The Business Imperative for Sustainability: What Med Tech Leaders Need to Know
By Reed A. Omary, MD, MS Carol D. & Henry P. Pendergrass Professor of Radiology & Biomedical Engineering, Vanderbilt University; Founder, Greenwell Project
At its core, sustainability is the practice of stewarding precious resources by reducing unnecessary waste. In the evolving landscape of medical technology, sustainability is no longer a mere buzzword; it’s become a business imperative. As medtech leaders, we are responsible for driving change that benefits the patients we serve, our organization’s finances, and society at large. In this article, I explore the key reasons why sustainability should be at the forefront of our strategic decisions and conclude with actionable ways to embed sustainability into daily operations.
1. Economic Benefits of Sustainability
Sustainability is often perceived as a cost center, but this assumption is wrong. Implementing sustainable practices can lead to significant cost savings and operational efficiencies. For instance, energy-efficient manufacturing processes and waste-reduction strategies can lower operational costs. Additionally, sustainable products often have a longer lifecycle, reducing the need for frequent replacements and thus saving costs in the long run. According to the Boston Consulting Group, reducing emissions by 20-30% can generate net cost savings, while reducing emissions by up to 80% can be cost-neutral.
Moreover, investors are increasingly prioritizing Environmental, Social, and Governance criteria. Companies that demonstrate strong sustainability practices are more likely to attract investment and enjoy a lower cost of capital. By integrating sustainability into our business models, we not only enhance our financial performance but also build resilience against market fluctuations and regulatory changes.
In conclusion, sustainability is a business imperative that drives economic benefits, regulatory compliance, brand reputation, innovation, and talent retention.
2. Regulatory Compliance and Risk Management
The regulatory landscape is shifting towards stricter environmental standards. Governments worldwide are implementing policies that mandate sustainable practices; non-compliance can result in hefty fines and reputational damage. For instance, the European Union has its Corporate Sustainability Reporting Directive, while the US Securities and Exchange Commission approved its comprehensive climate disclosure rule this year. California has an even stricter climate accountability package for large US publicly and privately held companies that are doing business in California.
For medtech companies, the rationale for staying ahead of these regulations should not be only to avoid penalties. Instead, let’s flip the script: we have an opportunity to position ourselves as industry leaders. By proactively adopting sustainable practices, we can mitigate risks associated with regulatory changes and generate value for our patients, organizations, and the planet.
3. Enhancing Brand Reputation and Customer Loyalty
In today’s market, consumers are more informed and conscious about the environmental impact of the products they use. According to McKinsey, 65% of consumers actively seek out sustainable products, and about 80% are willing to pay a premium. A strong commitment to sustainability can significantly enhance our brand reputation and foster customer loyalty. Patients and healthcare professionals are increasingly choosing products from companies that reduce environmental impact.
By transparently communicating our sustainability efforts and achievements, we can build trust and credibility with stakeholders. This not only differentiates us from competitors but also creates a loyal customer base that values our commitment to positively impacting the world. We all know that companies like Apple, with a strong brand reputation and positive image, significantly impact consumer loyalty.
4. Innovation and Competitive Advantage
Sustainability drives innovation. The quest for sustainable solutions often sparks the development of new technologies and products. For example, biodegradable materials and energy-efficient devices are not only environmentally friendly but also meet the growing demand for sustainable healthcare solutions.
By investing in sustainable innovation, we can maintain a competitive edge. This proactive approach to sustainability fosters a culture of creativity and continuous improvement, positioning ourselves as pioneers in the medtech sector. Advanced imaging, artificial intelligence, and miniaturization are spurring innovation in underserved disease areas, fueling growth and improving patient quality of life.
5. Attracting and Retaining Talent
The workforce of today, and increasingly of tomorrow, is driven by purpose. Employees want to work for companies that align with their values and contribute to the greater good. A strong sustainability agenda can be a powerful tool to attract and retain top talent. According to an IBM survey of over 16,000 people from 10 countries, 68% of respondents are more willing to accept jobs from environmentally sustainable companies.
We embed sustainability into our corporate culture to create a work setting that inspires and motivates our employees. This not only enhances employee satisfaction and retention but also drives productivity and innovation. A committed and engaged workforce is essential to achieving long-term business success.
Call to Action: Embedding Sustainability into Daily Operations
As medtech leaders, it is our responsibility to embed a sustainability mindset into every aspect of our operations. Here are some actionable steps to get started:
Make sustainable purchasing decisions: Prioritize suppliers and products that adhere to sustainable practices. This includes sourcing environmentally friendly materials and ensuring that our supply chain partners share our commitment to sustainability.
Seek energy efficiency: Implement energy-efficient technologies and practices in our manufacturing processes and facilities. This not only reduces our carbon footprint but also lowers operational costs.
Reduce waste: Nearly all large medtech companies have incorporated LEAN programs into their operations to minimize process waste. This approach can be expanded to environmental waste, too, by reducing single-use plastics, optimizing product design, and employing circular business models.
Crowdsource sustainability initiatives: Foster a culture of sustainability by engaging employees in sustainability initiatives. Provide training and resources to help our workforce understand the importance of sustainability and how to contribute. Everyone will benefit.
Measure and report: “If you don’t measure it, you can’t improve it” is a useful mantra for tech leaders. Start measuring environmental impact, and then work to improve results. Regular reporting will build trust across our entire range of stakeholders.
In conclusion, sustainability is a business imperative that drives economic benefits, regulatory compliance, brand reputation, innovation, and talent retention. By embedding a sustainability mindset into our daily operations, we can promote a more prosperous future for the medtech industry and beyond. By acting today, we can ensure a healthier planet tomorrow.