Climate.

Change poses the greatest and most pervasive threat to humanity and the natural environment. But tackling climate change could prove to be the greatest global health opportunity of this century. That point was argued in The Lancet Journal eight years ago. So have scientists been proved right? And what are the thoughts of the healthcare leaders who are entrusted with finding the solutions? I'm Georgie Frost, and this is The So What from BCG.

There's a rapidly rising number of cancers, respiratory disease, cardiovascular disease, also infections that are directly linked to the carbon emissions and climate change.

The whole supply chain of manufacturing medicines, but also providing healthcare services in the hospitals, etc, is a significant source of emission. Not only can we solve it on our own, we need to come together and work together in making sure that we address the whole challenge.

Today in this special episode, I'm talking to Pascal Soryo, CEO of AstraZeneca, and Lars Frugard Jorgensen, CEO of Nordisk.

Well, health and climate change is interconnected in the sense that climate change has a significant impact on our health. And on the other way, how we do health care is also impacting the climate because it's a significant contributor to fossil fuel consumption and CO2 emissions. They interlink climate impacts our health and provision of health care impacts the climate.

Pascal?

Maybe just to add, actually, Georgie, first of all, thank you for having us here. It's a pleasure to be with you and Lars. But the climate crisis is actually a health crisis. If you think about it, we've talked a lot about COVID and the millions of deaths due to COVID, and of course, this was very tragic. But every year, we lose more people. There are more deaths in the world every year due to climate change and pollution. There's a rapidly rising number of cancers, respiratory disease, cardiovascular disease, also infections that are directly linked to the carbon emissions and climate change. And as Lars just said, in the healthcare sector, we are here to help people and save their lives or improve their lives, but at the same time, we contribute to the carbon emissions.

Pascal, two years ago at COP26, you started collaborating on a public-private partnership called the Sustainable Markets Initiative, Health Systems Task Force. Would you just tell me a bit more about that?

Yeah, the SMI, the Sustainable Markets Initiative, is a very important group that was convened by His Majesty, King Charles III, when he was actually Prince of Wales. And his idea was to bring participants from the private sectors to encourage them to work together to help shape more sustainable markets for nature people in the planet. Essentially, he put together 20 task forces covering different sectors of the economy, being aviation, insurance, banking, agribusiness, healthcare, etc, etc. And we created the SMI Health Systems task force, which is dedicated to the health systems, the healthcare sector. And so we convened a number of companies together. We have the CEOs of Sanofi, Roche, Merck, GSK, Samsung Biologics, Reckitt, that are on board, pharmaceutical companies in particular. We also have representation from the WHO, from the NHS in the UK, and other academic institutions across Europe in particular. We are now also collaborating with a similar group in the US, and we're setting up a chapter of the SMI in China. Essentially, we are working together to address the decarbonisation of the supply chain. We're also looking at decarbonising the delivery of care, and we're leveraging digital healthcare with a focus on clinical trials.

How do we use digital technologies to reduce carbon emissions in our clinical trials? And more recently, we added another specific work group on consumer health and wellbeing that is led by Reckitt. We really worked together to see how we can collaborate and share ideas on how we can impact carbon emissions and decarbonise the healthcare sector. Pharmaceutical companies like Lars's company and mine are, of course, part of the supply chain of the healthcare sector. We do have to work hard to reduce this. I have to say, Novo is clearly a leader in the field has been a leader. We're trying ourselves also to show others how to decarbonise. And it's really pleasant, a great pleasure to work with everybody on this important task.

Well, Lars, talk to me about it from your perspective, a leader, as Pascal describes you.

Yeah, that's a very generous comment by Pascal, and I would start by thanking Pascal for his leadership in actually taking this initiative in the industry. It is interesting to reflect on that the climate change we see is a significant threat for health care, as Pascal alluded to, but also the reverse that our sector, the total health care sector, actually stands for 5% of all CO2 emissions. I think that's something that's not well-recognised. It's actually more than aviation. The whole supply chain of manufacturing medicines, but also providing health care services in the hospitals, etc, is a significant source of emission. None of us can solve it on our own, despite the fact that I believe our industry has come a long way in actually doing the green transition for our own, say, direct activities. But we need to come together and work together in making sure that we address the whole challenge. And I sincerely hope this initiative can both provide concrete solutions and actions, but also source of inspiration for others.

I want to get onto those in a second, but just can I drill down into that five % figure? That seems a lot. Where specifically are the trouble spots?

