care providers.
Three partnerships that positively impact scope 3 emissions
At Philips, a global health technology company, we work with care providers, practitioners, knowledge partners and suppliers to drive and scale sustainable practices and reduce our shared carbon footprint.
Recognizing the role of large corporations in leading the transition to a low-carbon economy, we have been rethinking our business models for many years, decoupling economic growth from environmental impact across the value chain. Indeed, our operations have been carbon neutral since 2020, and we have strict practices in place to ensure zero waste to landfill. We also continue to team up with partners to drive the production of renewable electricity across Europe and secure renewable electricity supply for our own operations.
But reducing scope 3 emissions will be the key to keeping global warming within bearable limits. That’s because shifting our focus to these emissions will have an expected impact that is seven times greater than simply lowering CO₂ emissions from our own operations. Here are three partnerships where we’ve worked on lowering scope 3 emissions, along with some lessons we learned throughout the process.
- Health leaders increasingly recognize that a healthy planet is a prerequisite for the health of patients and the wider population. In line with ambitious targets set by the UK’s National Health Service (NHS) to become the world’s first net-zero national health service by 2040, Philips partnered with County Durham and Darlington NHS Foundation Trust on a key plan to reduce the Intensive Care Unit’s (ICU) carbon footprint and waste. The analysis highlighted key areas for enhancing sustainable care, including optimizing ICU capacity, reducing waste in the supply chain, opportunities for staff training and equipment refurbishment. The results form a blueprint to drive further improvements across the system, with several recommended initiatives already implemented. This collaboration shows the potential for finding new solutions that improve care for patients, the healthcare workforce and the planet, while also helping strengthen health systems for the future.
- To overcome system-wide challenges in the supply chain, we have made it significantly easier to establish suppliers’ qualifications to either become, or remain, a Philips business partner. A dedicated AI tool, co-developed with Eindhoven University of Technology (TU/e) in the Netherlands, presents the top factors that suppliers should be aware of to ensure ESG compliance. The outcome is a plan for how individual suppliers can and should improve. As a result, the suppliers’ production becomes more dependable, their costs go down, they build a safer working environment, are staffed by a more satisfied workforce, and their own management practices improve. Taking ownership of supply chain emissions has been an essential step towards decarbonizing Philips’ supply chain. Partnering in a structured, maturity-based collaboration model has resulted in greater transparency and insights, accelerated improvement, and enabled cross-learning. The model has also improved trust in the supply chain, allowing more meaningful engagement further upstream. Philips is working to have at least 50% of its suppliers (based on spend) committed to science-based targets for CO₂ emission reduction by 2025.
- As part of the Alliance of CEO Climate Leaders, an initiative led by the World Economic Forum, Philips has been involved in discussions focused on expanding and scaling scope 3 reduction efforts throughout the private sector. Recently, all members representing corporations responsible for 14% of global emissions across all scopes agreed to scope 3 action plans. These include short-term targets for tackling both upstream and downstream emissions.
Time to act
While these initiatives showcase exemplary results, companies must elevate their climate action beyond the operational level to a strategic focus – from the outset – on innovation and the development of scalable, low-carbon solutions, including low-carbon supply chains.
We also believe that buyers of health technology have a major role to play in driving green purchasing reforms and raising minimum standards, thereby increasing recognition of the value of supplier sustainability commitments.
And finally, we need to pay continued and urgent attention to harmonizing ESG reporting standards, while keeping things practical, meaningful and actionable.
No single party has all the answers or can do it on their own. We urgently need to explore new and complementary partnerships across value chains to decarbonize industries like healthcare for the generations to come. With increasing customer demand and stringent environmental legislation on the way in many countries, it makes good business sense to stay ahead of the curve.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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