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Sustainable Purchasing - What's Healthcare Got to Do with It ? Maryland Health Care Sustainability Leadership Council Meeting June18, 2014. Agenda . Overview of J&J’s Sustainability Program Case for Greener Products Greener Product Examples Purchasing Greener Products .

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Agenda

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  1. Sustainable Purchasing - What's Healthcare Got to Do with It?Maryland Health Care Sustainability Leadership Council MeetingJune18, 2014

  2. Agenda • Overview of J&J’s Sustainability Program • Case for Greener Products • Greener Product Examples • Purchasing Greener Products

  3. Johnson & JohnsonThe world's most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services, for the Consumer, Pharmaceutical, and Medical Devices & Diagnostics markets. • More than 275 operating companies • 128,000 employees worldwide • Selling products in more than 175 countries • 3 Segments: Pharmaceuticals, Medical Devices & Diagnostics, and Consumer • 2013 Sales $71.3 Billion

  4. How J&J Defines Sustainability Fulfilling our Credo responsibilities so people, planet & business can all live in good health today & tomorrow.

  5. 1943 Our Credo Robert Wood Johnson crafted Our Credo long before anyone ever heard the terms “sustainability” or “corporate social responsibility.”

  6. 1990-2010 Sustainability Reporting Environmental Leadership • 1990 First Pollution Prevention goals Sustainability Goals • 1993 First Sustainability report • 2000 Next Generation goals • 2005 Healthy Planet 2010 goals • 2010 Healthy Future 2015 goals Johnson & Johnson Environmental Report, 1993

  7. 2012 Our Accomplishments Johnson & Johnson has been caring for people’s health and well-being since the Company’s beginning. In recent years, we have successfully reduced our impact on the environment and addressed global health concerns while continuing to grow our business. Cash & Product Contributions To 700+ philanthropic programs, 2012 Water Use Reduction between 2000 and 2012 Mebendazole Donations For intestinal worm treatment, 2012 116 MILLION $966.3 MILLION -34% J&J Sales Increase between 2000 and 2012 Research & Development Investment in 2012 More Sustainable Product Development Earthwards® recognized products. 2012 $7.67 BILLION +137% 36 PRODUCTS

  8. 2012 Commitment to Safe Employees J&J’s Illness and Injury rates tend to be among the lowest within our industry • Lost Workday Case Rate • Goal: <0.09 per 100 employees • Rate of LWDC decreased 71% since 1995 • Fleet Crashes Per Million Mile • Rate of crashes (CPMM) decreased 40% since 1995 • Continuing training efforts; focusing on high risk drivers

  9. 2012 Commitment to Renewable Energy • Currently at 45.5 mW approved or installed • 27 Solar Projects • 10 Co-generation • 3 Biomass • 3 Geothermal • 2 Wind • J&J achieves an average IRR of 19% on all energy projects. • Annual Savings exceed $42MM 1,500kW Co-Generation 1,690 kW PV Array ~30% of OCD, Raritan, NJ Two 500 kW wood chip boilers DePuy, Cork. Ireland 4,700 kW PV Array ~85% of Janssen, Titusville, NJ

  10. 2012 Commitment to Sustainable Building LEED Sustainable Building Policy: All new construction and major renovations of J&J facilities (over $5MM) will be LEED certified or equivalent. Select Examples of Our 16 LEED Certified Buildings Worldwide: 6.5% of J&J Building Area is Sustainable Workspace

  11. Recent RecognitionsJohnson & Johnson Operating Companies • Ranked #2 in the 2012 Access to Medicines Index biennial survey • Ranked #4 for Social Responsibility in the 2013 Harris Poll • 2009, 2010, 2011, 2012 , 2013 Practice Greenhealth “Champion For Change” Award • Ranked #7 on the Top On-site Corporate Solar Users List (the only health care company in the top 20) • The Innothink Center for Research in Biomedical Innovation named J&J the most productive drug firm of the last 10 years • 2013: Johnson & Johnson was ranked #6 in Interbrand’s list of the Best Global Green Brands • 2nd year on the Billion Dollar Roundtable for spending with diverse suppliers – still the1st and only healthcare company to join • 2013: Global CEO Cancer Gold Standard™ employer – for promoting a healthy lifestyle among employees

  12. 2015 Healthy Future Healthy People Healthy Planet Healthy Business • Building on our legacy in safeguarding the planet • Reduce the environmental impact of our operations • Increase the sustainable design of our products • Enhancing outcome measurement in philanthropy • Partnering with suppliers that embrace sustainability • Committing to enhanced transparency and accessing the power of external collaboration • Research and development for neglected diseases • Affordable access to medicines • Advancing community wellness • Fostering the most engaged, health-conscious and safe employees in the world

  13. Minimize Our Impact The EARTHWARDS® Process EARTHWARDS® Objectives: • Support the development of more sustainable products • Provide tools & resources to enable sustainable innovation • Enable meaningful and credible claims