Well, you can say that at any given moment, if you just look at transportation, there are a lot of materials being transported into our manufacturing. You will also see a lot of people actually commuting to hospital physicians. And if you look at the whole logistics around the hospital, it's a massive ecosystem of activity and consumption that leads to this five % burden on the environment.

And the five % is actually a global average, and it includes countries that are less developed economically and have less impactful healthcare systems on climate change. But if you look at developed countries like the US, it's up to eight %. So if you think about it, if you're sick, it's not very good for you to go to the hospital, of course. It's bad for your health. But also you cost a lot of money and you produce a lot of carbon. So fundamentally, the goal is to try and keep people out of the hospital. And if we do this, then we help their health. We reduce carbon emission and we reduce health care costs. And that's why pharmaceutical company like companies like Lars's company and mine are really so focused on early diagnosis of disease, early intervention, keeping people healthy. And if they have diabetes, give them insulin if they can or anything else and try to stabilize their health and stop them from being hospitalized.

Lars, you spoke earlier about how far we've come. How far have we come over the past years? What progress has been made in decarbonising healthcare, particularly since you began your partnership two years ago?

Well, many companies have taken action on own direct emissions. I mentioned that many of our companies have actually done the green transition in securing, say, renewable energy sources in powering of their own activities. But we also know that 50% is actually coming from the supply chain. It's really important for us, if we are to have a significant impact, that we work together with those who provide material to us. When we produce our products, there's a long range of materials going in from chemicals, glass, plastic, and much more. I think one of the key initiatives is that we have here aligned on a set of joint minimum supplier targets, whereby we make it simpler for our suppliers to actually understand what are our expectations to them. We set some common expectations on reducing emissions. We send a clear signal that we are willing, as responsible companies, to buy the right products and the right services and thereby, say, multiply the benefit on the environment.

Pascal, from your perspective, what progress has already been made through your collaboration? What are you hoping to achieve long term?

Yeah, actually, we are collaborating essentially to decarbonize our supply chain because we are the supply chain of the healthcare sector. But let me give you as an example as a company, but the other companies in the group are also working on the same issues. We have introduced the use of bio-gas in the US and the UK to power our manufacturing plants. In Sweden, where we have a lot of manufacturing, we've partnered with a company to build wind farms or electricity. We use green electricity. We are transitioning our car fleet globally to electrical vehicles, and we want to be 100 % electrical. By 2026, we are reducing energy consumption across our sites and looking at using sources of electricity like solar panels and other green sources of energy everywhere. So we're doing all sorts of individual initiatives. Then what we're doing is across the group is partnering to help our suppliers access green energy. Gsk is leading the charge in India, for instance, looking at how do we partner to source green energy together and provide this to our suppliers. We're going to do the same in China. We are really looking at how can we actually leverage our strengths together.

That's the supply end. What about perhaps closer to home with you?

Yeah, I would say that it's, as Pascal alluded to a bit earlier, one of the things that we do in the innovation we bring to patients is that we improve health, so to say. One is, of course, to bring out innovation that is preventing chronic diseases or leading to shorter stay in hospitals, etc. But we, of course, also have to cut our own emissions. If you look at Novo Nordisk as an example, we are now producing all products across the world based on CO2 neutral power. So all facilities in the world are operating on green energy. We just heard about our commitment to suppliers. We have asked all our suppliers by 2030 to have done the same. It's actually interesting that most companies, I would say, actually want to do the right thing. But it, of course, helps you if your customer asks you to do it, because then you perhaps also have a customer that's willing to give priority to those who do it. Maybe you can also agree on some financial arrangement that takes a part of the burden away initially and hopefully get to something that's an even more sustainable setup. I think also in addition to that, we have also embarked on a journey to actually make it transparent what is the footprint of the products we produce, because we all know that what cannot be measured is often not done.

Together with partners, we embarked on a journey to actually create the metrics that would guide us in actually articulating what is the environmental footprint of what we do. If we clarify that for our activities as medicine manufacturers, hopefully that can also inspire others like the broader health care system, hospitals, et cetera, to focus on what is actually the direct impact on what they do. I think that's the first step towards actually making significant change.

