It’s not a statistic that often makes the headlines but the world’s healthcare systems currently account for over 4 per cent of global carbon emissions – more than the aviation or shipping industries. And like any key industry today, it is under increasing pressure to decarbonise as countries and companies alike seek to achieve their climate pledges.
Global healthcare provider Philips recently became the first health technology company to have its Scope 3 carbon emissions reduction targets assessed and approved by the Science Based Targets initiative (SBTi).
This means all the company’s climate change targets are now SBTi approved, says Robert Metzke, the Amsterdam-headquartered firm’s global head of sustainability.
“In our view, the responsible and sustainable use of energy and materials is key to decarbonising healthcare… We need to ensure collaboration between the public, private sectors and civil society to map a clear path for national health systems to effectively address this challenge in the short and longer term,” he said.
Speaking to Eco-Business at the World Econonic Forum’s annual meeting in Davos this week, themed ‘Cooperation in a fragmented world’, Mertzke noted that rising geopolitical turmoil and economic uncertainty along with the need to cater for ageing populations and the rise in chronic diseases, is putting Philips under immense pressure. Here’s how the company is responding.
First, tell us more about your mandate at Philips?
I’m currently leading sustainability globally at Philips. Sustainability is a really core part of our strategy and not just “a Friday afternoon activity”. We wanted to become a purpose-driven health technology provider, and we realised three things: first, the great extent to which healthcare is affecting the environment in terms of carbon emissions and waste; second, the extent to which healthcare systems globally are suffering from climate change; and lastly, the impact of environmental pollution on human health.
We see that the healthcare industry and healthcare providers globally are waking up to the topic and embracing it by taking actionable approaches to decarbonise healthcare, to reduce waste, to move to circular models, and to take a closer look at their supply chains.
At Phillips, we are building on a heritage of more than 30 years of eco-design to help with this. We have put literally billions of research and development (R&D) resources into mainstreaming that so 70 per cent of our total product portfolio today is already eco-designed. This will rise to 100 per cent in the next five years.
To provide some context, more than half of the emission reductions globally need to come from circular models, and many people do not realise that. Beyond providing energy-efficient eco-designed products to healthcare providers, we also need to move to circular models. For instance, imaging-as-a-service, and diagnostics-as-a-service can really help drive up efficiency and drive down emissions per treatment.
On the social impact side, as a leading technology-provider, we also have a role to play in making healthcare accessible. Half of mankind does not have access to healthcare today. That is 3.5 billion people. If you bring that back to emissions in developed countries and to the fact that 10 per cent of national emissions are from the healthcare sector, we know that we need to bring the emissions of healthcare drastically down if you also want to expand it at the same time.
Therefore, besides digitalisation of healthcare, new alliances to make these tools accessible to underserved communities are big topics for us as well.
The Covid-19 pandemic was unprecedented in so many ways, and importantly, it has driven a lot of single-use plastic and the excessive use of medical equipment. How do you as a healthcare provider balance public health safety with the use of resources?
Covid-19 was an exceptional stress test for the healthcare systems globally but like any crisis, it’s a magnifying glass that enlarges underlying tensions and conflicts.
For example, we had been talking about telehealth digitalisation of care and the need to do that for many years… we developed the technology, but we saw that it was difficult for hospitals and practitioners to adjust their protocols and ways of working. When the pandemic hit, they suddenly didn’t have enough capacity and staff. They were forced to use telecare to monitor patients in a general ward.
So, during the pandemic, we saw a huge acceleration of the adoption of digital technology and telecare. At the same time, we also saw a spike in waste for personal protective gear. I think the increased awareness among care providers, nurses, and doctors in hospitals who have been confronted with huge amounts of waste is triggering a global movement to separate waste more effectively. Doctors and hospitals are also forming “green teams” on the ground to tackle the waste that hospitals generate.
The global average of waste generated by hospitals per bed per day is 13 kilogrammes — a staggering amount of which goes to landfill. We try to address that with circular models so not “make, use and waste”, but “reuse”, and especially with the large screen medical equipment. Indubitably, this has many implications for how you innovate and how you design the business models behind it.
Let’s turn to Asia. It has typically lagged behind in terms of the healthcare infrastructure and accessibility. How are you seeing this region play a role in your global strategy?
Asia is an extremely exciting space to be in — it is promising and very diverse. We see completely different levels of maturity between the healthcare systems in countries like say Singapore compared to other countries in the region. We need to factor in these differences. At the same time, because of its huge population, economic power, and growth potential, Asia is now at a critical stage in its development in making choices towards more sustainable healthcare. You need to bring down the ecological impact first before you can scale it.
The global average of waste generated by hospitals per bed per day is 13 kilogrammes — a staggering amount of which goes to landfill. We try to address that with circular models so not “make, use and waste”, but “reuse”.
The list of challenges for businesses today are long – but what would you say keeps you up at night?
I think the challenges ahead are not so much technological by nature, as there’s a lot of R&D budget going into that space. It’s more about building resilient partnerships and this is also often related to business models – to broken referral chains and to wrong incentives in the system.
If you take circularity for instance, it is not a product property but a systems property. Of course, we can design our healthcare equipment to be ready for circularity, but how will it be deployed? How will it be of service? What will happen to it at the end of its first technical life-cycle? That depends critically on the abilities and willingness of care providers, for instance, to engage with us on new business models, on our ability to develop these servicing capabilities and to support healthcare centres.
