White Paper Understanding and Linking Sustainability for Healthcare Richard W. Smith Director, Healthcare Johnson Controls, Inc.
Abstract Sustainability means different things to different people. This document is designed to help healthcare organizations better understand, articulate and operationalize sustainability, as well as include the partners and the stakeholders that are important to the entire healthcare organization s success. This document focuses on two main points: 1. Sustainability is best understood as actions designed to drive triple-bottom-line results around economic prosperity, environmental stewardship and social responsibility. 2. Organizations are moving from an informal process of considering triple-bottom-line elements in their daily business to a much more structured and measurement-oriented approach with targets and a commitment to continuous improvement. Introduction Leaders within healthcare organizations of all shapes and sizes face a wave of challenges including globalization, the explosion of information technologies, concerns around environmental impacts, changing demographics, increased regulatory scrutiny, pending healthcare reform and, most recently, a global economic recession. Many of these challenges are landing on the desk (or more likely the PDA) of decision-makers charged with managing the workplace. These individuals carry different titles, but share common responsibilities: delivering workplaces that are safe, comfortable, productive and cost-effective. Many leaders ask a relatively consistent set of questions: 1. How can we lower our $/square foot costs? 2. What can we do to use less fossil fuels, electricity and water in our facilities? 3. How do we meet our environmental commitments? 4. Can our workplaces help us build a more innovative and talent-rich culture? 5. Can our facilities improve our image in our community? The Framework for Sustainability: Managing to the Triple Bottom Line The traditional bottom line for healthcare organizations is generating margin, regardless of not-for-profit or forprofit status since no margin means no mission. Though many organizations talk about managing to the triple bottom line, their actions and offerings should not only focus on the economic results of their efforts, but work to embrace environmental, social and economic practices that benefit employees, patients, the community and society as a whole. Organizational Sustainability: environmental stewardship economic prosperity Managing the Triple Bottom Line social responsibility Sustainability is best understood as actions designed to drive triplebottom-line results around economic prosperity, environmental stewardship and social responsibility. This is nothing new for many healthcare organizations since they ve been thinking about how to better manage the resources they consume and how to serve their communities as a natural part of their business operations for years. In general, the longer an organization has been operating, the greater the value they assign to sustainability. What is new is the way they think about the triple bottom line, moving from an informal approach to a more formal and structured approach. 1
As part of this more formal approach, sustainability processes and triple-bottom-line thinking are being integrated into different departments and throughout all levels of a healthcare organization. Key Themes of Sustainability If organizations are beginning to learn about sustainability, they start by talking about managing operating costs first and reducing their environmental footprint second. Ongoing research points to four key themes that consistently arise to the top of the list. Research from Johnson Controls suggests that any and all sustainability initiatives must: 1. Reduce operating costs across the organization 2. Reduce the environmental footprint (emissions, waste, water and energy) 3. Secure its own support and funding (by paying for itself in some way) 4. Educate and engage stakeholders (employees, partners, customers and community) If organizations are beginning to learn about sustainability, they start by talking about managing operating costs first and reducing their environmental footprint second. Many healthcare organizations (particularly those familiar with Johnson Controls) quickly move to the topic of energy efficiency because it is seen as an area that offers the most opportunity to reduce costs, reduce environmental impacts and pay for itself through energy efficiency savings. We should note that our research and our own interviews also tell us that the engage stakeholders theme is much more significant and important than one realizes. Johnson Controls finds that virtually all sustainability initiatives are seen as important ways to engage and motivate employees, build a more loyal culture in an organization, and strengthen a brand and your share of the market. Sustainability can be used as a competitive differentiator, helping a healthcare organization attract patients that value and support organizations that are sustainable. However, without a meaningful communication program that creates visibility, momentum and enthusiasm, it will be difficult to maintain support and receive benefits from sustainability strategies and programs. Managing to the triple bottom line without telling anybody about sustainability misses the point. A Framework for Talking About Sustainability An organization may have many questions when deciding to incorporate sustainability into their strategy, operations and decision making criteria. Questions typically fall into five categories. 1. Improve our ability to fulfill our mission How can we create a more innovative and talent-rich culture? How can we impact patient outcomes? 2. Reduce our environmental footprint How do we meet our environmental commitments? How do we use less natural gas, electricity and water? 3. Improve financial results How do we lower our costs per square foot or meter? How can we improve our competitive position in geographic region? 2
