Pharma Prescriptions for Their Own Environmental Impact by Marcia Robbins, July 26 2022, 0 Comments
The pharmaceutical industry has an outsized impact on the environment. Historical data on carbon emissions has mostly focused on the industrial sector, with very little information on the carbon footprint for the global healthcare sector.
But according to research reported in the Journal of Cleaner Production in March 2019, the emissions output of the pharmaceutical industry is 55% higher than that of car manufacturers. The authors of this study believe it to be the first assessment of the global carbon footprint of the pharmaceutical industry, but they acknowledge the difficulty of tracking reliable data trends over time.
There has been a shift in the pharmaceutical industry with more and more companies pledging transparency and setting their own targets and various standards to address sustainability on a global basis.
While the industry as a whole has a long way to go, the world has looked to pharma for solutions to the pandemic. The spotlight may linger on how these companies balance their profitability goals with social and environmental expectations.
With the difficulty in finding research on an overall industry assessment, let’s take an anecdotal look at five of the top revenue-generating pharmaceutical companies across the world and see what they are doing to address the climate crisis and work towards a more sustainable future in their implementation of progressive Environmental, Social, and Governance (ESG) strategies.
A Few Relevant Programs and Ratings for Pharma Companies
The UN Sustainable Development Top 17
In 2015, the United Nations Member States adopted 17 Sustainable Development Goals (SDGs) as calls to action for all countries in global partnership. These SDGs address poverty, health, education, inequality, economics, the environment, and climate change. Many pharmaceutical companies have made specific commitments to address them.
As part of the Energize program, ten pharmaceutical companies have committed to engage their suppliers to support the adoption of renewable energy and reduce greenhouse gas emissions within their supply chains. The companies include Pfizer, Sanofi, Takeda and Novo Nordisk profiled below.
CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. The world’s economy looks to CDP as the gold standard of environmental reporting with the richest and most comprehensive dataset on corporate and city action. In 2021, 13,000+ companies, which represent over 64% of global market capitalization, disclosed through CDP, including the leading pharmaceutical companies. CDP rates companies on their conservation efforts with grades for climate change, water security, and forests, scoring from D- to A for each of the three.
Founded in 2007, EcoVadis is the largest provider of business sustainability ratings, with a global network of more than 90,000+ rated companies. About half of the top 25 pharma companies are rated by EcoVadis, including Sanofi, Takeda and Teva profiled below.
A Cross-Section of Global Pharma Action on Climate Change
Here is an overview of environmental efforts by five pharmaceutical companies--four in the Fierce Pharma Top 20 Pharma Companies by 2021 Revenue—Pfizer #2 (U.S.), Sanofi #9 (France), Takeda #11 (Japan), and Novo Nordisk #17 (Denmark), plus the leader in their generics ranked companies--Teva #1 (Israel).
Pfizer (New York, NY)
Pfizer leaped into the #2 revenue slot with its COVID-19 vaccine and almost doubled its revenue from 2020 to 2021. The company’s ESG strategy covers six key areas: product innovation; equitable access and pricing; product quality and safety; diversity, equity and inclusion; climate change; and business ethics.
On climate change initiatives, the company has set an interim target to reduce Scope 1 (direct production) & Scope 2 (indirect/purchased energy) emissions 46% by 2030 compared to a 2019 baseline. Their overall goal is to reduce company emissions 95% by 2040. Pfizer also intends to source 80% purchased renewable electricity by 2025, enroute to 100% by 2030.
Pfizer has committed to helping achieve the 17 Sustainable Development Goals (SDG) established by the United Nations (UN).
Sanofi (Paris, France)
Ranked #9 with 7% growth to $44.67 billion in 2021 revenue, Sanofi has built its business in immunology.
Planet Mobilization is the company’s global environmental sustainability program. It addresses the whole life cycle of their products, from raw materials in production to disposal by patients. The company has joined the Race to Zero initiative with a global commitment to net-zero carbon emissions by 2050.
