Chapter 6

Unexpected Opportunities for Large Corporations

“Nothing is more expensive than a missed opportunity”

—H. Jackson Brown

Change management efforts in large organizations have often been compared to turning a large ship. These efforts require approval from a lot of people, and even then may not result in the intended change.

While large publicly traded firms have a massive opportunity for impact by way of scale, they also have embedded systems, processes, capital (human and monetary), and technology. From a supply-chain perspective, globally interconnected and fragmented suppliers for every ingredient create a noisy procurement marketplace. Suppliers in particular often rely on term contracts with negotiated rates that inform their own subcontractors. Operations executives rely on the business continuity of vendor relationships and real-time tracking of supply chains to meet market demand. Uprooting or redesigning these processes is not only a massive change management effort but also hugely cost and labor intensive. Further, the embedded capital in existing pathways, processes, and products is often so well established that even when the business case for change or disruption is recognized, it’s not pursued—just another way the status quo preserves itself. When viewed through this lens, sustainability and ESG factors understandably remain under the umbrella of compliance and risk management as opposed to being seen as strategic and operational differentiators.

But large organizations also have several advantages over small businesses and nimble start-ups when it comes to sustainable transformation:

Scale. Large organizations can leverage existing distribution channels and customer relationships to introduce new products. They can put pressure on supplier relationships to sustainably source their inputs, negotiate rates that are favorable to them, or even create innovative financial contracts for lowering the cost of sustainable goods that are projected to enter the pipeline.

Financial cushion. Large companies have enough capital to shake off failed attempts and keep on iterating. Start-ups often can make only a few big bets before they run out of money.

Longevity. Large companies have longer time horizons than start-ups, which need to show short-term results to keep raising money. They can also leverage existing customers in rolling out new “better for you” products.

Considering these advantages, publicly traded firms and other large organizations can and should reasonably consider drop-in replacements and other alternatives to their existing processes to provide significant sustainability and financial upsides. For large organizations with significant embedded capital, either human or financial, pilots that rely on drop-in replacements can create a window into the opportunity of sustainability and provide leaders with a use case that can be leveraged as a business case for future transformations.

The next sections describe a few of the unexpected opportunities we have identified for a cross-section of large firms to leverage on their sustainability journeys.

Plasticizers

Plasticizers are softening agents used in a variety of products across industries to make goods more pliable, flexible, and resilient. Although they may sound like an obscure intermediate product with a niche supply-chain function, plasticizers are a huge global market, worth over $20 billion globally, and they touch almost every industry, from floor and wall coverings to wires, packaging, rubber-based goods such as tires and other consumer packaged goods, and healthcare.

The problem is that the plasticizers in production are hugely pollutive and toxic. These pollutants include endocrine-disrupting chemicals (EDCs)—xenobiotics that alter the endocrine system and consequently cause adverse health effects not only on the individuals consuming them but on their reproductive organs, affecting child development and impacting the reproductive organs of their children.¹ Yes, that is three generations of impact. It’s an issue gaining significant attention from the United Nations, industry watch groups, and consumers.

There have been some movements for change, however, including a monumental public health movement encouraging governments globally to implement regulations and limit the use of these harmful chemicals, including popular plasticizers such as phthalates, bisphenol A, and brominated flame retardants. In response, the industry has developed alternatives for use on the market; however, globally there is no requirement that they use them, and these alternatives, such as bisphenol F and bisphenol S, continue to have regrettable side effects that place generations at risk.

Bernard Robaire is a professor at McGill University who specializes in pharmacology and obstetrics and gynecology. Much of his interest these days is in analyzing the economic burden of pollution and plastics on EDCs. If you wanted to understand the direct effect and burden of plastics on the future of humanity, Dr. Robaire is the person for you.