4. Educate and engage stakeholders How can we improve our image in the community? How can increase the number of volunteers or donations? 5. Secure support and funding How do we pay for these programs? Building a Sustainability Solution When it comes to driving sustainability solutions, the process can be simplified to four key steps: 1. Set strategy and policy for the organization, for a business unit or even for a select workplace 2. Build the information and analytical platform to measure and monitor sustainability strategies and programs 3. Develop programs and projects to accomplish the strategy and goals 4. Develop communications programs to drive engagement with stakeholders Communications Strategy & Policy environmental stewardship economic prosperity Managing the Triple Bottom Line social responsibility Projects & Programs Information & Analysis These steps can be undertaken in different order, depending on where a healthcare organization is today. For example, if the leadership team has already made some sustainability commitment such as energy efficiency or greenhouse gas reduction, then there may be less need to dedicate significant time to developing these strategies. (It should be noted that setting a target is not by itself the same as developing a strategy and there are plenty of organizations today with a commitment, but no strategy.) Establishing and validating the information and analysis platform within the organization represents a critical step in developing a solution. Metrics are important, whether they are created internally or derived from external sources. Measurement and tracking helps an organization determine if its strategies, projects and communications are achieving its goals. 3
Finally, as pointed out earlier, any sustainability solution should include a significant communications and engagement dimension. Without it, a healthcare organization does not get the visibility, the momentum or the credit for the work. To put it simply, communications is a critical element in the sustainability of the sustainability initiative. The Value of a Sustainability Program Johnson Controls believes that by actually developing a sustainability strategy that is organized around the triple bottom line and developing a real information and analysis platform, it creates the opportunity to improve a healthcare organization s image, attract and retain talent, reduce an organization s environmental footprint and improve your financial results. Organizational Readiness Here are some indicators that a healthcare organization may be ready to take action: A numerical target or commitment binding the organization to some kind of resource commitment in energy, water, emissions and/or space One way that some organizations have operationalized sustainability is to use the triple bottom line as part of their decision making criteria. Participation and/or collaboration in prominent global non-governmental organizations such as the World Resources Institute, the World Wildlife Fund, the Carbon Disclosure Project, Healthcare without Harm, Practice Greenhealth, Global Health and Safety Initiative, and others A committed senior leader with on-the-record comments, the existence of a sustainability coordinator and cross-functional teams, and/or dedicated budget to funding sustainability initiatives A big action and/or announcement by a leading competitor in the area of sustainability It is worth noting that the enemy in most sustainability initiatives is inertia and organizational complexity. First, a doing things the way we ve always done them view virtually ensures that sustainability initiatives won t get off the ground. Second, organizational complexity can often prevent finding the right sponsor to drive change around sustainability. It requires finding someone within the organization that has the following profile: The person owns the commitment around meeting an environmental target The person has access to funding or can approve financing to budget and approve the necessary investments to meet the target The person has the internal influence and leverage to force unwilling participants to get on board In addition to executive commitment and cultural fit, healthcare organizations that have had the greatest success in creating an environmentally responsible organization have done so primarily through designating and supporting a person that can lead and integrate the various sustainability programs throughout their organization. One way that some organizations have operationalized sustainability is to use the triple bottom line as part of their decision making criteria. For example, when considering a strategy or program, does it help the organization improve its results in at least one (preferably two or more) of the following areas: economic prosperity, environmental stewardship or social responsibility. 4
Which Path is Best for You? There are many possibilities and opportunities for sustainability in healthcare. There is no one right way for an organization to become more sustainable. There are many resources and experts that one can turn to for assistance. Most importantly, healthcare leadership needs to decide what are the best next steps for their organization. Some organizations are waiting for others to define sustainability for them, and provide guidance on what to do and when to do it. Leading healthcare organizations are taking the time now to consider and define sustainability to fit their organization, their mission and their values. 5
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