SA: ENVIRONMENTAL REPORT

Transcription

1 01 02 SA: ENVIRONMENTAL REPORT Environmental optimisation is an important contributor to Netcare s quality improvement efforts and supports the Triple Aim framework. Ensuring the security of the supply of electricity and water required for our high-acuity operations is critical in delivering the best clinical outcomes and best patient experience. Actively managing our dependency on national utilities also results in direct and indirect cost savings, reduced environmental impact and better management of environmental risks. Introduction Our environmental report covers all Netcare hospitals, Medicross family medical and dental centres and Prime Cure clinics, and the Netcare 911 and National Renal Care operations located at Netcare facilities in South Africa (SA). In 2014, we expanded the environmental reporting scope to include laundry and hospital vehicle transport, energy and water consumption, and waste generation in the Lesotho and SA Public Private Partnerships (PPP) and joint-venture facilities. This is an 8% increase in the reporting scope for energy, water and waste data compared to our reporting baseline at. Global Carbon Exchange SA (Pty) Ltd (GCX) have independently assured our results for the purpose of reporting to the Carbon Disclosure Project (CDP). The verification was performed at a limited level of assurance and in accordance with the principles of the WBCSD/WRI Greenhouse Gas Protocol Corporate Accounting Standard, 2nd Edition, The CDP report is based on the 2014 financial year; hence the impact of optimisation projects is not yet visible Netcare s CDP results Disclosure 84% Performance B Disclosure 82% Performance B Disclosure 98% Performance C 2015 market average as provided by CDP Disclosure 84% Performance C Benchmarking In the 2015 CDP, we scored 98% in the C band of the carbon disclosure leadership index, from 82% in the B band in As noted above, the CDP report is based on 2014 metrics and the increased scope of reporting which allows for greater transparency and more accurate disclosure. The increased scope accounts for the shift in CDP band and was expected as the bulk of the savings from projects being implemented are only likely to be realised in the reporting period. Netcare was included in the new FTSE/JSE Responsible Investment Index Series, launched by the JSE Limited in partnership with FTSE Russell in 2015.

2 03 continued 04 Our strategy In, we implemented a five-year strategy and execution plan covering operations in SA to achieve a targeted 35% real reduction in energy consumption over 10 years. Our progress to date 42 projects completed 26 projects in various stages of implementation 19 projects proposed or in development stage EMISSIONS WASTE CO2 EMISSIONS due to electricity consumption t (2014: t) GENERAL WASTE TO LANDFILL 3 213t (2014: 3 827t) ê ê4% 16%. WASTE RECYCLED 1 074t (2014: 1 062t) LOOKING AHEAD 1% ENERGY & FUEL ê AVIATION FUEL by air ambulances l (2014: l) 2% FUEL USED BY ROAD AMBULANCES l (2014: l) 15% ê 2% TOTAL ENERGY USED GJ (2014: GJ) FUEL USED BY BACKUP GENERATORS l (2014: l) LOOKING AHEAD More than 3 MW of rooftop solar PV plants are planned. 72% Implementing integrated waste management process. WATER HEALTHCARE RISK WASTE INCINERATED 70t (2014: 69t) Installing water meters. 5.6% Investigating water alternatives including boreholes, filtering, reuse of water and rain water harvesting. TOTAL WATER USED kl (2014: kl) LOOKING AHEAD TREATED HEALTHCARE RISK WASTE SENT TO LANDFILL 4 756t (2014: 4 082t) 1% 17% CO 2 : Carbon dioxide GJ: Gigajoules kl: Kilolitres l: Litres MW: Megawatt t: Tonnes Since, the Sustainability Committee has approved projects to the value of R320 million. Projects are at different stages of implementation and are measured against the baseline. During the 2015 financial year, we have effectively avoided energy costs of R34 million on electricity and R3 million on piped gas as a result of completed projects. Since, our cumulative energy savings amount to more than R64 million. Our baseline was calculated based on the audit of over 40% of the Hospital and 25% of the Medicross networks, as well as other facilities. A baseline and targets were established for each facility in the baseline calculation. Baselines and targets are reviewed on an annual basis. The analysis of inputs to and outputs from Netcare s operations is an ongoing exercise undertaken by our Environmental Sustainability team. This helps us identify and implement initiatives to further minimise our environmental impact. The team works with the support of senior management and manages project implementation from a central point in close collaboration with each facility. Environmental risks are managed through a robust governance framework and facility management structures at operational level.