In 2017, Robaire and his team developed and published the first methodology for greening plasticizers. After utilizing a four-step process to develop and test the molecules produced on various parts of the reproductive pathway, they arrived at two chemical compounds that are ready to disrupt the toxic phthalates and serve as drop-in replacements: DOS (a succinate) and BDB (a di-benzoate).² These compounds can serve the same function as current plasticizers, but they are nontoxic, they biodegrade rapidly, and they are produced from renewable feedstocks across their whole life cycle.³

The shift to green chemicals in supply chains is a clear market trend, with one of the major drivers being consumer demand for entirely new and clean formulations. While there are varying numbers on the true market size for green plasticizers, our analysis has shown that the market opportunity in commercializing green plasticizers not only meets current investor expectations but surpasses them, due to

▪ High demand for green chemicals for environmentally friendly construction and in green city initiatives in major US and international urban areas

▪ Fluctuating fossil fuel prices and market pressures that are driving firms to reduce reliance on fossil fuels as an input in the production of plasticizers globally

▪ Pressure from governments and multilateral organizations such as the United Nations and World Health Organization to eliminate all EDCs from everyday products

▪ Increased investment from major manufacturers in the research and development of sustainable plasticizers

Healthcare

Sustainable operating rooms not only help hospitals fulfill their mission to continually advance patient health while doing no harm but also drive down the cost of healthcare, providing a greater number of people the opportunity to access lifesaving procedures.

Dr. Harriet Hopf is a professor and vice chair of the department of anesthesiology at the University of Utah and an internationally known expert in wound care and wound healing research. She and her department at the University of Utah have proven that sustainable anesthesia not only reduces the financial burden of surgery but also improves patient outcomes and public health while curtailing the shortage of lifesaving medications in the US.

Hopf described to us a common refrain in her early training: “There is no price too high to pay for infection control.” “Really?” was her initial thought. “There must be a better way to control costs without impacting patient outcomes. Someone just hasn’t done it yet.”

Coordinating across New Haven, Connecticut; San Antonio, Texas; and Palo Alto, California, Hopf and her colleagues began a quiet revolution to “green” the practice of anesthesiology with drop-in replacements and minor changes that significantly improved her operations.

They began their work in healthcare sustainability through a simple analysis. Desflurane is an anesthetic gas with quick onset of action and rapid dispersal. Several studies tout desflurane’s ability to quickly apply an appropriate depth of anesthesia and maintain molecular stability. This makes the drug ideal for upholding the effects of anesthesia during surgery. The University of Utah School of Medicine procured and utilized desflurane primarily for its low solubility. This yielded a faster wake-up time when administered as a vapor, a preference that typically costs hospitals in the United States over $14 an hour, and can result in OR expenses of over $300,000 per year.

However, this preference did not take into account the common practice of tapering the vapor anesthetic to provide rapid wake-up at the end of surgery—which nullifies the benefit of low solubility. At that point, does desflurane really provide an advantage? It was this line of thinking that prompted Hopf to question the department’s use of the drug and to search for an alternative. What she and her researchers discovered was an equally effective yet significantly cheaper alternative: isoflurane.

In July 2010, Hopf and her team implemented a plan to transition over to the alternative drug, desflurane’s green cousin. During this period, however, desflurane was freely available to any anesthesiologist who preferred to use this drug, and the vaporizers used to administer it were not removed from the anesthesia machines. Because anesthesiologists were not forced to use the new drug (so as to maintain the integrity of autonomy of each physician), no desflurane checks were conducted to ensure that it was not used, and no mandate to selectively use isoflurane were instituted.

The results of the initiative were staggering: through Hopf’s efforts, the University of Utah experienced a reduction in usage cost of desflurane of over 50 percent in just under a year (and associated expenses related to the drugs usage)—despite a 5 percent increase in surgical volume. Second, this resulted in reduced carbon emissions by the equivalent of 76.35 million driven miles, without any impact on patient outcomes or their wake-up time. The department remained as efficient as ever.