Yeah. We actually, as the last said, we are decarbonizing our own companies. For instance, at AstraZeneca, our goal is to be carbon zero for our own scope one and two, our own carbon emissions by 2026. And then we are working with our suppliers. Our goal is to have to decarbonize the totality of our supply chain, including our suppliers. Lars has covered that very well. I think the other thing we're trying to do is champion the use of digital technologies across the healthcare sector, for instance, to run the clinical trials. So you reduce the amount of travel that is involved, you simplify everything. We are also looking at what we call the patient pathway, which is patients going from being sick to being hospitalized potentially. And looking at how do you, as I said earlier, how do you diagnose patients early? If you are a lung cancer patient and you diagnose at the early stage, you can have surgery and medical treatment and be cured. If you're diagnosed too late, your metastatic, you're going to be treated, your life will be extended. Unfortunately, technologies are still progressing, but most of the time people will die and they will die after costing a lot of money, spending a lot of time in hospital.

Really, for many diseases, kidney disease is the same. If you look at dialysis, patients who are diabetic will risk ending up in dialysis. If you treat them well early enough with insulin and anti-diabetic agents, then you will stop them from potentially moving into dialysis. So fundamentally, it's about treating patients early so you can cure them or slow down their disease. And we're working with partners across the healthcare sector to do this and reduce healthcare cost and reduce emissions. In our group, it's Paul Hudson at Sanofi, which is really helping drive this work through our collaboration with other companies and external partners.

Lars, it seems quite a quandary in a way. There's two aspects to this in the healthcare industry. There's one, the emissions that you create, and two, the role that you're going to have to play in the future as a result of climate change affecting our health. At a time when you're trying to reduce your emissions, you're probably going to be called upon to do much, much more. Are you not?

I believe we are. I think we are an industry that can actually lead the way. We are used to making large investments, making big risks. That's how we develop our medicines. I think in many ways, solving the environmental challenges we are dealing with here is a similar proposition that you need to show a commitment and you need to make some investments upfront. For an industry that's focused on health, I think there's nothing more meaningful than actually addressing the climate issue because we know those two aspects are so closely interacted. We also serve societies in ways where unless we make societies sustainable, our opportunity to do business with society in the future is weaker. I think it's a win-win all around for the individual citizens getting better health, getting a healthier environment to work in for the systems that typically pay for our products and thereby also for the industry. There's really no reason why not to dive into this and form the partnerships necessary and lead the way and get stakeholders like suppliers. We work with the WHO as well. At the coming COP meeting, there's a health day organized. I think getting the ball rolling and showing willingness to commit and invest is what this is all about.

Pascal, how can others across the health sector and beyond take action?

Everybody can actually play a role and should play a role. The health systems are very complex. And so, of course, you have pharmaceutical companies, you have medical equipment companies supplying the healthcare sector, but you also have energy companies, you have logistics companies, you have, of course, hospitals that are managed. So everybody really should look at their part in the healthcare sector and work together to reduce the consumption of energy and turn to green energy and remove plastics as well. We can need to remove plastics from labs in hospitals and across the industry. And it's really by developing private-public partnership and having hospital partner with our suppliers that I think we actually can reduce carbon emissions overall.

To both of you, I said at the start that in the Lancet Journal eight years ago, they said that tackling climate change could prove to be the greatest global health opportunity of this century.

Do you agree? Absolutely, I do. And as health care companies, as Lars said a minute ago, our goal really is to improve people's health. It's a bit contradictory really to aggravate people's health who are carbon emissions. Mobilizing the entire sector to reduce carbon emissions is, I think, an enormous opportunity for society. But also if we are successful partnering and slowing down hospitalisations, diagnosing people early, treating them, curing them, so they don't get hospitalized or they get hospitalized for a shorter period of time. All of this goes in the right direction, which is reduce carbon emissions, but also reduce cost in the system.

Yeah, I agree very much. If you consider that we have aging populations, if you consider the burden from the environmental challenges and what that causes on health issues on people, there'll be, I think, forever, or at least for C3's future, a growing need for health care. It's already one of the biggest sectors from an emission point of view. This problem will just keep growing. We have to really decarbonize the health care sector because otherwise, we just keep fueling that societal challenge. I think we're an industry that has the capacity in terms of both scientific understanding, but also, I think, the financial means to drive this transition. It's really a burden that we should take on proactively.

Also, I think that climate change will increase inequities around the world, in particular, in terms of access to health care. Countries with lower income, people with lower income will find it more difficult. They will be more affected by climate change, and they will find it more difficult to access health care. We truly have to play our part in this big climate crisis.

If anyone's been listening and hasn't been persuaded by your arguments, and I don't know why they wouldn't be, but why should they care?