3 05 continued 06 Progress against our core environmental governance categories Environmental policy and management plan with defined action plans and targets Partnerships to facilitate energy reduction and measurement, and install realtime energy meters Progress in 2015 The Group environmental policy was updated, with supporting policies published for energy, water, waste, green procurement and hazardous substances. This supports our implementation of an environmental management system that is guided by international best practice and standards. A self-assessment of the environmental management system is in progress, with the results from the environmental consultants expected in early. This will guide us in determining the next steps to ensure our environmental management system is aligned to ISO Consulting teams have been engaged to undertake detailed investigations and audits of our water and waste management and use principles, to be completed in the second quarter of. Targets for electricity usage and carbon emissions reduction were set in. Our objective for 2015 was to invest R136 million in environmental optimisation projects. Unfortunately, we experienced execution difficulties on two major projects that deferred approximately R60 million of planned spend to. This will impact the intended rollout plan and ability to meet the 10-year savings target. The projects have been successfully remediated and we are identifying additional projects to be implemented in parallel with the delayed projects to accelerate our execution plan. Focus for Develop policies for emissions and green buildings. Develop and implement projects to meet targets. Develop water and waste management strategies based on the audit findings. Detailed risk assessments form part of this strategy and will prepare us for future risks and regulatory changes. Other projects: A national project to upgrade lighting systems in our hospital facilities. Annual saving estimates: megawatt hours (MWh) or tonnes of carbon dioxide equivalent (CO 2 e) and R14 million (at current tariffs). A national project to upgrade lighting systems in owned Medicross facilities. Annual saving estimates: kilowatt hours (kwh) or 700 tonnes of CO 2 e and R (at current tariffs). Switched on the first rooftop solar photovoltaic (PV) installation in September Annual saving estimates for all solar PV installations to be completed in : MWh or tonnes of CO 2 e and R7 million (at current tariffs). Ongoing focus areas Energy management: National audits of our facilities inform opportunities for reducing utility usage and costs. The results are used to identify additional projects for implementation. Waste management: The recycling initiative, started in, ensures accurate and robust medical waste management practices and data. Progress in 2015 The Sustainability Committee approved a tenant metering and billing project currently under development. This will automate a compliant billing process. Focus for Implementation is expected in the second half of. Ongoing focus areas Energy management: Meters are being installed in all hospitals and are critical to establishing an accurate baseline for measuring, verifying and reporting energy reductions. Partnerships: Our enterprise sustainability platform generates daily and monthly dashboards of utility usage and environmental impact across facilities. This platform informs our submissions to sustainability indices and the CDP. We also work with expert consultants who assist us in identifying initiatives that support our strategic objectives and targets. Incorporate green design principles in facilities Awareness and communication on climate change to keep staff informed of new policies, projects and achievements Progress in 2015 Tested the Design for Sustainability toolkit in a number of facilities. This toolkit facilitates best practice methods and processes for new buildings, renovations, upgrades or changes in functional applications at our facilities. The tests confirmed the robustness of the toolkit. Going forward Use the toolkit to inform the viability and profitability of technical projects, and benchmark each facility s energy footprint. This will assist with identifying reduction targets and ensure accountability at facility level. Ongoing focus areas Internal communication: Environmental training and information sessions take place at all levels of