Baxter International Inc. is a $12.8 billion Fortune 500 healthcare products company headquartered near Chicago, Illinois. Baxter manufactures and markets products to treat hemophilia, kidney, and immune disorders as well as other chronic, acute medical conditions. The company employs approximately 48,000 in more than 100 countries.
In 2010, Baxter was named the leading medical products company by the Dow Jones Sustainability Index for the ninth time, and was recognized by Corporate Knights as one of the 100 Most Sustainable Companies.
GreenBiz.com's Heather King recently spoke with CEO Robert Parkinson and VP of Environment, Health, Safety and Sustainability Art Gibson about the integral tie between the healthcare industry and the health of the planet, the unique challenges of medical product reuse, and the impact of Kaiser's recently announced supply chain scorecard.
Heather King: What are the business reasons Baxter is committed to sustainability?
Robert Parkinson: As a global healthcare company, Baxter takes seriously the health of the planet. It is within this context that we look at our business and challenge ourselves as to how Baxter can utilize its assets, expertise and influence to best contribute to a more sustainable world.
We have aligned our business and sustainability strategies. Baxter's executive-level Sustainability Steering Committee, established in 2006, leads the company's efforts to integrate sustainability into our long-term strategic planning as well as our daily activities.
Art Gibson: In fact, our commitment to sustainability spans more than three decades. Early on, the company realized that taking a responsible approach is not only the right thing to do, but also makes good business sense. It drives financial savings, helps attract high caliber, diverse talent, differentiates the company and enhances its reputation.
HK: How is Baxter integrating sustainability into its product development effort? Can you give an example of a sustainable product innovation?
RP: From product planning through the entire product life cycle, we are integrating sustainability into product development. We are also implementing green principles into our manufacturing and operations.
AG: For example, Baxter includes Product Sustainability Review (PSR) during the early stages of the product development process. PSR is a two-step assessment of a product's projected environmental, health and safety impacts.
Since 2005, Baxter has used PSR to evaluate all new medical devices that reach the concept stage of development, and currently has several devices under review. This year we're expanding the use of PSR into our BioScience business. Baxter also completes life cycle assessments of certain products to further differentiate products based on environmentally efficient design.
We have achieved recognition for certain products. These demonstrate the value of our PSR approach. Our FLEXBUMIN [Albumin (Human)] product and our XENIUM+ synthetic dialyzer both received Carbon Reduction certification from the Carbon Trust. Certification is based on a verification of carbon reduction through carbon footprint analyses and Baxter's ongoing commitment to carbon footprint reductions.
HK: Historically, the medical products industry has provided single use products for both economic and hygienic reasons. Is the "green movement" impacting the industry's and Baxter's approach? Will we see more reusable products going forward?
AG: The responsible treatment of healthcare products at the end of their useful life is an emerging issue worldwide. The appropriate approach varies by type of product. For example, many of the electronic medical devices Baxter sells, such as automated systems used for home dialysis therapy, are well suited to repair and refurbishment after the original customer has finished using them. Other products, such as intravenous (IV) bags, cannot be reused but may be responsibly recycled to recapture materials for other uses.
We have several initiatives in Ireland, for example, in which Baxter partners with waste management and recycling firms. In 2010, Baxter provided waste-collection services to more than 700 home patients in Ireland. Some of the waste collected is used to fuel furnaces in an Irish cement factory, reducing the amount of waste sent to landfill.
We continue to look for opportunities to test the economic and logistical feasibility of more efficient waste management. This includes products made from recycled materials that can be reused in the medical supply chain, such as plastic pallets made from mixed IV bags or packaging for product transport.
HK: This past spring, Kaiser Permanente announced a supplier scorecard in an effort to pressure medical product suppliers to adhere to certain standards for sustainable products, packaging and operations. Some view the announcement as having similar impact as Walmart's scorecard has had in the consumer packaged goods industry. How will this affect Baxter and your industry peers?
AG: There clearly is impact. Customers, governments and other stakeholders are increasingly interested in the materials and chemical substances used in products and packaging. We believe that both suppliers and companies benefit from efforts to drive a sustainable supply chain. We have to anticipate and respond to a growing volume of regulatory standards, as well as the evolving expectations of customers such as Kaiser.
Since a single product may contain many components from numerous suppliers worldwide, we ourselves are implementing a product stewardship software application to manage environmental and other information related to new and existing products. These tracking and information systems will enable Baxter to better understand, manage and optimize product environmental performance and meet the needs of customers like Kaiser.
HK: Water conservation and the responsible management of wastewater is a primary focus area for Baxter. What are your most significant wins with regard to water?
AG: Baxter closely manages how it obtains, uses, treats, re-circulates and discharges water. We have a corporate goal to reduce water usage 35 percent indexed to revenue by 2015 from a 2005 baseline. We used 10 percent less water in 2010 than in 2005 in absolute terms and 31 percent less indexed to revenue.
The company's overall water usage continues to decline, driven by water conservation projects such as in our Singapore facility. In 2010, our "Green Committee" optimized cleaning processes in that facility, saving 14,000 cubic meters of water during the year. Baxter identifies these types of opportunities through formal energy assessments, water value stream mapping, water balances, and facility-driven initiatives.
As a global company, water issues vary significantly by location. Baxter used the World Business Council for Sustainable Development (WBCSD) Global Water Tool to evaluate the availability of renewable water resources at the company's 40 largest water-consuming locations, representing approximately 92 percent of the company's total water use. Ten of those sites are located in water-scarce areas, eight in water-stressed areas and 22 in water-sufficient areas.
We plan to conduct further analysis to understand the full water risk at each location. Additionally, we are expanding our water risk evaluation to also consider regulatory, geopolitical, economic and social factors that can impact water access and use. Based on this information, the company will develop a more comprehensive water risk management strategy, and set more rigorous water conservation goals.
HK: What does Baxter's sustainability future look like ten years out and how will you measure your success? What do you anticipate as the greatest challenges as you continue on this journey?
RP: Baxter operates in an increasingly challenging business environment. This has motivated us to intensify our efforts to become more innovative, productive and efficient. Sustained financial strength is critical to our ability to achieve both our business and sustainability goals, and to fund innovation, which is the real key to creating solutions for today's and tomorrow's challenges.
Baxter is in a unique position to make an impact due to the industry we are in, our strong global presence and reputation, the sustainability progress we have made and the experience we continue to gain. While we have made great strides in many areas of sustainability, we clearly need to improve in others.