Embracing sustainability criteria in the healthcare sector – is the industry ready?

Nordic healthcare companies are well-positioned to address increasing sustainability demands, leveraging a solid foundation. By fostering collaboration between buyers and suppliers, the entire industry can be developed towards greater sustainability.

General demand for sustainability

Climate change and medicine are inextricably linked: rising global temperatures affect everything from the spread of infectious diseases to the impact of dangerous weather phenomena. Scientists have described this interaction as the "great threat of the 21st century" to human health. The environmental impact of the social and healthcare sector accounts for 6.5% of Finland's carbon footprint. Only the energy, transportation, and construction sectors exhibit a larger footprint than this.

According to the researchers' analysis, healthcare itself is a significant source of emissions and thus a driver of change. However, the analysis also reveals opportunities to make key improvements that not only reduce emissions but could also improve public health.

Sustainability is demanded by legislators as well as consumers, and the demands are rising continuously. In the health sector, both buyers and sellers must develop their operations. For example, in Norway, a law came into effect at the beginning of 2024 requiring climate and environmental considerations to carry a 30% weight in all public procurement.

The environmental impact of the social and healthcare sector accounts for 6.5% of Finland's carbon footprint. Only the energy, transportation, and construction sectors exhibit a larger footprint than this.

"In the long run, responsibility always trumps irresponsibility, so sustainable action is a necessity for the future. For us, it is an opportunity: our clients want a responsible partner,” says Eero Kaaja, Head of Quality and Responsibility at Lojer, the largest manufacturer of medical furniture in the Nordic countries.

Suppliers to influence procurement

From the buyer's perspective, improving the sustainability of one's own operations requires foresight and dialogue with suppliers.

If a consumer goes to a store, they can compare products and choose the most sustainable option. In the public sector, purchases are tendered in accordance with procurement legislation, and in these cases, requirements for suppliers and solutions must be decided in advance.

Last year, the Hospital District of Helsinki and Uusimaa (HUS) reviewed all procurement categories and identified the most important product and service groups from a sustainability perspective.

"We are aware that suppliers often have the best and most up-to-date understanding of the sustainability risks and opportunities in their operations. However, as purchasers, we have to define the criteria for tender requests. That is why collaboration is important," says Suvi Ketene, Development Manager for HUS procurement.

"This is why I encourage suppliers to actively participate in market dialogue invitations by procurement units – at that point, they can still influence the procurement criteria!"

As a Nordic front

At HUS, sustainability was made a focus area for strategic guidelines in procurement in 2023. The National Public Procurement Strategy and HUS Climate Roadmap have been used as the basis for defining sustainability targets, and the ideas have have been reflected with EU directives.

HUS also works closely with other Nordic healthcare provider buyers to develop policies and requirements for suppliers related to social and environmental responsibility.

"It would also make great sense for suppliers to have similar procurement criteria from Nordic buyers. The requirements would not vary from country to country, but we would take things forward as one front – that is at least my vision for the future,” Ketene says.

The Nordic NIELS dialogue on eco-labels already took place in the autumn. An ecolabel would indicate a strong consideration for environmental responsibility in the respective product or service. On the other hand, in their tendering, buyers should require the eco-label so that suppliers benefit from it.

Buyers, suppliers, and eco-labelling organizations could work together and start thinking about the broad lines and identify which product groups would be worth starting with.

"We in the Nordic healthcare industry procurement would like to see more eco-labelled products not only in supporting products such as detergents or tissue papers, but also in actual medical products like surgical gloves and masks. Currently, there are hardly any of them on the market," Ketene regrets.

According to Eero Kaaja, responsibility requirements have tightened in the Nordic countries perhaps faster than elsewhere in the world. Suppliers capable of responding to them gain a competitive advantage.

"The local legislation is quite strict, and the requirements are strictly enforced. Electricity production is environmentally friendly, as is Nordic steel as a raw material. We can bear comparison with anyone – we just don't necessarily know how to communicate it."

Directive requires reporting

Uniformity in comparing sustainability issues is brought about by a change in accounting law. It requires corporate social responsibility reporting from companies with over 500 employees, whose turnover exceeds 40 million or whose balance sheet totals 20 million euros.

The law, which is based on an EU directive, obliges companies to report on their policies regarding the environment, employees, and social issues, human rights, as well as anti-corruption and anti-bribery efforts. The report also needs to include a description of the company's business model and the risks associated with operations and their management.

"That is why we have recruited a sustainability expert and compiled our first sustainability report. For large customers and purchases, the requirement may include a report, as well as an environmental management system and its certification," Kaaja mentions.

For small clients, sustainable choices equal high product quality, long service life, serviceability, and availability of spare parts.

"We think it is the best kind of sustainability. We design and manufacture the products ourselves, make a lot of the spare parts ourselves or ensure availability from suppliers for a long time. This way we can keep our equipment in use for decades.”

Specifying the rules of the game

Tightening regulation also brings challenges. Even though Finland and the European Union, for example, have ambitious goals, sustainability requirements may not yet be fully refined when they come into force.

"As an industry, sustainability has developed at such a fast pace that all the rules may not have been specified clearly. For example, there are still a lot of choices and generalizations that need to be made in the calculation of the carbon footprint to get any results,” Kaaja explains.

Expectations of buyers may differ across markets. Different interpretations of sustainability may arise under this banner, and future expectations may not be fully identifiable at the moment.

HUS understands well that the suppliers would like to know future policies, but no concrete answers can be given at this stage.

"It is a big process to create a shared view of the entire organization of what risks various procurements entail, which we recognize as key impact opportunities, and what the overall goal of the entire organization is. However, we want to improve communication towards suppliers, be more open, and work on development together," Ketene says.

Business Finland's Mission Healthcare Reimagined 2035 aims to promote environmentally friendly operations also in the healthcare sector and better consideration of sustainability aspects in procurement processes. This will improve the competitive advantage of Finnish companies in international markets.

Lojer Group
Lojer Group is the largest manufacturer of medical furniture in the Nordic countries and a provider of lifecycle services. Lojer manufactures hospital beds, examination and treatment tables, as well as operating tables and lights at its factories in Sastamala, Hollola and Kempele in Finland. Founded in 1919, the company employs approximately 260 people and is the most significant domestic employer in the industry. The company's turnover is over 60 million euros. Exports account for 70 per cent, about 95 per cent of operating room products. The group includes Lojer Oy, Merivaara Oy and sales companies in Sweden and Norway.www.lojer.com

HUS Procurement
HUS procurement services competitively tender the procurement of healthcare and general supplies, medical devices, as well as equipment and services for HUS and its other clients in close collaboration with healthcare professionals. HUS is one of Finland's largest public procurement units. The procurement services, consisting of approximately 80 employees, are part of HUS Group Services.

Further information

Kirsi Armanto, Senior Advisor, Global Growth
kirsi.armanto (at) businessfinland.fi

Terhi Rasmussen, Global Opportunity Leader, Health & Wellbeing
terhi.rasmussen (at) businessfinland.fi