the business, covering the actions to be taken should an adverse event occur and the behaviours required to mitigate long-term environmental risk. We will undertake specific actions, activities and initiatives in to ensure an optimum level of awareness is achieved. External communication: Articles on specific activities related to environmental management progress have been published on Facebook, as well as print and electronic media. Energy and carbon footprint The energy consumption baseline established in recorded gigajoules (GJ), at 112 GJ per registered bed. In 2015, our energy use was GJ with an energy intensity of 109 GJ per registered bed. This equates to a 2% reduction in our energy intensity compared to the baseline intensity ratio, despite the 8% increase in reporting scope. Compared to 2014, our 2015 intensity ratio has reduced by 8%. The contributing factors to the reduced energy intensity include a reduced consumption of purchased electricity, piped gas and fuels with the exception of diesel which was required to run the backup generators during load shedding. Given the inefficient energy conversion intensity for diesel, our 2015 reduction in energy intensity is significant and means we would have registered an even lower intensity ratio had it not been for electricity supply disruptions. Our total Scope 1 and 2 emissions for the base year were 29 tonnes of CO 2 e per registered bed. In 2015, we recorded 27 tonnes of CO 2 e per registered bed. As the reporting base of Scope 1 and 2 emissions increased by 6% compared to, this represents a net reduction of 13% in intensity against the base year. The table below sets out our energy and emissions performance for 2015 and 2014, against the baseline. Electricity is our main source of energy use. The Hospital division used 225 gigawatt hours (GWh) in 2015 (2014: 223 GWh), some 94% (2014: 91%) of the SA and Lesotho electricity consumption. Total energy usage for the year was 240 GWh (2014: 245 GWh; : 232 GWh). While this is higher than the baseline, with growth in operating activity and the increased reporting scope, it represents 2% less electricity than used in Our electricity expense for 2015 was R259 million (2014: R246 million; (: R235 million). If the sustainability projects had not been implemented, costs for 2015 would have been R293 million, implying a cost avoidance of R34 million (2014: R28 million). Energy and emissions performance: SA and Lesotho Carbon emissions and energy use Unit 2015 % change 2014 Baseline energy used GJ (4.3) Indirect energy used GJ (1.9) Total energy used GJ (2.4) Scope 1 emissions Tonnes CO 2 e (11.7) Scope 2 emissions Tonnes CO 2 e (4.4) Total Scope 1 and 2 emissions Tonnes CO 2 e (5.5) Scope 3 emissions Tonnes CO 2 e (8.5) Total Scope 1, 2 and 3 emissions Tonnes CO 2 e (5.8) Emissions that fall outside Kyoto Protocol Tonnes CO 2 e Total measured Greenhouse Gas emissions Tonnes CO 2 e (5.4) Ratio of total Scope 1 and 2 emissions to revenue Tonnes CO 2 e/rm (11) Ratio of total Scope 1 and 2 emissions to registered Tonnes CO 2 e/bed (10.9) beds 1. Restated: During the 2015 assurance of data it was found that late information for 2014 changed the values for the 2014 reporting period. 2. Registered beds.

4 07 continued 08 Inclusions Water consumption Scope 1 Scope 2 Scope 3 Mobile fuels: diesel, petrol and aviation fuel Stationary fuels: natural gas, diesel for generators, liquefied petroleum gas and coal Fugitive emissions: medical gases and refrigerant gases Purchased electricity only Waste: solid and medical waste Water: electricity used to pump and treat water and waste water Business travel: air travel and car hire Transport: upstream transport and distribution Forecast for If no growth is assumed, we anticipate electricity usage to reduce by approximately 10 GWh to around 230 GWh in. However, taking into account the expected increase in electricity tariffs, costs are projected to rise to R301 million. Our new hospitals in Pinehaven and Polokwane, which have been developed along green design principles, should collectively avoid an energy impact of 1.8 GWh annually, an approximate annual avoidance of tonnes of carbon emissions. In 2014, we secured a R500 million loan from Nedbank Corporate Banking in conjunction with the Agence Français de Dvelopment (AFD). The Sustainability Committee has approved R16 million of this grant to accelerate