ESG and Reducing the Physical Footprint of Healthcare

2022-07-04 -

When Providence in early 2020 announced a strategy to significantly reduce its environmental impact and become carbon negative by 2030, the impetus was two-fold: mission and business imperatives of the system.

Providence, a faith-based health system located across seven states, has a mission to serve all, especially the poor and vulnerable. Leadership couldn’t ignore that its contribution to carbon emissions was in direct contradiction to its mission. The U.S. healthcare system as a whole is a major carbon emitter, responsible for 8.5% of overall greenhouse gas emissions.

“We’re called to do no harm. We’re called to heal. Yet, we’re harming our planet and also our patients by our intensive carbon footprint,” said Alison Santore, Executive Vice President and Chief Advocacy and Social Responsibility Officer at Providence.

There is a strong financial case for Providence to invest in a carbon negative strategy. Providence experiences extreme weather events, which forced it to shut down an operating room. “We have seen first-hand the vulnerabilities that we have,” Santore said.

Providence is one of several hospitals and health systems across the country dedicating resources and investments to become environmentally sustainable. While sustainability is an ethical business practice fundamentally tied to the mission of healthcare institutions, it is also increasingly important due to emerging regulatory and financial factors.

Specifically, regulators’ heightened interest in Environmental, Social and Governance reporting is a major factor. The U.S. Securities and Exchange Commission recently released a proposed rule that would require publicly traded companies to disclose and report their measures to address ESG, with major criteria concerning sustainability. The CMS is also seeking comments from healthcare providers on how they can better prepare for the harmful impacts of climate change, the threat it presents to their operations and

“We’re called to do no harm. We’re called to heal. Yet, we’re harming our planet and also our patients by our intensive carbon footprint.” – Alison Santore, Providence

how they can take action, including how to track progress. Additionally, HHS is asking healthcare stakeholders to sign a pledge to reduce emissions by 50% by 2030 and achieve net zero emissions by 2050.

Another element driving focus on ESG is the growing number of cities and even states mandating policies to reduce energy use and greenhouse gas emissions for building owners. Multiple cities, including Washington, D.C., St. Louis and New York, have now enacted such standards.

“We’re getting a lot more interest in things like ESG reporting and these local jurisdictions adopting building performance standards, which are really going to accelerate this change,” said Kim Shinn, Principal and Senior Sustainability Wizard at TLC Engineering Solutions’ PEAK Institute, a design firm that works with healthcare organizations.

As hospitals and health systems are growing more interested in and pressured to engage in sustainability efforts, Modern Healthcare Custom Media spoke with providers and experts about what practices and business structures must be in place to ensure the work is meaningful and impactful.

After all, absent the proper buyin and commitment, “going green” is merely a catch phrase.

“I work with architects all the time [that] say, ‘We’re 100% into sustainability; we want to drive down carbon in the built environment,’ and [when I] work with one of their teams, I get this glass box,” Shinn said.

He explained that healthcare organizations tend to fall back on old habits and follow the latest design trends rather than following through on what’s best for the environment.

Design and construction decisions that fail to provide community benefit may not be intentional though, said Adele Houghton, President of consulting firm Biositu. For instance, there are no set standards for measuring ESG in real estate development.

Starting at the top

To make meaningful progress on their carbon footprint, hospitals

and health systems must first have commitment from the board and C-suite.

For instance, at the University of Vermont Medical Center, when plans for a new building are presented to the board of directors, the question of how sustainable construction will be achieved is a huge part of the discussion.

“Our No. 2 principle for all new buildings or project renovations is to have it be LEED-certified. No. 1 is to make sure it’s going to deliver high-quality, safe patient care,” said Dr. Stephen Leffler, President and Chief Operating Officer of UVM Medical Center.

UVM’s return on investment from applying green design and construction in the next five to 10 years is another huge part of the presentation to the board. Achieving third-party sustainable design certification such as LEED does require more spending up front, Leffler said, but he’s confident the investment will pay for itself through lower energy usage to keep buildings operational every single day.

“At times, striving for LEED certification can be slightly more expensive on the build side,” Leffler said. “But if you look at energy costs right now, we believe long term, (the buildings) will be more energy efficient, which will be a positive to the bottom line ultimately.”