  14. Minimize Our Impact EARTHWARDS® Process Development and Goals • The EARTHWARDS® process has been reviewed by a panel of sustainability experts from government, academia, business, and an environmental NGO • A proprietary scorecard was developed to evaluate products in seven key categories that we feel have the most potential for environmental and social impacts • As part of the Healthy Future 2015 initiative, the goal of the EARTHWARDS® process is to have 60 EARTHWARDS® recognized products

  15. Using Less MaterialBAND-AID® Brand Adhesive Bandages • >10% reduction in secondary packaging and 20% weight reduction of tertiary packaging* • 30% less energy used during manufacturing compared to previous process* • Use of socially responsible local cooperatives to produce recycled paper *Product comparisons based on previous version of the product

  16. Using Green Chemistry ZYTIGA® (abiraterone acetate) 64% fewer raw materials used by implementing green chemistry to improve the overall yield* 78% less water used in synthesis* 87% less hazardous waste from synthesis* Wet crystallization and extraction process used to reduce to lean process and minimize potential worker exposures to the API * As compared to the previous API synthesis process

  17. Using Less Packaging VALUTRUS™ Linear Stapler ADLH Reusable Linear Handle-ADL40R • >95% reduction of materials* • >95% reduction in packaging* • >95% waste reduction* • Socially sustainable solution for underserved populations for access to superior medical technology *Compared to EES base product

  18. SterilmedOffers products and services that lower healthcare providers medical device costs & waste through reprocessing, equipment repair, and pre-owned equipment sales • 4 million devices or 2.5 million pounds of medical devices restored • Customers saved over $76MM • Recycles final products, diverting another 700,000 pounds of waste from landfills • Received the Practice Greenhealth 2012 Champion for Change Award • Donated 10,948 sterile medical devices to International Aid

  19. What We Do at Wellness & Prevention (W&P): • HealthMedia® Succeed Health Risk Assessment • HealthMedia® Digital Health Coaching • Lifestyle Management • Behavioral Health • Chronic Condition Self-management • Human Performance Institute • Corporate Athlete • Health Athlete • Health Segmentation • Incentive Management • Participation and Engagement • Productivity & Outcomes Reporting • Data Analytics / Behavioral Insights HRA Member Communications Biometrics Behavioral Health Human Centered & Digitally Driven Disease Management HP Portal Human Centered & Digitally Driven Telephonic Incentives

  20. Greener Products:The Making & Marketing of Sustainable Brands Table of Contents • Section 1: The Case for Greener Products • Market Drivers • Regulatory Drivers • Section 2: Making Greener Products • Greener Product Design Examples (14 case studies) • Framework for Developing Greener Products (J. Fava) • Section 3: Green Marketing • Consumer Interest in Green Purchasing is Growing (The Shelton Group) • Green Marketing B2B & B2C (11 case studies) • Aspects of Green Marketing (green washing, eco logos, FTC & DEFRA guides, cause marketing) • Best Practices & Conclusions

  21. The Case for Greener Products New Era of Constrained resources • 3 Billion more middle class consumers by 2030 • Global car fleet to double to 1.7 billion by 2030 • China anticipated to annually add 2.5 x’s floor space the size of Chicago and India 1 x • Ave. cost of an oil well has doubled over past decade • New mining discoveries has flattened despite quadrupling exploration spending Source: McKinsey Resource Revolution, November 2011

  22. The Case for Greener Products PER CAPITA GARBAGE PRODUCTION Average pounds Per person Per Day • USA 4.6 • Australia 2.7 • Japan 2.58 • Canada 1.79 • China 0.7 • Imagin the impact if developing nations generate at USA levels (Source: the Story of Stuff, Leonard 2010)

  23. Group MOST INTERESTED IN SUSTAINABILITY In both the US and the EU the group that is the most interested in sustainability and sustainable products is purchasing or materials management. BASE: ALL QUALIFIED RESPONDENTS Q350 What group within your organization is most interested in sustainability and sustainable health care products?

  24. Barriers to sustainability initiatives The greatest barriers to sustainability initiatives in both the US and the EU are cost of implementation and lack of affordable products. Significant barrier/Somewhat of a barrier BASE: ALL QUALIFIED RESPONDENTS Q355 In your opinion, how much of a barrier is each of the following to implementing environmental sustainability or ”green” initiatives in your hospital?

  25. “Green” initiatives - Current and future Hospitals in the EU are much more likely than those in the US to have integrated sustainability considerations into their purchasing decisions. B B A A A BASE: ALL QUALIFIED RESPONDENTS Q322 For each of the following, please indicate whether any initiatives of that kind are in place at your hospital. A, B indicate statistically significant difference between US and EU

  26. Attribute importance in product purchasing Hospitals in the US are much more likely than those in the EU to consider designing products as multi-use to be important when making product purchasing decisions. Very Important /Somewhat B BASE: ALL QUALIFIED RESPONDENTS Q385 Using the scale below, how important are the following attributes in your purchasing decisions for medical products (e.g., pharmaceuticals, surgical devices, medical supplies, diagnostics)? A, B indicate statistically significant difference between US and EU

  27. Greener Product Design Examples

  28. There is no such thing as a green product

  29. Life cycle impacts Raw Materials Product Manufacture Materials Manufacture Transportation & Distribution End Disposition Recycling Use Source: Five Winds Intl. 31

  30. Greener Product Design Examples GE Ecomagination™ • Energy use • Green house gas emissions • Water use • Ability to offer financial benefits to their customers

  31. Ecomagination™ • Significant funding commitments: $1.5 billion in clean technology investment in R&D and committed another $10 billion for R&D over the next 5 years. • Success is measured in dollars. Sales in 2009 were $18 billion and the goal for 2010 is $20 billion.

