Green MedTech: How Leaders Can Drive Sustainability in the Health and MedTech Sector

In the face of climate change, organizations across the globe are scrambling to shrink their environmental footprints.??

The healthcare sector, including the HealthTech and MedTech industries, accounts for 4% of global carbon emissions.??

But climate change isn’t just about melting ice caps. It’s a public health issue, too. It is projected to cause an additional 250,000 deaths per year between 2030 and 2050. The direct costs to health could be USD 2-4 billion per year by 2030.?

The MedTech industry, committed to preserving life and enhancing patients’ quality of life, must ensure it does not contribute to exacerbating these crises.??

MedTech’s Call to Sustainability?

Two-thirds of employees say they are more willing to accept a job offer from a sustainability-conscious employer than an employer that doesn’t take environment, social, and governance (ESG) seriously.?

Nearly two-thirds of consumers also prefer supporting sustainable companies. This percentage is even higher among younger generations. Nine out of 10 Gen Z consumers are willing to pay 10% more for sustainable products.?

Despite this, MedTech companies are lagging in terms of their sustainability progress when compared to other sectors in the life sciences and healthcare industry.??

While 19 of the top 20 MedTech companies have set carbon reduction targets, only 40% of those have included consumer and supplier emissions in this carbon reduction target.??

To put this into perspective, 9 of the top 10 pharmaceutical companies have included consumer and supplier carbon emissions in their reduction targets, and seven have full-scope net-zero goals.?

The reasons behind MedTech’s slow embrace of sustainability are complex, and they aren’t solely rooted in costs. It is estimated that cutting emissions by just 20% to 30% could generate a net cost saving—and cutting them by 80% would be cost-neutral. As a matter of fact, roughly 60% to 80% of emissions can be eliminated at no cost.??

MedTech Investors Want Greener Practices?

Fewer than a third of life sciences CEOs believe that sustainability can offer a competitive edge, and only a third have introduced sustainability key performance indicators (KPIs) within their companies.?

More than half of life sciences CEOs also claim that a major reason for not seriously committing time and resources to sustainability is investor opposition.??

This is puzzling considering trend data indicates that, generally, 78% of investors want companies to enhance their ESG performance even if it impacts short-term profits.?

6 Steps Companies Should Take for Greener MedTech?

1. Lifecycle Assessment? ?

Conducting a complete Lifecycle Assessment (LCA) for each of their products is the first step MedTech firms should take. Determining a product’s environmental effect from manufacture through end-of-life and beyond is the goal of these LCAs.??

Consider the fictitious example of an organization, MedTech Inc., that discovers via an LCA that their production process is too energy-intensive and produces too much waste. Through the use of more energy-efficient equipment, waste recycling, and sustainable materials, MedTech Inc. may be able to lessen its environmental impact and perhaps cut manufacturing costs. After all, environmental friendliness often correlates with higher profits.? ??

An LCA may also reveal to Life Tech, another fictitious firm, that the disposal of their single-use surgical instruments results in severe harm to the environment. Upon this realization, Life Tech could redesign the tools to be reusable and introduce a cleaning, sterilization, and take-back program to reduce waste.??

2. Green Procurement? ?

Green procurement refers to the deliberate selection of suppliers who exhibit a strong commitment to ESG and environmental sustainability.? ? To ensure greener procurement, MedTech organizations should complete green procurement assessments.??

A green procurement assessment may include reevaluating the criteria and methods used for supplier selection. It can also examine other factors, such as the possible advantages of opting for local suppliers owing to the accompanying decrease in transportation distances and, hence, carbon emissions. ? ? Companies failing to adopt green and ethical procurement can face significant reputational damage, as highlighted by the Nestlé case.?

Nestlé faced accusations of child slavery within their cocoa supply chains in Africa. The company, however, refuted these allegations and the related court case was dismissed from the U.S. Supreme Court.?

Regardless, the incident inflicted reputational damage at the time. Thus, the case underscores the importance of not only ethical supply chain management, but also public transparency concerning organizations’ green procurement policies.

3. Renewable Energy Sources? ?

It is not enough to merely require suppliers to be green; businesses must also practice what they preach. This calls for the adoption of renewable energy whenever and wherever feasible to avoid overreliance on fossil fuels. There are numerous ways to achieve this. ? ?

Traditional renewable sources such as solar and wind power, biofuel, and biogas are cornerstones of sustainability. MedTech companies should continue to harness them. ? ?

But there is also room for innovation. A significant opportunity lies in solar windows and building-integrated photovoltaics. These solutions can enhance energy efficiency within infrastructure, thus transforming buildings into self-sustaining entities. ? ?

To further optimize energy efficiency, MedTech organizations should consider incorporating energy-saving technologies. Examples of such technologies include geothermal heat pumps and smart energy management systems. ? ?

Several promising advancements are on the horizon, too, and they have the potential to propel the MedTech sector’s sustainability efforts forward. These include the integration of subdermal solar cells into bioelectronic devices, the use of solar-powered medical autoclaves, and the generation of bioenergy from medical waste disposal.? ?

4. Energy-Efficient Operations ?

It is essential to use renewable energy sources like those stated above. But for them to be effective, your operations must also be energy-efficient; otherwise, you might be compelled to utilize electricity produced by fossil fuels anyway.

The first step toward more energy-efficient operations is to conduct regular energy audits. Energy audits are used as a “diagnostic” tool to identify problem areas. These audits can assess everything, from the manufacturing process to the energy efficiency of the machinery. ? ?

MedTech companies should also commit to routine maintenance of their equipment, especially of machines in the production line. This ensures that the machinery operates as efficiently as possible while reducing energy waste.