I think the complexity of this requires us to work together and have a common frame of reference, a common language, and a common desire to do that. This is something that keeps me up at night sometimes but at the same time, we are an innovation company and we love challenges because they trigger innovation.
What are some examples of circular models in Philips’ range of products?
One good example is our helium-free MRI scanner. It weighs many tonnes and uses about 1,500 litres of helium because it has a super-conducting cooled magnet that is used to create these images. Now, helium is extremely expensive, scarce and not renewable. Once it is evaporated, it goes into the atmosphere and sometimes because it’s such a small molecule, it even leaves the atmosphere. So, it’s an extremely precious resource.
We have designed a seal technology that allows us to fill this MRI scanner once with just seven litres of helium rather than thousands of litres. This new design is energy efficient, it is lighter, and you don’t need a quench pipe where the helium could evaporate in case it warms up so you can place it anywhere in your hospital. The operating costs are also lower.
On the circularity point, we are now able to take back our large-scale medical equipment in all markets across the world. We have issued green and innovation bonds which also attract new money from the capital markets to build refurbishment factories where we can take back these machines and then harvest parts, replace them, upgrade them and give them a second life as full factory guarantees.
Where do you see the most exciting pockets of innovation happening in healthcare and social impact?
When we talk about social impact and digitalisation, it’s fantastic to see what you can do with digital technology to make healthcare accessible. One of the biggest challenges in underserved communities is that the healthcare referral chains are broken. People run to a tertiary hospital because they don’t trust the primary and secondary hospitals. Often there is no triage and the system basically breaks down.
Digital technology can help to empower patients to make better choices. It can help to refer the right patients to the right care provider. It can help to build trust-based systems without corruption where the money stays in the system, whereby people dare to invest in insurance because they know they will get the money back when they need it.
Currently, 100 million people per year go into extreme poverty due to health care expenses that were unforeseen. There’s a lot that digital innovation can do in the healthcare space beyond healthcare technology itself which is revolutionising the way healthcare is delivered, how it is paid for and how people are educated and relate to the healthcare system.
How are you making this accessible to the masses? Are you also providing that telehealth service and enabling the democratisation of healthcare?
That’s the goal. We want to provide healthcare to 300 million people in underserved communities by 2025. That’s a staggering amount and of course, we cannot do it by ourselves. So we are building coalitions with care providers, local health authorities, finance providers, health insurance, or other technology companies and practitioners, to get everyone to think about how they can bring the different puzzle pieces together and build these new ecosystems.
For instance, to address cardiovascular diseases in India, we have just installed our 1000th catheterisation laboratory (cath lab) in India. These cath labs are operating theatres where you can place stents with minimally invasive operations and we’re going to double this in the next few years. This equipment is extremely expensive if you just look at the cost of purchasing but if you look at the total cost of ownership, or the operating costs and the cost per treatment, then it comes back to effective referral chains, to the link between the cath lab and the primary care centers. So that’s how we try to make healthcare accessible and work together with NGOs and many partners to make that happen.
We reach out to suppliers, create incentives, build capabilities, and give them better financial conditions if they drive science-based targets. It’s a massive programme and a huge undertaking since we have thousands of suppliers, but it is the right thing to do.
Besides India, we are very active also in several countries in Africa like Kenya. We are also expanding into South America. This is a global programme but we are trying to build it steadily and not spread ourselves too thinly. We want to demonstrate that it is robust and scalable on the ground, before scaling it from there. Right now, we have already enabled healthcare for 470 million people so we’re over the halfway point and that’s very encouraging.
On your carbon footprint, your supply chain is so massive and many companies are struggling with addressing with Scope 1 to 3 emissions. How are you approaching it?
Let me give you two data points. We were the first health technology company in the world to adopt science-based targets and to implement a marginal carbon cost curve so we know what our own carbon economics look like. Based on these insights, we were able to reduce 25 per cent of our operational carbon emissions between 2008 and 2012.
Based on these successes, we were able to commit back in 2015 during the Paris Agreement to operating carbon-neutrally globally by 2020. We are now carbon neutral, have our own wind farms and we source 100 per cent of green electricity.
But, as you rightly say, supply chain emissions are a much bigger issue. We have committed to work with all our suppliers and to get at least half of them to commit to science-based targets in the next four years. We have invited many of our largest suppliers – first-tier manufacturing and transportation-related suppliers – to report their climate performance and strategy as part of the Carbon Disclosure Project (CDP) Supply Chain programme.
We are sharing our knowledge and our insights. We reach out, create incentives, build capabilities, and give them better financial conditions if they drive science-based targets. It’s a massive programme and a huge undertaking since we have thousands of suppliers, but it is the right thing to do.
The other thing is we actively engage with care providers, and on the consumer side, with retailers to drive down carbon emissions. Last year, we translated our science-based targets into innovation roadmaps at a product level so that every business unit of Philips knows per product, what needs to happen in the next five years to get the energy-efficiency up to a degree that is comparable with the Paris treaty.
Finally, where do you think the biggest opportunities lie in sustainability with respect to your industry?
The biggest challenge is in getting all stakeholders behind the idea that we urgently need sustainable and accessible healthcare. And that this also makes business sense. If we all work together in the interest of people who need care, we can drive systemic change and deliver safe, efficient, and effective methods of care, that are sustainable too. And that means better health outcomes, at lower cost, and improved patient and staff experiences. It’s time that we extend the principle of “first, do no harm” – the very foundation of healthcare – to the planet. And deliver on it.
This interview is part of Eco-Business’ coverage of the World Economic Forum Annual Meeting.