the roll out of solar PV projects. By the end of, our rooftop solar PV projects will have a combined capacity of more than 3 megawatts, producing approximately 6 GWh of electricity a year. This will reduce our Scope 2 emissions by more than tonnes annually. We have secured a number of Eskom rebates from light-emitting diode (LED) down-lighter replacements and qualifying domestic hot water projects, totalling R5 million. As there are no further Eskom rebates available, this is likely to be the last year we report this metric. Unit 2015 % change 2014 Baseline Water use in Hospital division in SA kl ¹ Water use in Lesotho kl (51) Not included Water use for the balance of the SA operations kl ¹ Total water use for Southern African operations kl Ratio of total water use to registered beds kl/bed (0.5) Ratio of total water use to revenue kl/rm 124 (0.8) Restated: metrics were re-categorised to align to the energy and emissions categorisation, and Medicross water consumption was added for the first time. 2. Registered beds. Forecast for We are developing a water strategy to manage water supply risks. Implementation will start in with optimisation projects scheduled for the next five years. As part of this strategy, we will be installing water meters to verify the accuracy of municipal billing and monitor our optimisation initiatives. Our water is sourced from municipal infrastructure. We are investigating water efficient alternatives such as boreholes, filtering, re-use of water and rain water harvesting. The Netcare Femina Hospital in Pretoria and Netcare Alberlito Hospital near Durban will be the first facilities to benefit from these feasibility studies. Similarly, we are investigating ground water as a potential water supply alternative for our central laundry in Gauteng. A commercial water use license is required for this ground water initiative and this process can be protracted. The graphs below demonstrate our energy performance against targets, and the acceleration of the actual due to utility tariff optimisation drives. Actual versus forecasted electricity footprint reduction Energy in GigaWatt Hours GWh GWh 185 GWh GWh without savings Actual Consumption registered Updated planned consumption GWh Actual versus forecasted cost avoidance R600 R550 R500 R450 R400 R350 R300 R250 R200 R259 million R239 million R375 million R304 million Updated Expected Cost without Intervention Actual Cost registered Updated Expected Cost with zero growth forecast R501 million R344 million Waste management We continue to focus on healthcare waste risk management, to ensure ongoing compliance with regulations, as well as our recycling efforts to further reduce waste to landfill. Waste management Unit 2015 % change 2014 Baseline Healthcare risk waste incinerated Tonnes ¹ 68 Healthcare risk waste treated and landfilled Tonnes ¹ Recycled waste Tonnes Landfill waste Tonnes (16) Totals Tonnes Restated after 2015 assurance. Forecast We have completed the audit process and developed a waste management strategy, which will be presented to the Sustainability Committee in. Together with the roll out of our environmental management system, we will implement a more integrated waste management process. This will optimise the value stream in terms of waste to energy, waste to fertiliser, waste to fuel, as well as recycle, reduce and re-use. Both the waste optimisation, as well as the environmental management systems, will be rolled out simultaneously at all hospital facilities over a 24-month period. Water Phase 2 of the nationwide low flow shower upgrade in hospitals (excluding PPPs and joint ventures) was completed in January In addition, we have converted the reverse osmosis plants at the National Renal Care units of Netcare Sunninghill and Netcare Alberlito Hospitals to re-use filter flush water as grey water to flush toilets. Combined, these conversions will reduce fresh water demand by kilolitres (kl) a year. A water-wise grey water laundry design was implemented in the new hospital in Polokwane, reducing the facility s annual potable water requirements by kl. Our water baseline, calculated in, was kl. The significant year-on-year increase in the unit cost of water has resulted in a 38.6% increase in the cost of water in and a 38.1% increase in In 2015, the increase was 5.3%, yet the cost of water per bed reduced marginally by only 0.7% when compared to 2014.

