AdventHealth’s supply chain is fully engaged in meeting the health system’s bold sustainability goals.
By Daniel Beaird
June 2024 – The Journal of Healthcare Contracting
Supply chain leaders play a critical role in reducing the carbon footprint of hospitals and health systems. To that end, Altamonte Springs, Florida-based AdventHealth, and its supply chain team in particular, has been on a journey to discover how it can lessen its environmental impact. It estimates that its supply chain activity accounts for up to 40% of its emissions footprint, while another 40% is estimated to be tied into its investment portfolio.
In October 2022, AdventHealth signed the U.S. Department of Health and Human Services’ (HHS) Health Sector Climate Pledge – a commitment to reduce its Scope 1 and Scope 2 emissions by 50% by 2030 and to get to net zero by 2050. Scope 1 emissions include direct greenhouse gas emissions from sources that an organization owns or controls directly, while Scope 2 emissions include indirect purchased energy that comes from the energy an organization purchases and uses.
Five potential levers for AdventHealth to achieve its 2030 emissions reduction goal, based on financial and operational considerations, include:
- On-site renewable energy generation.
- Virtual power purchase agreements (VPPAs).
- Energy efficiency improvements.
- Grid greening.
- Utility Partnerships (community solar programs)
In particular, AdventHealth sees on-site renewable energy generation and power purchase agreements serving as significant contributors to reducing their Scope 1 and 2 emissions.
Reducing Scope 3 emissions with suppliers
Meanwhile, supply chain leaders enter the critical work with Scope 3 emissions, which are other indirect emissions. These emissions come from upstream and downstream operations, including supplies, purchased services, investments and business travel.
Marisa Farabaugh is senior vice president and Chief Supply Chain Officer for AdventHealth and says the health system has been working with its suppliers to collect data measuring Scope 3 emissions to help understand their decarbonization initiatives.
Many suppliers are early in their decarbonization journeys. To help its suppliers along, AdventHealth will soon be requesting information in its RFPs and through other discussions to make clear to suppliers that it is focused on sustainability.
“When we talk about this with our supplier community, we truly hear the gamut. Some suppliers are already on this journey and have been abating their carbon footprint for many years,” Farabaugh said. She says those suppliers are working on more sophisticated solutions at the manufacturing level and even at the supplier community level.
“They’ve got the education and the understanding, and they’ve moved upstream to abate their carbon footprint,” she added. “But there are other suppliers that don’t always understand environmental sustainability and how to unpack their own carbon footprint.”
Farabaugh thinks the provider community needs to highlight the importance of this to its suppliers.
“As health systems, we need to come together and show this is important to us,” Farabaugh explained. “If we are all uniting around the work, it will drive the supplier community who are not already on this journey.” But education is still needed on the provider side, too.
“The provider community – and in particular the chief supply chain officers or supply chain leaders – are beginning to understand their role in this,” she said. “There are still gaps in education for the provider leadership in understanding how much of their carbon footprint is tied to the supply chain.”
It’s a complex undertaking given the number of items a provider like AdventHealth purchases and the number of suppliers that support their needs. So, AdventHealth is launching a platform to help complete its annual carbon footprint work and to help complete hybrid accounting in the supply chain space, giving ‘credit’ and acknowledging the suppliers that are progressing in their decarbonization efforts.
“We’re in our third year now of calculating our carbon footprint across the organization. Early on, we learned the data was showing us that supply chain accounts for up to 40% of our overall footprint. That’s a lot of emissions attributed to the supply chain. So, when we think about addressing Scope 3 emissions, it’s imperative that we have our trading partners and other provider supply chain leaders at the table,” Farabaugh said.
Signing the HHS Health Sector Climate Pledge
When AdventHealth signed the HHS Health Sector Pledge, it tasked Farabaugh and Rob Roy, senior vice president and chief investment officer for AdventHealth, to co-lead the space and help create a plan and roadmap for the health system to tackle its Scope 1, Scope 2 and Scope 3 emissions.
Over 130 organizations have joined the HHS Health Sector Climate Pledge, which was launched on Earth Day 2022, demonstrating a commitment to lowering greenhouse gas emissions and building more climate resistant infrastructure. HHS publicly recognized AdventHealth for installing more than 1,800 solar panels on its parking garage. AdventHealth is also actively under construction for a solar project on their corporate campus that will be one of the largest solar projects on a business campus within the state of Florida. This project is 3 MW, is expected to generate 30% of clean energy for the campus and provide 62 EV stations on their campus.
The HHS Health Sector Climate Pledge is still open and health sector groups are encouraged to sign on. Pledge signers commit to:
- Reducing organizational emissions by 50% by 2030 (from baseline no earlier than 2008) and achieve net zero by 2050, publicly accounting for progress on this goal every year.
- Designating an executive-level lead for their work on reducing emissions within six months of signing the pledge and conducting an inventory of Scope 3 emissions by the end of 2024.
- Developing and releasing a climate resilience plan for continuous operations within six months of signing the pledge, anticipating the needs of groups in their community that experience disproportionate risk of climate-related harm.
“I’ve learned a lot,” Farabaugh said. “It was a space that I had passion in, but not a lot of technical expertise. It’s been a fun journey to learn so much with a key group of people internally and externally who have helped educate us. I am deeply grateful for the partnership with Rob Roy and Kate Reid on this work and all the contributions of our lean environmental sustainability core team. We are blessed to have our CFO, Paul Rathbun, and our CEO, Terry Shaw, both highly interested and committed to the work.”
Two Texas farms and AdventHealth’s roadmap
Putting together the full roadmap for AdventHealth’s 2030 and 2050 goals is Farabaugh and Roy’s responsibility.
“Our first focus was on our 2030 goals. We have a plan to reduce our Scope 1 and Scope 2 emissions by 50% by 2030 as our primary focus. Last December, we executed two virtual power purchase agreements (VPPAs), one of which is a wind farm in Texas that’s producing clean energy via wind, and another is a solar farm to be built in Texas that will produce clean energy via solar,” Farabaugh explained.
Through those VPPAs with key strategic partners, AdventHealth will offtake renewable energy credits for its electricity needs. With the size of these agreements, this will position AdventHealth to be 100% on renewable electricity by 2026.
“The HHS pledge calls us to a 50% reduction in Scope 1 and Scope 2 emissions by 2030 and with just moving to the two VPPAs that we’ve executed on, we’re actually exceeding that 50% goal by four years earlier – in 2026 – than the target time period,” she said. “We’re conducting a facility condition assessment right now of major plant equipment across our more than 50 hospitals within nine states to understand the life of the equipment and to better understand the energy usage of this equipment.”
AdventHealth’s current assessment, target setting, planning and communication activities mark the beginning of its environmental sustainability work. They will become part of an iterative process that will evolve as standards and technologies continue to change.
“We’re highly tied into the journey,” Farabaugh said. “We have a great team to help think through the process, communicate it out, and help to drive this monumental change that ultimately will drive toward our mission of helping our communities feel whole.”