Another change to operating room procedures made by Hopf was in the drug administration process. Medication administered in the operating room typically comes in vials that are too large for a single use, resulting in the remaining amount being discarded. The department started using prefilled syringes prepared in the hospital pharmacy; a vial prepared closest to the site of administration would not only ensure maximum potency and drug efficacy but also reduce waste. Instead of one vial per patient, the one vial now supplied vasoactive agents to a large number of providers by having been separated into ten syringes with a 10 mL dose or twenty syringes with a 5 mL dose of the drug. These prefilled syringes prepared in-house at the hospital pharmacy were not just fiscally responsible; they reduced the risk of drug-handling error by the anesthesiologist, were sterile to the highest quality, could be stored longer than a single vial, and could even be tracked by a bar-code system.

Hopf also evaluated the anesthesia workstation, particularly the waste anesthetic gases that leaked either from the ventilation system applied to the patient during surgery or those exhaled by the patient recovering from anesthesia. Research conducted at the Yale New Haven Hospital led by Dr. Jodi Sherman has quantified the significant negative environmental impact of these gases. Using a cradle-to-grave approach to model the impact of commonly used inhaled anesthetics, the study found that desflurane showed the highest amount of unaltered escape to the atmosphere. Isoflurane and sevoflurane demonstrated similar greenhouse gas (GHG) emission profiles that were significantly less than that of desflurane, while the IV drug propofol showed a minimal GHG impact nearly four orders of magnitude lower than desflurane or nitrous oxide. To combat the issue of waste gases, Hopf started recycling the gases using equipment such as Delasorb—a cryogenic condensing system that could capture the gases that escaped, liquefy them, and recycle them into water vapor, thus resulting in an eco-friendly manner of disposal.

Hopf and her team have begun to change the way anesthesia is practiced by quantifying the impact on cost, GHG production, and wake-up time from various drugs. This pioneering work has not only impacted the drug selection of anesthesiologists but has resulted in changes to the method of administration of drugs to reduce biomedical waste at the University of Utah and even in reduced water contamination by biomedical waste. Furthermore, it has reduced the cost of anesthesia to patients and, consequently, the overall cost of care. So although patients may not have been asking for greener anesthesia, these sustainable drop-in replacements are proving greatly beneficial to them, as they are reducing the burden and cost of population health programs for large health systems.

The successes demonstrated by anesthesiologists at the University of Utah are important not only for the cost and energy savings enjoyed by the hospital but because they were spearheaded by a single department. Hopf and her colleagues took matters into their own hands, documenting the inefficiencies and their negative impact, researching alternatives to the status quo, convincing others in the hospital of the benefits, collecting results and analyzing progress, and coordinating with others across the country. Healthcare professionals of all specialties should follow this example and know that if they see an opportunity for improvement, they have the power to make a difference and influence change.

Here’s another example: refurbishing single-use medical devices. The US medical device industries’ obsession with infection control has led to a proliferation of single-use devices that drive up the cost of care to a level that prohibits the communities that need it the most from receiving it. Further, the US healthcare sector is responsible for 9 percent of GHG emissions as well as other toxins.⁴ In the United States, this results in 614,000 disability adjusted lost years annually.⁵ These sick days affect firms that accommodate for employees who are unable to perform at their highest potential or unable to work due to poor health.

For the most part, materials used in invasive procedures, such as electrophysiology catheters, are designated for single use only. Catheters are high-cost medical devices and are used in huge numbers. Their design is relatively simple, however, and the devices themselves can be easily reprocessed. In fact, catheters have a long history of repeated use in hospitals outside the US.

To further make the sustainability and economic argument for refurbished medical devices, studies have found that rates for postoperative infection, use of antibiotics, and length of stay in the hospital were all exactly the same for patients using refurbished or recycled equipment, and the total cost of surgery was up to 50 percent less.⁶