According to Shinn, seeking third-party certification is a good idea because it’s an unbiased way for provider organizations to show investors, the community and regulators their commitment to sustainability. Shinn was named a LEED fellow in 2011.

Similarly, at Providence, sustainability work has C-suite priority through Santore’s position as the chief advocacy and social responsibility officer, reporting directly to CEO Rod Hochman. Providence also ties executives’ bonus plans to the system’s sustainability goals.

“For our leadership teams, that’s how they are involved. They’re involved because they have to be,” Santore said.

She noted there are competing priorities for the system right now as it struggles with thin margins, and it’s certainly not the only health system with this experience. But Providence continues to keep sustainability top of mind because it’s framed with a strong

business case, Santore said. She points to the CMS recent request for information and the fact that Washington state, where Providence is headquartered, has mandated building performance standards related to carbon emission.

“We can’t afford not to do this,” she said.

Empowering stakeholders at all levels

In addition to C-suite and board buy-in, caregivers and employees should be involved in efforts to be a sustainable health system.

At UVM Medical Center, for example, the work on sustainability first started when a nurse in the OR raised concerns about the amount of blue wrap being wasted for each surgery and came up with a plan to recycle them. That initial project has since evolved into a long-term strategy by UVM Medical Center to reach net zero carbon emissions by 2050.

According to Leffler, employees are encouraged to share ideas on how to be sustainable and these suggestions are seriously explored.

“We are encouraged when our nurses or our food services staff bring forward ideas. We celebrate that and we make sure to highlight that work.” Dr. Stephen Leffler, University of Vermont Medical Center

The approach has fostered a culture where individuals at all levels are engaged in the long-term goal.

“We are encouraged when our nurses or our food services staff bring forward ideas. We celebrate that and we make sure to highlight that work,” he added.

Similarly, Providence has established what are called Green Teams, or groups of caregivers located across the enterprise who plan environmentally focused initiatives to achieve the system’s goal of being carbon negative by 2030. As of 2021, 25 Green Teams have formed.

A few examples of the work done by the Green Teams are establishing green gardens, excess food donation programs and commuter and ride-share incentives.

Providence also hosts forums for the Green Teams to meet and share best practices, thereby improving staff satisfaction and retention, according to Santore.

“I’ve gotten emails from caregivers across the system that say, ‘I’ve never felt so inspired to work for a healthcare system when I learned of this work we’re doing,’” she said.

The importance of reporting

Another crucial element of sustainability at health systems and hospitals is tracking the work being done internally as well as publicly.

At Providence, the system partnered with Microsoft to create a scorecard that tracks progress across multiple categories of pollution reduction and cost savings. The scorecard is available to anyone within Providence, whether they are an executive leader or frontline caregiver. It shows data for a specific hospital or clinic, and also provides comparative data. This is particularly important for local leaders who have their compensation tied to reaching sustainability goals.

“We try to harness a little bit of friendly competition,” Santore said.

Providence reports the data to the board and releases a sustainability report to the public annually.

Shinn notes there is a “learning curve” with measuring carbon emissions because they haven’t been traditionally measured or reported on. He advises that an organization tracks metrics that are aligned with their mission and values. “If the organization has a carbon-based goal (e.g., net zero carbon by 2040), then it is essential that carbon emissions be the metric that is tracked,” he said.

In terms of measuring progress against peers, Santore said there is a disparity in access to uniform datasets, particularly in the U.S. Providence uses international greenhouse gas protocols but that’s not necessarily what other systems are using. She added she’d like to see more progress on that front going forward.

Linking ESG and sustainability

Although signs indicate that more health systems and hospitals will begin concentrating their efforts on sustainable design and operations in the coming years, Houghton emphasized that the work shouldn’t happen in a silo.

Right now, designers usually work on green building projects separate from health systems’ social and governance goals. From Houghton’s perspective, there is an opportunity to bring the sustainability teams together with the social and governance teams. In fact, a growing body of research shows the tie between poor environmental conditions such as air quality and socioeconomic status.

Healthcare systems in general “are really focusing on the S and G (of ESG),” Houghton said. “Finding a way to bring the three together is something I think will be an emerging topic for hospitals that think of themselves as, or aspire to be, anchor institutions.”