By Lewis Gough, Senior Analyst, Matt Quinn, Manager, and Dan Donaghy, Director, UK Public Sector Enterprise Operations team

The climate emergency has now become a health emergency with the World Health Organisation estimating that, between 2030 and 2050, climate change will be responsible for approximately 250,000 additional deaths a year.¹ On 1^st July 2022, the NHS in England became the first health system to embed net zero into legislation, through the Health and Care Act 2022. In response, the NHS has re-issued its Delivering a Net Zero National Health Service report as statutory guidance, setting out  the direction, scale and pace of change needed to reach its net zero target by 2045.² This blog from our colleagues in the UK Public Sector Enterprise Operations team explores how regulators can play a vital part in encouraging and supporting the NHS achieve these ambitions.

The NHS has an ambitious target for how it will reach Net Zero by 2045

Currently, the health and care system is responsible for between 4-5 per cent of the UK’s carbon footprint .³ The Health and Care Act 2022 requires NHS England, all trusts, foundation trusts, and Integrated Care Boards (ICBs) to address these net zero emissions targets.⁴ Within this, direct NHS controlled emissions (carbon footprint scopes 1 & 2) are expected to reach net zero by 2040 with further influenceable emissions (including upstream and downstream scope 3) by 2045.⁵ All NHS trusts and ICBs are required to develop a ‘Green Plan’ with a responsible Board-level lead to detail how they will reduce emissions by the planned net zero date.

Our independent assessment of current plans suggests that the net zero dates will not be met, as illustrated by the trajectories below (see Figure 1).

Figure 1. NHS decarbonisation trajectories

Source: Deloitte 2022 analysis of trend data for ‘Delivering a Net Zero NHS’⁶

How can regulators respond to this challenge and develop the capability to do so?

To help close the gap, NHS regulators could help improve the progress towards net zero by taking a more proactive stance – albeit this may potentially need legislative and regulatory regime changes. Proactivity now, will also enable regulators to remain ‘relevant’ within the green agenda. Regulators could bring clarity of expectation and regulatory support to net zero delivery by:

• introducing changes to the system oversight frameworks (SOF) and performance regimes; with inclusion of net zero considerations when judging and rating organisations and their leaders
• revising professional ethical considerations and what it means to practice safely and protect the health of patients in the future
• reassessing products and services used in the NHS, including digital, to determine the overall sustainability impact alongside cost and efficacy considerations
• supporting decarbonisation improvement such as thematic report publications related to sustainability; networking support to organisations with strong and poor sustainability performance to offer peer coaching; and working with sustainability experts to focus improvement activity.

Other UK regulatory regimes are also considering how they monitor and incentivise sustainable net zero behaviours⁷. For example, the Food Standards Agency now lists sustainability as one of its key strategic considerations in it revised regulatory strategy⁸.

There are several specific actions that would help build healthcare regulator capability to help them remain relevant:

• Functional capability: the creation of functions within regulators specifically focussed on sustainability. For example, appointing an executive director of sustainability could help shape regulatory interventions and standards to encourage transformation in the NHS.
• Establishing an environment: to encourage a culture: that supports NHS organisations in their ambitions to become carbon-neutral, means regulators will need to become truly sustainable themselves, educating their own organisation in sustainable behaviours and encouraging its adoption in regulatory interventions. This will require organisational culture change which will likely be a multi-year journey.
• A new regulatory model: the questions regulators ask of the regulated might include information that enables them to make a better judgement on sustainable practices. Regulators will also need to know how to effectively regulate and encourage new products and delivery models that assist in reaching net zero, without reducing healthcare outcomes, safety and innovation.
• A new technology and data model: to make informed regulatory judgements, carbon emission data will need to be captured and analysed and oversight will be needed to track Green Plans and their outcomes. Regulators may require the use of Internet of Things (IoT) as standard by regulated NHS organisations to verify supply chain emissions. It will be incumbent upon the regulatory community to help clarify definitions, standards and measurements to reduce uncertainty.
• Public engagement: To gather views on how the public want to see sustainability reflected in the regulation of the NHS, raise awareness that changes to services are likely to take place to reflect this, and embed ‘user voice’ in how these services are designed for the future. This will be a vital element of staying ’relevant’.

Organisations in scope of needing to respond to this change include:

To do this, regulated organisations should consider developing:

• culture change initiatives that foster and encourage innovation towards sustainable practice with resulting changes to performance management, recruitment and learning & development planning
• a data and technology model that can accurately capture and report on carbon emissions and help solve operational issues quickly
• refreshed organisational strategies to embed sustainability as a core theme that guides operational and transformation activity. This could include specific plans for procurement and supply chain management reviews, as well as reviews of the organisation’s operating model.
• investments in regulator relationship management to effectively communicate changes towards sustainable practice so that regulatory judgements are well informed. This may include the need to invest in Reg-Tech compliance and assurance systems.
  
  

Figure 2. Net Zero strategies maturity levels⁹

Source: Deloitte analysis, 2022

Conclusion

With increased public support and governmental backing for net zero and climate change initiatives, healthcare regulators need to be seen as a catalyst, supporter and champion of ways to encourage responsible, sustainable, climate action in the healthcare sector in the UK. Regulators who make changes now to support the NHS to reach its 2040 Net Zero target will remain ‘relevant’ as regulators within the green agenda. Likewise, regulated organisations and individuals may potentially risk their reputations without visible and fundamental changes to how they operate to deliver healthcare in a century where climate and associated health issues look set to dominate.

Lewis Gough – Senior Analyst, UK Public Sector Enterprise Operations team

Lewis has over 3 years’ experience of working across the Public Sector. He works with clients in the health and social care space to deliver operational improvement through data analytics and Operating Model redesign.

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Matt Quinn – Manager, UK Public Sector Enterprise Operations team

Matt has over 9 years’ experience of working in the Healthcare sector. Since moving into consulting Matt has supported regulators and providers to redesign their Target Operating Models as well as deliver hands on operational improvement.

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Dan Donaghy – Director, UK Public Sector Enterprise Operations team

Dan leads Deloitte’s UK Public Sector health and social care regulation team. He works with clients in the health and social care space to think through how to respond to the changing nature of regulation. He also advises national regulators and arms-length-bodies on regulatory approaches and operating model transformation.

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¹ https://www.who.int/news-room/fact-sheets/detail/climate-change-and-health

² https://www.england.nhs.uk/greenernhs/national-ambition/

³ https://www.fph.org.uk/media/3126/k9-fph-sig-nhs-carbon-footprint-final.pdf

⁴ https://www.england.nhs.uk/greenernhs/a-net-zero-nhs/

⁵ https://www.england.nhs.uk/greenernhs/a-net-zero-nhs/

⁶ https://www.england.nhs.uk/greenernhs/publication/delivering-a-net-zero-national-health-service/

⁷ The new strategy for FSA includes considerations of sustainability https://www.food.gov.uk/about-us/our-strategy and FCA have set out a clear strategy https://www.fca.org.uk/firms/climate-change-sustainable-finance

⁸ https://www.food.gov.uk/about-us/our-strategy