Corporate Social Responsibility: Eco-Efficient Operations and Transportation

Across our company, we're working to use less energy and use resources wisely.

Communities thrive in a healthier environment. That’s why we’re sharpening our focus on environmental sustainability.

Establishing new environmental best practices is a priority across McKesson businesses. We work to capture the metrics most relevant to our lines of business and act on recommendations that lead to a healthier environment.

We use electricity for lighting and IT, and fuel for heating and transportation, including inbound and outbound distribution and business travel. We focus on efficiency across these areas.

In our distribution centers and pharmacies, we focus on reducing energy use and finding alternative sources of energy. As a company focused on distribution, transportation is important to us – in particular, fuel efficiency for our fleet.

Reducing energy use in our facilities

Across our locations, we work to use less energy for lighting and heating.

Increasing LED lighting to lessen our footprint

Our buildings use energy mainly for lighting. In our distribution centers, lighting accounts for up to 40% of the electricity consumption. In our pharmacies, it’s approximately 50-70%. With more efficient lighting, we can cut our CO2 emissions and reduce our carbon footprint.

During FY19, we implemented initiatives to add LED lighting in our distribution centers, pharmacies and offices. Through these initiatives, we expect to see energy reductions of up to 40%. Our European distribution centers expect to save more than 3,300 tons of CO2 emissions per year through LED lighting alone.

While we’re bringing LED lighting to more than 350 pharmacies in Europe, we’re also replacing inefficient heating systems with more efficient units, complete with timer controls and/or presence detectors. This initiative follows a successful pilot, where we helped 50 pharmacies save energy equal to 200 tons of CO2 emissions yearly.

Monitoring and benchmarking energy use

We use a number of tools to benchmark our energy use, including the U.S. Environmental Protection Agency’s Energy Star Portfolio Manager. In many distribution centers, we also monitor energy consumption by production line, which helps us find more opportunities to conserve and cut energy use.

Bringing in renewable energy

In our warehouses in Belgium, we switched from purchasing electricity generated from traditional sources to renewable energy starting in FY17. Three of these Belgian warehouses are equipped with solar panels and generate approximately 700 MWh of clean electricity every year.

In the U.S., we signed a long-term agreement to purchase solar power from solar arrays. We began installing these arrays in West Sacramento, California, during FY19. We expect the agreement to reduce costs for McKesson, producing electricity equivalent to approximately 74% of the West Sacramento facility’s annual consumption.

Working toward environmental certifications as we grow

As part of our energy reduction strategy, we pursue environmental certification for new and newly renovated buildings. For example, our European headquarters in Stuttgart, Germany, was recognized by the German Sustainable Business Council for its environmentally friendly design. Our U.S. offices in Irving, Texas; The Woodlands, Texas; Richmond, Virginia; and San Francisco, California are Leadership in Energy and Environmental Design (LEED) certified, as is our distribution center in Aurora, Illinois. We are pursuing LEED certification for our Scottsdale, Arizona; Jacksonville, Florida; and Columbus, Ohio, offices. We also hold WELL certification for our Irving and Richmond offices and are pursuing it in Columbus, Jacksonville and Scottsdale.

Transportation: more efficiency, less impact

More output with less energy input — this is the principle of energy efficiency. It makes perfect business sense, because we save money by reducing our energy needs. At the same time, we reduce our impact on the environment by using fewer resources, which means we emit less CO2.

Transportation in our operations

We’re an international business focused on distribution. For us, fuel consumption for transportation is an environmental challenge and opportunity. Our strategy focuses on optimizing delivery routes and the use of delivery vehicles. To do that, we monitor mileage and fuel consumption, and we educate our drivers on eco-efficient driving.

Energy reduction for outsourced fleets

In areas where we outsource transportation, we take advantage of external carriers’ ability to optimize schedules and avoid returning empty trucks to distribution centers. We also work with customers to adjust delivery schedules to be more efficient.

