Hospitals and medical facilities are significantly more resource intensive than the average commercial building. They need considerable quantities of water and energy to power their operations around the clock; covering everyday facilities such as lighting and heating or air conditioning, as well as sterilisation and operating rooms for medical procedures.
In India, the resources required by hospitals are no different. However, as one of the world’s most water-stressed countries, it is particularly important for healthcare organisations in India to consider their use of these vital resources. Increasing resource efficiency not only brings significant environmental benefits but also offers financial gains for organisations through cost savings. These are both benefits that help to ensure hospitals and healthcare systems thrive long-term. Beyond this, introducing water efficiency measures in water-stressed areas also brings social benefits – for example by mitigating water scarcity risks for local communities.
In 2014, we invested in Narayana Health, an Indian healthcare provider delivering high quality, affordable healthcare services to lower-income patients. The company has been consistently held up as an innovator in affordable health models, particularly its ‘assembly line’ approach to achieve low-cost at scale. Its founder, Dr Devi Shetty, has been described as the ‘Henry Ford of medicine’. At the time of our investment, Narayana Health was serving around 1.5 million patients annually in 18 hospitals. By March 2020, when we exited the investment, Narayana Health was treating over 2.5 million patients annually and had reached nationally recognised quality accreditation across 21 hospitals.
During our investment, CDC’s Environmental Social and Governance (ESG) Impact team worked closely with Narayana Health to implement high environmental and social (E&S) management standards across their hospitals. One of the ways we did this was by improving resource efficiency, in line with CDC’s strategic priority of addressing climate change. We run a programme of work at CDC that aims to provide finance for resource-efficiency projects as well as increase off-grid access to clean energy. Through this programme we supported Narayana Health to reduce energy consumption and promote the adoption of renewable energy.
Narayana Health treats over 2.5 million patients annually.
CDC-funded water, energy and waste audits identified ways Narayana Health hospitals could improve resource consumption and waste management practices. For example, the water audit identified several ways to reduce water use, such as installing low-flow devices in kitchens and training on how to avoid water leakages. These improvements led to significant resource savings, including a 20 per cent reduction in water consumption and a 9 per cent increase in water re-use by the business.
A CDC-funded energy audit, which recommended a system upgrade and installation of LED lights across selected hospitals, had similarly positive results. Combined with frequent training for staff on good practice, these energy-focused initiatives resulted in a 15 per cent reduction in energy consumption. In addition, by the time we exited the investment, 92 per cent of total energy consumption at Narayana Health’s Health City Campus in Bangalore was powered by renewable energy. Adopting renewable energy helped Narayana Health reduce their total energy costs by 30 per cent.
The third audit funded focused on waste management, an integral part of environmental and social responsibility. Acting on its recommendations, which sought to identify the quantities and types of waste produced by the business, meant that Narayana Health increased their paper and plastic recycling rate by up to 10 times in some hospitals.
Adopting renewable energy helped Narayana Health reduce their total energy costs by 30 per cent.
The close partnership between staff at Narayana Health and CDC’s team was instrumental in driving the successful implementation of this work. This relationship began when we invested in the business; our investment required that Narayana Health create a dedicated ESG team to develop and deliver a comprehensive environmental management system. We worked closely with the senior management team at Narayana Health to increase awareness of the social, environmental and business value of strengthening ESG capacity within the business. By establishing a strong partnership through open and regular communication and knowledge sharing, we supported senior management to better understand the objectives driving the ESG initiatives and their potential benefits.
In 2015, we supported the appointment of an E&S manager to oversee ESG performance across all Narayana Health hospitals. Fast forward to 2020, and Narayana Health has a well-established ESG team with an E&S manager, energy manager and a fire safety officer reporting to senior management. The team was instrumental in developing and implementing an effective environment and social management system across all 21 hospitals with close support from CDC. Our partnership with the team at Narayana Health provided a platform for knowledge sharing, skills development and support for further improving operations across the organisation.
Narayana Health’s experience shows how tackling water and energy efficiency can result in significant environmental and financial impact for a business. Securing a sustainable energy supply and reducing resource consumption also helps businesses prepare for resource shortages and increases resilience to environmental shocks. Narayana Health’s approach to ESG provides an example to other organisations in the sector, including companies in our portfolio who we are working with to implement similar initiatives.