Plus, upgrading outdated equipment and technology with more energy-efficient options could help conserve energy as well.? ?

Small adjustments like installing high-efficiency heating and cooling systems and swapping out incandescent light bulbs with energy-saving ones can have a big impact too.? ?

For organizations in the planning phases of new buildings, weaving energy efficiency into the building design blueprint can result in considerable energy savings. Options for reducing energy use and heating and cooling costs include adding solar panels, maximizing natural light, and using next-gen insulation solutions.? ?

5. Regulatory Compliance? ?

MedTech organizations face a variety of sustainability laws and regulations around the globe, like:?

• The EU’s Corporate Sustainability Reporting Directive (CSRD)? The CSRD improves corporate sustainability reporting. It amends the 2014 directive, adding detailed reporting requirements for environmental, social, human rights, and governance issues for large companies. It will be rolled out in January 2024 in three phases.?
• South Africa’s Environmental Impact Assessment (EIA) Regulations? These regulations ensure that certain companies evaluate the environmental effects of their activities and report their findings to the Department of Environmental Affairs.?
• The SEC’s Proposed ESG Rules? In 2022, the U.S. Securities and Exchange Commission (SEC) proposed new rules that would make it compulsory for registered companies to make thorough and accurate climate-related disclosures in their SEC filings.?
• The UK’s Producer Responsibility Obligations Regulations? These regulations compel companies with an annual revenue above ￡2 million and a package handling volume more than 50 tons to contribute to recycling expenses.?
• The UK’s Climate Change Levy (CCL)? The CCL is an energy tax. Businesses consuming 33kWh of electricity or 145kWh of gas per day are subject to the CCL in the UK.?

Keep in mind that there’s a renewed sense of urgency: July 2023 was the hottest month ever recorded, underscoring the need for change. Expect new and stricter sustainability laws to be implemented.? ?

6. Appointing a CSO or CESGO ?

Another phenomenon has emerged as a result of all the factors that MedTech businesses must take into account in order to be green: the rise of the Chief Sustainability Officer (CSO) or Chief ESG Officer (CESGO).? ?

These sustainability specialists offer the C-suite a unique set of talents. They typically have extensive professional experience in sustainability, corporate social responsibility, or related fields, a track record of successfully developing and implementing ESG or sustainability strategies in a corporate setting, experience working with stakeholders, including negotiations with regulatory bodies, NGOs, or community groups, and familiarity with industry standards and regulations on ESG and sustainability. ? ?

Ideally, CSOs and CESGOs should also have experience in or certifications from organizations like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), or Carbon Disclosure Project (CDP) to support their work experience.? ?

When it comes to making your operations more environmentally friendly, a CESGO or CSO can really make a difference. But finding top professionals in this field, particularly those who are familiar with the MedTech ecosystem, can be challenging.?

Companies Already Reaping the Benefits of Sustainability?

Some MedTech and HealthTech leaders have already made significant advancements that will drive them into the future:?

• Abbott: By 2030, Abbott aims to maintain a 90% waste diversion rate and reduce direct GHG emissions from sources owned or controlled by Abbott (referred to as scope 1 emissions) as well as indirect GHG emissions within its value chain (referred to as scope 3 emissions) by 30%.?
• Johnson & Johnson: Johnson & Johnson has established a goal of achieving carbon neutrality by 2030 and transitioning to 100% renewable energy usage by 2025.?
• Siemens: Siemens Healthineers’ ecoline offers refurbished diagnostic-imaging equipment upgraded to the latest standards in hardware and software. Repurposing MedTech medical devices can decrease hospital costs by half and ozone depletion by 90%. By refurbishing equipment, Siemens helps to provide top-tier medical equipment to even the most disadvantaged communities worldwide at a fraction of the cost.?

MedTech Companies Need Sustainability Leaders

Fostering an organizational culture that puts a high priority on sustainability is the most effective way for MedTech businesses to succeed in implementing greener practices.??

Doing so entails instilling a sense of collective responsibility for sustainable initiatives across all levels, from the CEO and executives to production line workers.?

But you need leadership that is truly enthusiastic about sustainability to succeed. That’s where Stanton Chase comes in.?

You need leadership that is truly enthusiastic about sustainability to succeed.?

We are skilled at finding leaders who not only have the abilities needed to create a sustainable organizational culture, but who are also innovative, adaptable, knowledgeable, and agile. Click here to contact one of our consultants.?

About the Authors

Gavin McCartney, a Partner at Stanton Chase London, serves as the Global Sector Leader for the Health and MedTech sector. He brings extensive experience managing executive search assignments for clients at global, regional, and local levels, conducting searches across Europe, US, Africa, the Middle East, and Latin America.??

Gavin’s international executive search expertise includes working with multicultural teams in the life sciences and healthcare industry. He handles mandates ranging from C-suite to VP and director positions across various functional areas. Furthermore, complementary to mature global MedTech organizations, Gavin’s experience extends to supporting early to commercialized-stage start-ups and SMEs, navigating the unique challenges of small, fast-growing, and investor-backed organizations.?

Christian Ehl is a Partner at Stanton Chase Düsseldorf and the Global Practice Leader of Stanton Chase’s ESG and Sustainability Practice. He has 19 years of experience in executive search, leadership advisory, sustainability, and ESG.?

Christian’s work is specially concentrated on aiding companies that are undergoing a shift towards sustainable and ESG-compliant business models. The extensive insights Christian has amassed over the past decade in areas connected to sustainability significantly assist him in this undertaking.?