Energy reduction for our in-house fleet

In some areas, we own our fleet. When buying new vehicles, key criteria are fuel consumption and low CO2 emissions – while adhering to high quality standards. We teach our drivers environmentally friendly and safe practices, such as driving at a safe speed limit and avoiding idling. We also adjust delivery routes and vehicle loading to cut mileage and increase efficiency. Our fleet in Canada’s Quebec province has already seen the impact:

  • Equipment upgrades: We have a multi-year initiative to upgrade our line-haul tractors and 5-ton vehicles. The annual fuel reduction is approximately 95,000 liters (about 25,000 gallons).
  • Using LCVs: We use long combination vehicles (LCV) in our line-haul network in Quebec. LCVs use less fuel to carry goods, which reduces our carbon footprint.

Redistribution Center model

We operate National Redistribution Centers (NRDCs) in the U.S. and France. These centers help us to better manage our inventory and reduce redundancies. Even better, they help us reduce the movement of our inventory. In turn, we can save on costs and fuel within our distribution center network.

Employee travel and commuting

For travel to the office, we encourage employees to use sustainable options, like bikes or buses. In North America and several European countries, McKesson also offers commuter benefits, which let employees use pre-tax dollars to pay for items like subway cards or train tickets. In Canada, our Montreal office has reserved parking spaces for people who carpool. Several sites in Canada and Europe offer electric/hybrid car charging stations.

While business travel is part of how we work, it also affects the environment. To reduce our impact, we encourage employees to use tele- and video-conferencing whenever possible to reduce travel and, by extension, our carbon footprint.

C02 emissions performance in FY19

Category

FY18 CO2 emissions (metric tons)*

FY19 CO2 emissions (metric tons)*

Scope 1: Fuel consumption for in-house Pharmaceutical Solutions & Services, Medical-Surgical, Canada and Europe fleets; natural gas consumption in U.S., Canada and Europe facilities; heating oil in Canada and Europe facilities

124,911

157,076

Scope 2: Electricity consumption in U.S., Canada and Europe facilities

178,385

173,390

Scope 3: U.S., Canada and Europe employee air travel; third-party transportation

75,506

67,114

  • Scope 1: Direct emissions from the consumption of natural gas, heating oil, diesel fuel and gasoline. Our Scope 1 emissions increased by 25% from FY18. We believe that an important factor was a particularly cold winter in North America, which increased use of heating oil. The number of sites reporting natural gas consumption also increased.
  • Scope 2: Emissions from purchased and consumed electricity and long-distance heating consumption. Our Scope 2 emissions decreased by 3% from FY18, driven by a decrease in electricity consumption in Europe and the U.S.
  • Scope 3: In FY19, we saw a substantial reduction in employee air travel, which led to an 11% reduction in CO2 emissions from FY18. These figures reflect air travel booked through our corporate travel partners.

We measure CO2 emissions using the IPCC Guidelines for National Greenhouse Gas Inventories.

Conserving resources in our daily work

We use a variety of resources in our work. Besides power sources, we use office paper, packaging, water and materials related to distribution. We do our best to use only what we need. When we can’t avoid using resources, we strive to use recycled products.

Resource scarcity doesn’t affect only McKesson. Companies that aim to stay competitive in the long term must work toward closed-loop systems and use their resources responsibly. This approach makes sense from both an economic and an ecological point of view.

Use of resources: FY18-FY19*

 

FY18: U.S. and Canada

FY19: U.S., Canada and Europe

Materials recycled

15,307 tons

 

48,147 tons

 

Materials to landfill

Not reported

19,129 tons

Water use

339,449,541 liters

 

633,370,008 liters

 

To reduce our impact on the environment, we continuously improve the way we handle resources for our products, our services and our processes.

To hold ourselves accountable, we report on the total weight of materials that were recycled and went to landfill, and on water use. Our FY19 figures are higher because we added data from Europe. This will represent our new baseline for reporting.

Reducing water use

Water is a limited resource so we seek to reduce its use in our operations.

One way we’re limiting water use is by expanding smart irrigation programs in our facilities. This system adjusts watering times based on weather conditions and lets us check our water use remotely. Users can receive notifications about changes to the settings or equipment malfunctions. Automation saves water because the irrigation system runs less often, and it is easier to identify problems. During FY19, we expanded smart irrigation programs to include five sites and saved enough water to fill 4.4 Olympic swimming pools each year.