One aspect of waste prevention can be managed by way of keeping materials in circulation through recovery and recycling. In the case of the medical devices industry, a solution provided by the American Refurbished Medical Devices Association presents a significant opportunity. For the medical device industry, there are a few complicating factors that affect upcycling and refurbishing medical devices at scale. Researchers allege that original device manufacturers have driven the healthcare industry and medical devices in particular to adopt a “take-make-waste” model so as to drive single-use behavior that maximizes short-term gains derived from high-volume orders. One of the ways that device manufactures achieve this is by building in obsolescence in medical devices, labeling devices as single use even if they can be safely reused or refurbished, or shortening the “best before” dates.⁷ As Dan Vukelich, president of the Association of Medical Device Reprocessors, states: “Just because a device is listed as single-use by device manufacturers doesn’t truly mean that it can only support one-time use. It simply means that the manufacturer has chosen not to perform a cleaning validation.”⁸ In addition, reprocessing medical devices for reuse is a strategy that has low uptake among prescribers in the care delivery system due to a lack of awareness. These strategies, while reducing the market’s awareness of and propensity to refurbish, result in short-term profit maximization that ultimately impacts patient health and the environment. However, this approach is not valid—profit maximization is not dependent on volume sales alone or harm of any sort. In 2018, reprocessing companies in the United States, Canada, and Europe reduced hospital solid waste by almost seventy-one hundred tons and generated cost savings of more than $470 million for device consumers.⁹

There are several examples of reuse devices and equipment that can be prioritized by hospitals. For example, reusable surgical gowns are typically FDA approved for seventy-five reuse cycles before they are no longer suitable for high-level barrier protection. Multiple life-cycle assessments have shown that reusable gowns can generate up to sevenfold less solid waste and half the amount of global GHG emissions compared to single-use gowns. Solutions like this are an important first step; however, they are ultimately “less bad,” as they simply extend the product life without avoiding the ultimate gravesite (landfills). While such a change will result in an improved Sustainability Scorecard output, it is not a perfectly circular strategy that lends itself to complete recoverability of all materials.

Lars Thording is the VP of marketing and public affairs at Innovative Health, an FDA-regulated medical devices firm that supports cardiology labs in reducing the total cost of patient care through the adoption of new, cutting-edge technology. As a specialty lab, Innovative Health presents unique cardiology use cases for the financial benefit of businesses adopting refurbishing practices in the cardiology service lines—a success story that can and should be adopted across the healthcare industry. In his analysis of the equipment for atrial fibrillation (commonly known as Afib) ablation, reprocessing the devices for reuse can result in over 30 percent cost avoidance per procedure. When examined against the total number of Afib ablations in the US per year (approximately 366,000), scaled cost-avoidance savings can be extraordinary. Lars has also examined the realized and unrealized savings from such procedures. Although a portion of devices are reprocessed, Innovative Health determines that approximately 52 percent of the savings in the Afib service line alone, across the US, are as yet unrealized. In addition, the market opportunity for traditional device manufacturers to cannibalize their own single-use sales to address the demand from health systems that seek to realize this value can yield additional service lines that will compound the benefit that we see in the Afib service.

Paint Coatings

The coatings industry has been at the forefront of adopting sustainable chemistry routes. According to market research reports, the global market for environmentally friendly coatings in 2012 was estimated at $117 billion in 2018.¹⁰ This compound annual growth rate of 5.6 is due to high demand for automotive, architectural, and packaging coatings, and from the printing industry.

Environmentally friendly or green coatings are primarily classified as radiation-curing, water-based, and high-solid materials. On application, they seal, varnish, and protect against corrosion. The progress of direct-to-metal radiation-curable corrosion protection coatings is still in its infancy due to the numerous challenges in the development of such formulations. Water-based and high-solid-content formulations are better appreciated as corrosion barrier coatings due to their low volatile organic compound (VOC) content; radiation-curable coatings are gradually making their way into the automotive sector.

Reduced Costs + Increased Market Share = A Greener Planet

The tides are changing, and the large ships are finally turning. Big business has begun to review its feedstocks, inputs, and processes with an eye toward long-term sustainability and financial benefits. Large organizations in particular are leveraging their ability to create pilots using greener drop-in replacements to their original practices and reducing productions costs. More than the guarantee of reduced costs, however, the real benefit of such pilots is perhaps the increase in market share and new customer capture that is coming from posing fewer toxic effects on human health and the environment.