5 09 continued 10 Our stakeholders We engage with a number of stakeholders on our environmental sustainability initiatives as set out in the diagram below. Our environmental policy is publicly available and can be accessed at Engagement on environmental issues Patients Doctors Employees Funders Posters committing each building manager to the Netcare Group Environmental Statement will be displayed in all facilities. Sustainability teams at each facility communicate with doctors on good environmental governance practice, adherence to statutory and compliance frameworks, and efficiency measures. Employees ultimately implement sustainability initiatives. As such, it is vital that they are informed to ensure participation and support. Communication and awareness training takes place at all management levels. Government Investors Suppliers Communities Statutory compliance and staying up-to-date with regulatory changes is critical. engagement takes place when required, as well as through mechanisms such as annual reports and sustainability indices. Investors are increasingly looking to invest in responsible corporates. Most engagement takes place through mechanisms such as investor presentations, annual reports and sustainability indices. The CDP is placing greater emphasis on Scope 3 greenhouse gas emissions reporting to obtain information on organisations that are not reporting a carbon footprint. Their aim is to acquire a more accurate picture of total global emissions. Our Scope 3 reporting will increase as data collection improves. In addition, we are now engaging with suppliers on our green procurement policy. Best clinical outcomes and cost-effective care align to the objectives of funders. To achieve this, we must secure our supply of resources. We communicate our initiatives directly and through our annual reports and submissions to sustainability indices. Other than through social media pages and media articles, we do not formally engage with communities on environmental sustainability matters. However, Netcare is investigating working with communities to plant trees and develop food gardens, as well as on carbon sequestration opportunities. Risks and opportunities Our key environmental risks and mitigation actions are set out below. Environmental regulations, including planning Increased capital cost Carbon tax, as well as other fuel and energy taxes Increased operational cost and indirect (supply chain) We are required to constantly keep abreast of regulatory developments. Failure to comply could expose Netcare to fines and/or declining investor confidence. Our regulatory risks relating to climate change are primarily associated with energy supply. Expected spend on optimisation projects to the end of 2018 is R350 million. Projects include domestic hot water and free reject heat harvesting projects, lighting upgrades, and optimising our heating, ventilating and air conditioning (HVAC) systems. We apply compliant and transparent corporate governance principles and continuously monitor each facility s environmental performance through the enterprise sustainability platform. The associated cost to implement projects is discussed under the energy and carbon emissions heading. The SA National Treasury plans to initiate the first carbon tax phase at a rate of R120/tonne CO 2 e. This will increase by 10% a year during the first implementation period for which a basic tax-free threshold of 60% is proposed. The introduction of carbon taxes will require capital to adapt our infrastructure so that we can increase operational efficiency and reduce emissions. The inception date of this tax is unknown. If applied to Scope 1 and 2 emission sources, our carbon tax is set to be around R13 million annually. This is less than 6% of the current annual electricity cost and less than 0.1% of the SA operation s annual revenue. We stay abreast of the latest trends relating to carbon tax and have engaged an energy tax consultant to provide further guidance. Our enterprise sustainability platform will enable us to monitor and measure our carbon tax exposure and assist with budget forecasting. Our costs include a dedicated energy engineer and the enterprise sustainability platform, which had a total of R2 million in the first year of implementation (). Ongoing monitoring of energy consumption across the national footprint costs around R1 million a year. Electricity supply backup Increased operational cost Reputational loss associated with a lack of initiatives to reduce our operational impact on the environment Reduced stock price (market valuation) A constant supply of electricity is an inherent risk in SA. As continuous supply is critical to our ability to provide best and safest patient care, full backup systems are essential. Energy is a substantial expense, so increased utility costs imposed as a result of higher demand and limited supply could pose an operational risk. We have approved solar PV installations to the value of R110 million. We are investing in solar domestic hot water projects and solar PV installations. The management costs associated with these projects have not been calculated. Pressure to disclose energy and carbon measures, and emissions reduction performance is increasing. Not responding to these stakeholder expectations could negatively impact Netcare s reputation. We pride ourselves on being a responsible corporate citizen committed to good governance, including the adoption of sustainable practices. To be determined. We will develop a long-term strategy to guide our responses to the implications that climate change may have on disease vectors and the associated modifications required by our services and facilities. Management costs have not been quantified as they form part of consultation costs.