Hazardous waste

In the U.S., our Hazardous and Regulated Waste Management Program establishes standards to identify and manage hazardous and regulated waste and handle hazardous and regulated waste spills. Through the program, we make sure that accumulation and disposal of waste from McKesson facilities complies with international, national and regional regulations.

When it comes to e-waste, we partner with certified suppliers for both leased and non-leased assets. Leased electronic assets make up the bulk of our portfolio. When they’re returned, most are wiped clean and reused. If they can’t be reused, the parts are recycled. In Germany, we work with AfB to ensure that electronic assets are either resold or recycled. AfB is Europe’s first nonprofit IT company, and it focuses on providing employment opportunities for disabled workers.

We also report on total hazardous waste for McKesson Europe. In FY19, we generated 1,474 tons of hazardous waste, an increase from 750 tons in FY18. We believe this increase is due to more complete reporting across business lines and represents a new baseline.

Transport of reusable containers

In many of our businesses, we send medication to customers — including pharmacies and hospitals — in reusable containers. After the containers are unloaded and emptied at their destination, we use them for the next delivery. Our return system guarantees a smooth pick-up process. By reusing containers, we save valuable resources and avoid unnecessary waste every day.

Green decommissioning

When consolidating office space or moving to a new location, furniture can often go to landfill. In FY19, we partnered with a vendor that recycles, resells and donates furniture instead. To date, we have completed projects in Houston, Texas; Pittsburgh, Pennsylvania; and San Francisco, California. In the San Francisco project alone, we diverted 90 tons of waste and donated more than $38,000 of furniture to local nonprofits. The estimated CO2 offset as of the end of FY19 was 432 tons.

Reducing paper use in our operations

By going digital, we’re using less paper. Our initiatives range from paperless invoices and two-sided printing, which will cut printing by 34 million sheets of paper, to electronic handheld scanners for packing orders in distribution centers. Our Canada distribution centers will all implement paperless paystubs by the end of FY20. When we can't avoid using paper, we encourage use of recycled stock.

Donating unused medications and products to support patients

Part of resource conservation means ensuring that unused medications and medical supplies go to people and organizations that can benefit from them.

  • When people purchase medications and don’t use them, valuable products can turn into trash. A group of pharmacists from Italy’s LloydsFarmacia decided to do something about that. They joined forces with the City of Bologna, the regional health authority and other pharmacies to form Farmaco Amico. They invite customers to bring in unused medications that are valid for at least six more months and in unopened packages. A nonprofit partner collects and sorts the products. Then the products go to organizations serving patients without access to healthcare, in Italy and beyond. Narcotics, medications that need refrigeration, and free samples aren’t included in the program. AIFA, Italy’s national prescription drug agency, monitors the process.
  • Through our partnership with World Vision, McKesson’s Medical-Surgical business donated 229 pallets of supplies during FY19. These donations helped support important health initiatives in seven countries. They include programs that screen and treat young children in Somalia for malnutrition and promote better access to care for pregnant and nursing women in Zambia.
  • The returns teams at several distribution centers in Canada collect returned or damaged products and arrange for them to be donated to nonprofit outreach programs. They reduce waste while supporting their local communities.

Complying with laws and regulations

Our environmental commitment begins by adhering to all applicable environmental laws and regulations. Just as we take great care in the safety and security of our products, services and people, we are careful and thoughtful to minimize the effect of our company operations on the environment.

During the period covered by this report (April 1, 2018 through March 31, 2019), McKesson was in material compliance with all applicable environmental regulations.

  • FY19 Corporate Social Responsibility Report

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    Our Approach to Corporate Responsibility

    We focus on the issues that matter most, guided by our ICARE shared principles.

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    Employees & Communities

    We support the health of our employees, patients and the communities we touch.

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    Product Quality & Patient Safety

    It's crucial to deliver the safest products to the patients who count on us.

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  • Our Sustainability Initiatives

    1. Increasing LED lighting across facilities
    2. Monitoring and benchmarking energy use
    3. Pursuing environmental certification
    4. Reducing movement of inventory through our redistribution center model
    5. Recycling and reusing resources

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