  32. Seventh Generation

  33. Philips • Improvement categories called Green Focal Areas; energy, packaging, hazardous materials, weight, recycling and disposal and life time reliability used to develop greener products are employed in marketing too. • A HD9 Ultrasound System lists the following benefits in the Green Focal Areas of energy consumption, product packaging weight, and recyclability. Compared to its predecessor product there is 18% reduced energy consumption and 25% less packaging material weight.

  34. HARMONIC FOCUS®+ Meet customer need with 25% less material* Meet customer need with 24% less tertiary packaging and 21% less secondary packaging reduced overall packaging by 15%.* Doubled shipping efficiency* *Compared to HARMONIC FOCUS®

  35. Best Practices for Making Greener Products • Top management Support and greener products are part of the business strategy • Third party input in developing design criteria • Use score cards, focal areas and tools to make it easier for product developers • Enterprise-wide goals to augment individual brand improvements • Use of life cycle analysis or life cycle thinking to focus on the most important impact areas • Transparency of ingredients used in products to build more trust • Meet customer requirements by providing end-of-life solutions for products

  36. GREEN MARKETING

  37. Green Marketing What good is a greener product if no one knows about it?

  38. Should You Market Green? “It’s the number one thing consumers all over the world care about.” David Compton, CEO PepsiCo Americas Foods (WSJ 2011)

  39. Al’s 3 Key’s to Green Marketing • Have a credible greener product story • Meet your customer’s greener product demands • Appropriately communicate the products greener attributes

  40. Neutrogena ® Naturals messaging Neutrogena® Naturals Purifying Facial Cleanser Label Messages • No harsh chemical sulfates, parabens, petrochemicals, dyes or phthalates • Gently removes impurities and improves complexion for fresh, clear skin • A cause marketing partnership with the environmental group, the Nature Conservancy, on freshwater projects has been initiated

  41. NEUTROGENA® Naturals Purifying Facial Cleanser • Product formulation contains 90% naturally derived ingredients • Packaging contains 30% PCR content • 70% reduction of GHG emissions achieved through supply chain improvements* • Through a partnership with The Nature Conservancy, sales from the product will help promote clean water projects in the United States

  42. NEUTROGENA® Naturals Purifying Facial Cleanser • Product formulation contains 90% naturally derived ingredients • Packaging contains 30% PCR content • 70% reduction of GHG emissions achieved through supply chain improvements* • Through a partnership with The Nature Conservancy, sales from the product will help promote clean water projects in the United States *Compared to Neutrogena® Deep Clean Facial Cleanser

  43. Philips • Improvement categories called Green Focal Areas; energy, packaging, hazardous materials, weight, recycling and disposal and life time reliability used to develop greener products are employed in marketing too. • A HD9 Ultrasound System lists the following benefits Compared to its predecessor product: 18% reduced energy consumption and 25% less packaging material weight.

  44. TerraChoice’s 7 Sins of Greenwashing • Sin of the Hidden Trade-off • Sin of No Proof • Sin of Vagueness • Sin of Irrelevance • Sin of Lesser of Two Evils • Sin of Fibbing • Sin of Worshiping False Labels • Top three mistakes made by marketers are - no proof, vagueness and worshiping false labels.

  45. Materials & Green Purchasing Several materials have been identified by hospital groups as “materials of concern” or “phase-out” materials. These include (click on each link for more information): • Cleaners and disinfectants • Electronic equipment • Flame retardants • Fragrance chemicals • Mercury-containing medical devices and wastes • Pesticides • Phthalates and DEHP • PVC For a list of alternative, sustainable products, please visit the following: Sustainable Hospitals Alternative Products & Procedures Alternatives Products Also see: Guide to Choosing Safer Products

  46. Best PracticesGreen Marketing • Effective communication of greener characteristics to meet customers’ needs through focus areas and product profiles. • Use of well know respected eco-labels or third party’s to endorse products. • Company branded greener product lines and internal eco-label like designations. • Appropriate cause marketing relationships that have a direct nexus with the brand. • Prevent green washing by being authentic and not overstating green product attributes.

  47. Making Sustainability a Priority Together

  48. Thank YouAl IannuzziSr. Director Environment, Health, Safety & SustainabilityTwitter #aliannuzziwww.greenerproducts.coaiannuz@its.jnj.comFor sustainability resourceswww.earthwards.com

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