It is indeed a startling fact that healthcare comprises 5% of the overall worldwide carbon emissions, and it is medical devices and technology that happen to be responsible for a large chunk of it as per Boston Consulting Group- BCG.
Much of this happens to come from the manufacturing operations as well as supply chains pertaining to the medtech companies as well as their suppliers. In terms of the provider level, MedTech happens to generate tonnes of unrecycled waste by way of single-use disposable products as well as packaging.
Strict Regulations
Regulators across the world happen to be also establishing the rules that require companies to get standardized ESG information published. Apparently, when it comes to Europe, regulations already happen to be in place. As far as the US is concerned, the proposed new disclosure needs to relieve public companies’ stress on the risks pertaining to climate as well as the management processes.
Another major ESG trend happens to be the compulsory sustainability reporting obligation, which happens to be imposed on organizations across the world. In Asia-Pacific, ESG regulation is speeding-up because of the urgent requirement in terms of greater transparency as well as tightened definitions pertaining to sustainable investment products.
The two-fold rise in ESG policy numbers in the region in the last five years has gone on to lead to growing corporate ESG disclosure throughout most of the APAC markets that now syncs with or goes beyond those in the US, according to a Goldman Sachs report.
It is well to be noted that the Australian government looks forward to coming up with compulsory climate-led financial disclosure needs, thereby encouraging companies to embrace practices that are environmentally responsible. Furthermore, strict waste disposal regulations happen to be on the cards, with Japan looking to cut plastic waste by 25% and South Korea by 50% by the end of this decade.
Due to this, the medtech sector as well as the wider healthcare industry happen to be growingly committed to environmental stewardship.
Slashing carbon footprints
All the highly regarded medtech companies, such as Becton Dickinson, Siemens Medtronic, GE HealthCare, and Philips, have gone to set an ambitious target to slash carbon emissions. Medtronic Plc went on to announce in 2022 to be net zero in the value chain by 2045. The fact is that Philips is most surely a leading innovator when it comes to environmental technology within the medical device sector. The company looks forward to maintaining neutrality in carbon and, at the same time, using 75% renewable energy within its operations by 2025.
Moreover, the company happens to be committed to decreasing CO2 emissions throughout its complete value chain in sync with the 1.5-degree Celsius global warming aspect. It is well to be noted that Philips is most likely going to embed circular practices across its sites and hence attain zero waste to landfill in the next year, i.e., by 2025.
On the other hand, Siemens Healthineers happens to be committed to becoming carbon neutral by the end of the decade. It happens to be presently on track. The company has already pushed its efforts. Siemens Healthineers reports a 50% reduction when it comes to its CO2 footprint from operations, sans offsetting, ever since 2019 and happens to be targeting a 90% decrease by 2030.
Moreover, Siemens Healthineers has gone on to decrease its energy consumption by 9% since fiscal 2021, and 96% of its locations have already executed a water strategy.
Olympus, which happens to be based out of Japan, happen to be bent on becoming carbon neutral by 2030, and since 2021, the company has gone on to promote sustainability management by way of designating an ESG Officer as well as established KPIs within the medium- to long term business plans. The APAC region, which is 18% of the almost $660 billion worldwide market sector, is anticipated to be the fastest-growing region in terms of growth and is also giving due priority to the ESG initiatives.
Bain & Co., as well as APACMed, went on to partner to survey 120 customers and over 800 employees with ESG considerations in the medtech sector. Almost 70% of the medtech customers that were surveyed anticipated that ESC would go on to be a core purchasing criteria. Of the 874 employees who were surveyed, 60% went on to report that their companies have already gone on to establish ESG parameters and have set up specific objectives, whereas 43% confirmed of the separate ESG strategies for the suppliers of their companies.
Solutions that are innovative
MedTech companies have already announced initiatives pertaining to climate change by way of slashing carbon emissions, cutting waste, saving water, and also embracing environmentally balanced manufacturing within their products.
As per the Head of APAC Healthcare & Life Sciences Practice for Bain & Company Vikram Kapur, Medtech companies happen to be proactively taking into consideration numerous ESG issues and have also come up with many initiatives, which include energy efficient manufacturing, engagement in the supply chain, reduction of waste, recycling, remanufacturing, and adoption of eco-materials. Moreover, medtech firms keep focusing on improving healthcare access, diversity, inclusion, and community engagement. To acknowledge the significance of ethical business standards as well as transparency more, medtech companies across APAC have gone on to restructure the SOPs and at the same time offered compliance training when it comes to employees.
It is well to be noted that successful medtech companies across the world happen to stress upon global sustainability while at the same time also recognizing the significance of considering the nuances of local market and engaging with stakeholders.
While the medtech sector has gone on to take many initiatives, there is still a lot to be done to reduce carbon emissions significantly. In spite of setting targets which are ambitious and also making progress, more endeavors happen to be needed so as to have a significant effect. It is worth noting that taking into account sustainability can also play part in cost-cutting steps. The BCG report goes on to estimate that slashing the emissions by 20% to 30% could as well go on to result in net cost savings, and hence it is compulsory for the sector to take all the required measures so as to become much more sustainable and simultaneously also maintain an ecosystem that’s healthy.