6 11 continued 12 Emissions reporting obligations We report a carbon footprint annually and work towards reducing our environmental impact. However, our organisational growth strategy may increase our emissions. Drought and service water delivery failures Interruptions to water supply impact business operations and the ability to provide quality healthcare. This may have a negative and place the health of our patients at risk. Reduced stock price (market valuation) Change in temperature Increased operational cost Change in mean (average) temperature Increased capital cost Expected spend on optimisation projects to the end of 2018 is R350 million, with estimated annual savings ranging up to R70 million at base year tariffs. We aim to apply good, auditable and transparent environmental governance practices assisted by our enterprise sustainability platform. Where audits indicate that efficiencies can be obtained, we execute the relevant projects where feasible. We expect an accumulative cost of R33 million between and 2018 to monitor, measure and report our performance against baselines and targets at each facility. These results will inform our submissions to the FTSE Russell, CDP, United Nation Global Compact and our integrated report. A temperature rise will influence infection control as well as ambient temperatures in critical healthcare areas such as operating theatres, where temperature control is imperative for certain procedures. An increased risk of infection could increase the demand for isolation rooms, which would translate into fewer beds per square metre. In addition, isolation rooms use more energy per square metre as they require additional HVAC systems. Not quantified, however we are building isolation rooms where necessary. No additional requirements as needs are driven from an operational level. Electricity to run HVAC systems comprises around 30% of our carbon footprint. Not quantified. No additional requirements as needs are driven from an operational level. As our water strategy is in development, the table below sets out our risks related to water and discloses the likely magnitude of. Pollution of water supply Higher operating costs Low Declining water quality Constraint on future growth Low to medium The quality of water supplied to certain facilities already requires additional treatment before distribution. We invest in infrastructure where required. Our current expenditure is low. Declining water quality is a key risk that extends beyond the borders of SA. Our immediate planned infrastructure expenditure is low as we are investigating options and alternatives. Solutions are most likely to involve deployment of on-site water recycling systems that will re-use effluent water. This will limit dependency on treated water while simultaneously lowering treated water demand. Higher operating costs and potential loss of income if a facility is without water for an extended period of time. This risk extends to our suppliers as a prolonged water service delivery interruption will affect their ability to deliver critical goods and services required to provide healthcare services. High Reputational loss associated with a lack of initiatives to manage water disruptions Reduced stock price (market valuation) and loss of revenue for every patient day lost High Extreme changes in mean (average) precipitation Reduction or disruptions to normal operations. The will depend on the severity of a drought. High We are investing in infrastructure and technologies that will reduce our reliance on municipal water supply systems. For the last five years, we have spent R72 million on backup water storage to meet Netcare s internal policy regulations for 48 hours of water supply backup in all hospitals. Over the next two years, R50 million to R60 million has been budgeted for further initiatives. A component of our water strategy, which is under development, is identifying risk areas in our supply chain associated with water supply. Once we have a better understanding of risks, we will be able to quantify the potential. We will work to build resilience in our supply chain through supplier diversification and engaging with our suppliers on their strategies to manage water issues. Our water strategy will be implemented over the next five years and is expected to decrease our supply chain risk to low to medium. Interruptions to water supply impact business operations and the ability to provide quality healthcare. This may negatively impact our competitiveness, investor confidence and patient satisfaction. In addition, companies responding to environmental aspects such as water use is a growing stakeholder expectation. Not showing initiative to manage consumption or the ability to deal with a disruption could further impact our reputation. Water tanks have been installed at all hospital facilities, catering for backup water supply. The enterprise sustainability platform monitors and manages environmental aspects to support good environmental governance and assist with stakeholder reporting. The water strategy will take into account the water risks associated with climate change. The average precipitation in certain regions in which we operate is projected to decrease in both wet and dry seasons. This will impact water availability within the catchments and the ability of municipal infrastructure to provide water, increasing our risk of business disruptions. Water tanks have been installed at all hospital facilities, catering for backup water supply. On-site inspections are conducted to identify visible water leaks, and downtime is recorded and continuously monitored so that we can improve our planning and preparation for interrupted services. The enterprise sustainability platform monitors excessive use of water.