Net zero NHS: Are suppliers the key to decarbonising large complex systems?

In October 2020, the NHS committed to reaching Net Zero within 20 years. Almost two-thirds of its emissions, 62%, come from the supply chain, so suppliers and buyers must work together to decarbonise.

Lisa Dittmar, Net Zero and Sustainable Supply Chain Lead for NHS England, took to the stage at Sustainable Industry ’22 to explain what suppliers need to know.

Lisa Dittmar, Net Zero Supply Chain Lead - NHS

The climate emergency is a health emergency. Rising global temperatures are leading to more intense storms and floods, more frequent heatwaves and the spread of infectious diseases.

In the UK, air pollution is the single greatest environmental threat to human health, accounting for 1 in 20 deaths. Improving air quality will mean fewer cases of asthma, cancer and heart disease and could help save more than 5,700 lives every year.

In response to the health threat posed by climate change, the NHS became the world’s first health service to commit to a target of reaching net-zero direct carbon emissions by 2040 and for all emissions by 2045.

The NHS is in a strong position having already cut its carbon emissions by 30% since 2010. However, as the second-largest healthcare system in the world and the largest employer in Europe, a significant challenge still lies ahead.

The NHS needs to eliminate a carbon footprint roughly equal to Croatia to close the gap to Net Zero. That 62% of NHS carbon emissions occur in the supply chain, with many of these emissions occurring outside the UK, adds further complexity.

While the NHS can modify the way it consumes goods and services to reduce carbon emissions, part of its supply chain emissions can only be reduced by suppliers themselves. As the lead for sustainable supply chain, Lisa Dittmar is responsible for driving cohesion internationally and ensuring suppliers meet new minimum requirements.

Lisa noted that the NHS increasingly sees pharma companies making commitments that include their entire value chain and collaborating to accelerate action. The NHS needs to ask similar questions of suppliers with one coherent voice; not easy to do when you have 4,500 people working in procurement.

It's recently developed Net Zero Supplier Roadmap and Evergreen Sustainable Supplier Assessment have the dual purpose of testing engagement and inspiring other organisations, particularly those with equally large and complex ecosystems like manufacturing primes.

What does good look like?

The Net Zero Supplier Roadmap commits to all NHS procurements having at least 10% net zero and social value weighting from April 2022. According to Lisa, social value encompasses five themes aligned to environmental, social and economic benefit:

1. Fighting climate change

2. Tackling economic inequality

3. COVID-19 recovery

4. Wellbeing

5. Equal opportunity

From April 2023, for all contracts above £5m, the NHS will require suppliers to publish a carbon reduction plan for the UK emissions, expanding to all new procurements from April 2024. From April 2027, all suppliers will be required to publicly report targets and emissions and publish a carbon reduction plan for global Scope 1, 2 and 3 emissions aligned to the NHS net zero target.

While the Supplier Roadmap commits to near-term targets, the Evergreen Sustainable Supplier Assessment focuses on a longer-term time horizon. The Evergreen Assessment is a tool for suppliers to share information about their sustainability journey with the NHS and to receive information back as to how aligned it is with the NHS’s sustainability priorities.

Currently being piloted and due for rollout sometime in 2023, the voluntary assessment is recommended to be completed annually, with the score valid for a year. Lisa commented that Evergreen enables suppliers, especially those going above the minimum requirements, to share the good work they are doing. Scores, at least provisionally, will be based on a range of factors, including:

• Carbon Reduction Targets and Emissions

• Corporate Social Value

• Emissions Reduction Plans

• Electric Vehicles and Fleets

• Ethical Sourcing

• Modern Slavery

• Products and Service Carbon Foot printing

• Renewable Energy

• Validation and Verification

The aggregated score will translate to a sustainability grade:

• Minimum expectation of suppliers

• Level 1: Early Adopter – Operational emissions targets and plan

• Level 2: Mature – Comprehensive targets, plans and action

• Level 3: Influencer – Leaders in sustainability

Lisa explained the benefits of such an assessment to both suppliers and the NHS, including the opportunity to benchmark against future roadmap requirements, a standardised way of community sustainability credentials and being able to more easily compare where suppliers are in relation to the NHS priorities. “Such information can help drive conversations regionally and globally to support business cases for sustainable investment, global target setting and more,” Lisa noted.

Improvement starts now

The NHS has an enormous environmental impact but an equally enormous opportunity to improve, concluded Lisa. The biggest opportunity to reduce the NHS’s impact comes from understanding the Scope 3 emissions of its suppliers and products.

She encouraged all suppliers, whether to the NHS or elsewhere, to get started on their carbon reduction plan with a clear focus on:

• Additional – The social value you will deliver as a result of winning the contract, so it is over and above what you are already doing

• Appropriate – The more aligned the tender, and with NHS priorities more broadly, the better you are likely to score

• Measurable – KPIs that can be easily reviewed as part of contract management will likely improve your scoring and ability to deliver against commitments made