Pharma and Medical Supply Leaders' Rx for Greener Operations

Editor's Note: As the healthcare industry strives to reduce its environmental footprint, the makers of pharmaceuticals and medical devices are working to curb their use of energy and water and run their facilities more responsibly.

Thera Kalmijn examines their efforts in Part 2 of her series on green initiatives in the healthcare industry. Part 1, "Healthcare Heal Thy Footprint," is available on GreenBiz.com.

The pharmaceutical industry spends $1 billion annually on energy, which accounts for 14.4 percent of the healthcare industry’s carbon footprint. Medical devices add another 2.5 percent to the industry’s carbon footprint. Treatment and prevention of malaria costs in Africa are estimated at $12 billion annually and global treatment cost for HIV/AIDS is projected at $25 billion per year.

So which of these challenges do pharmaceutical and medical devices companies see as part of their corporate social responsibility? The answer is all.

Healthcare suppliers face an extremely complex set of environmental and social responsibility challenges. Industry sustainability leaders are tackling these challenges head-on domestically and globally. For those leaders who are recognized on rankings such as the Newsweek Green Rankings, Corporate Responsibility’s 100 Best Corporate Citizens and the Dow Jones Sustainability Index, one critical element to an effective response is a deeply embedded commitment to corporate citizenship in their missions and company cultures.

StethoscopeRobert L. Parkinson, Jr., chairman and chief executive officer of medical device company Baxter International Inc. (No.10 on CR’s 2010 list of 100 Best Corporate Citizens), says, “We define sustainability as a long-term approach to including our social, economic and environmental responsibilities among our business priorities.” This focus on environmental and social progress informs and influences strategy, operations and product development.

Kaiser Permanente recently introduced a supplier Sustainability Scorecard impacting $1 billion in purchasing annually. This is a clear sign that healthcare providers are demanding greater environmental accountability from their suppliers.

Easing the Load on the Grid

In reducing impacts of operations, leaders like Baxter and Johnson & Johnson, are going off the grid. Baxter pumped renewable power up to 16 percent of total energy usage in 2008 and augmented energy needs with 29,500 megawatt hours of purchased certified renewable energy certificates. Baxter has set a goal to slash greenhouse gas emissions 45 percent indexed to revenue from 2005 baseline.

By 2008, J&J had cut absolute GHG emissions by 9 percent, while sales rose over 400 percent. J&J is turning to the sun to achieve GHG goals. J&J’s LEED-Gold New Brunswick, NJ, headquarters has more than 800 solar panels and saves $100,000 in electricity costs and 2,000 tons in CO2 emissions per year. J&J is recognized as second largest generator of solar electricity in the U.S. and is a six-time recipient of the EPA Green Power Partner of the Year award.

Healthcare companies also leverage energy management systems to crank down the heat on energy bills. According to Lars Thording, senior director of Marketing and Brand Strategy at device reprocessor Ascent, A Stryker Sustainability Solution, a new energy management system at their plant in Phoenix, Ariz., is projected to cut energy use by up to 20 percent.

Managing Water Use

Reducing water use, particularly in water-stressed areas is also an industry priority.

Abbott Laboratories (No. 6 No.10 on CR’s 2010 list of 100 Best Corporate Citizens), exceeded a five-year goal to reduce water intake by 40 percent by 2009. Using the World Business Council for Sustainable Development’s “Global Water Tool” to create assessments, Abbott benchmarks against external water data to develop metrics and targets. In the two years from 2007 to 2009, several of its plants in vulnerable water areas including Casa Grande, Ariz., and Campoverde, Italy, achieved double-digit water use reductions. Additionally, innovative heat and water recovery systems in cooling systems at Abbott’s Ross Products division plants save some facilities over $100,000 per year.

Pharmaceutical and medical device companies also face water quality issues, largely due to wastewater discharges and spills. While many have made significant progress, even sustainability leaders are challenged to further cut wastewater exceedances.

Baxter acknowledges that with its 27 wastewater related incidents in 2008, wastewater discharge still “represents one of the company's most significant environmental compliance risks” and as a result the firm invested $10 million in wastewater treatment upgrades in 2008 alone.

On the other end of the water performance spectrum, J&J’s manufacturing plant in Baddi, Himachal Pradesh, India, took an innovative and aggressive approach to wastewater management by installing an on-site, zero-discharge wastewater treatment facility and using treated water in gardens and toilet flushing.  The facility also started harvesting rainwater that was otherwise wasted as run-off during the monsoon season.