Well, I think this is really meaningful. I think this is about livelihood and sustainability of the societies we maybe have taken a bit for granted for too long.

Yeah, and I think people should care because it's about the future and the life of their children and their grandchildren. What a world will we live to our grandchildren if we don't act today?

Are you hopeful, Pascal, for the future?

You know, if you are in our industry like Lars and I, you have to be an optimist. We are in innovation. Innovation is very hard. Science has exploded, in particular, in the last 10, 15 years. You have to be an optimist to pursue some of these very challenging and risky projects that we all pursue. In the end, we don't have much of a choice. We have to commit, do our best, and suddenly work together.

Yes, like Pascal, I'm a long Timer in the industry, so I'm also an optimist. I actually believe we know what to do. There's still some innovation needed, but I believe we, by coming together, can actually solve this, the CO2 emission challenge on biodiversity. I think we still need to get our heads a bit better aligned on how to do that. I think those, when you have species that become extinct over time, I think that's a hard challenge to solve. But I'm optimistic on the CO2 mission, we can solve that.

Yeah, but we actually have, as Lars said, we have what we need, right? We have the technologies, we have the capital, we have the money as a society. It's really a question of directing all of this to the right priorities and creating collaborative spirit across society to resolve all of this. But we can do it, I think.

Fantastic. Pascal, Lars, thank you so much for joining us, and we look forward to seeing what comes out of Health Day at COP in Dubai. Thank you. Joining me now is Chrissy O'Brien, Lead for BCG's Climate and Sustainability Practice in Healthcare. Chrissy, thanks so much for being here. Bcg has been supporting the SMI Health Systems Task Force for the past year and a half now. Can you just talk to me about the partnership from your perspective?

Absolutely. This has been such a unique partnership on so many fronts, but there's two reasons I think that really stand out to me that make it special. The first is the level of ambition that these CEOs and these companies have taken on. If we go back to COP 27 and we think about the Health Systems Task Force, having everyone commit to a net zero emissions target by 2045 was really unprecedented. That's five years ahead of what's required for a 1.5 degree path in the Paris Agreement. For a company like ours that has such a clear focus and this is such a priority for us, having the honor of partnering with companies who have the same level of ambition is incredibly motivating. The second thing I'd say is that this is a coalition that has not just talked about a target, but they've taken action. They've taken real clear to commit to goals for themselves and for their suppliers. That's really important in this context because their suppliers actually make up 70% to 90% of their actual emissions footprint. This year, they went ahead and committed to minimum joint targets for their suppliers, and then went beyond carbon to include waste and water.

I think those are two things that really make this a unique group of CEOs committed to delivering the change.

What's the future for this group?

I think this group is really going to continue to drive and shape the agenda in healthcare, not just for their own businesses, but really the full ecosystem. Because SMI doesn't just include these pharma companies, it includes WHO, UNICEF, the NHS, as well as their academic partners. And in the near term, we all know that at the upcoming COP, the link between climate and health is going to be so prominent. There'll be a special health day, which is unique in the history of COP. We'll see health ministerial for the first time we look forward to those announcements, and we're expecting to see more commitments from companies around climate change and it's linked to global health and the need to invest in healthcare resilience. Smi, of course, will have a really prominent role at COP as they have for the past two years. I know personally, I'm looking forward to seeing how they'll continue to evolve the agenda.

You were listening to Pascal and Lars talking about how they are optimists. Always nice to hear. But how important is collaboration in this space? Can we do it without collaboration?

Absolutely not. It was, I think, a really important note that they all struck when they talked about this topic. Collaboration is essential both amongst the sector and then across the value chain with their suppliers. Let me offer maybe two examples that really highlight how collaboration has been a force multiplier for SMI. The first is about obtaining green power in China and India, and this is incredibly important because 50 % of the raw materials that go into the medicines that we all take every day come from those regions. The other example I'd call out is that there's been a push to get a common framework for how you measure the environmental impact of a pharmaceutical product. It's been a joint effort together with the NHS to harmonize this thinking. So collaboration is just so critical for us to make progress on this topic. And I think SMI is a great example of how companies can really push themselves to operate in different ways to get the work done.

Chris, thank you so much and thank you for listening. We'd love to know your thoughts to get in contact. Leave us a message at thesowhat@bcg. Com. And if you like this podcast, why not hit subscribe and leave a rating wherever you found us? It helps other people find us too.