Sanofi has three main sustainability goals:
- Reach carbon neutrality by 2030,
- Limit their environmental footprint and adopt circular solutions, and
- Improve the environmental profile of their products.
The company has also developed a fact sheet outlining its work to address the UN 17 SDGs.
Sanofi made a double A grade in the CDP list for positive impact on Climate Change with 200 companies and Water Security with 118 companies. The only other pharmaceutical company in the top 20 by revenue to earn two ratings is Astra Zeneca, while Novo Nordisk earned one A rating.
In France, all Sanofi sites are powered by renewable electricity and the company commits to doing the same in its global operations by 2030. From 2019 to 2030, Sanofi has committed to a 55% reduction in its greenhouse gas emissions from its own activities and 14% reduction from its value chain.
Takeda (Tokyo, Japan)
Takeda ranked #11 in revenue generation for 2021 growing 5% to $31.55 billion. Growth of the company is fueled by its inflammatory bowel disease drug.
The company has been active in its environmental stewardship initiatives for nearly 50 years and has ambitious goals. “Protect our Planet” is embedded into its corporate philosophy with the company putting environmental sustainability into its core operations.
Takeda has set three main priorities:
- Minimize the environmental impact of products and services, based on principles of a circular economy,
- Decarbonize their value chain, and
- Empower their employees to go above and beyond to conserve the world’s natural resources.
The Climate Action Program at Takeda has an overarching goal to achieve net-zero carbon emissions. This is structured around local energy efficiency initiatives to reduce GHG (greenhouse gas) emissions from its operations and increase renewable energy sources.
- By 2025, the company has committed to reduce GHG emissions by 40% from its 2016 levels and cut Scope 3 emissions (indirect in the value chain) by 15% based on their FY2018 levels.
- Before 2035, Takeda is working to achieve net-zero GHG emissions in its operations and by 2040 plans to reach net-zero for its entire value chain.
- The company also plans to achieve zero waste-to-landfill status for all its major locations by FY2030, and by 2025 will reduce their water withdrawal by 5% from a FY2019 baseline.
Novo Nordisk (Bagsvaerd, Denmark)
In 2021, Novo Nordisk ranked #17 with $22.38 billion in revenue, led by its semaglutide franchise, with expansion into diabetes and weight loss.
Novo Nordisk earned an A on the CDP Climate List, along with 200 companies in 2021 and a B ranking in Water Security. The company achieved a 43% decrease in its overall CO2 emissions from in-house operations and transport compared to pre-COVID levels in 2019. In 2020, the company achieved a significant landmark of using 100% renewable power across their global production pipeline.
During Climate Week 2021 in New York City, Novo Nordisk was awarded the RE100 Key Collaborator Award for its work to accelerate the global transition to 100% renewable energy.
By 2030, Novo Nordisk intends to have zero net emissions of CO2 from its own production facilities, offices and labs. They also expect all direct suppliers to source 100% renewable power by then. By 2045, the company has committed to reach net-zero emissions across their entire value chain.
Novo Nordisk has also made strides on reducing the use of fossil-based plastic used in the production of pre-filled pens for diabetes. Over the past year, they piloted a take-back initiative that shows it is possible to reclaim and reuse the plastic that makes up to 3/4 of these devices.
Teva (Petah Tikva, Israel)
Teva has been in business since 1901, and with almost $8.99 billion in revenue is the leading global supplier of generics. In its annual 2021 Environmental, Social, and Governance Progress Report, Teva highlights up front that “ESG at Teva is everyone’s business,” emphasizing the company’s desire to integrate sustainability throughout its operations.
In 2021, the company integrated ESG into its financing strategy with a $5 billion bond linked to its sustainability objectives. The bond was the first in the pharmaceutical industry tied to both environmental and social targets. It therefore holds the company accountable for reductions in greenhouse gas emissions and increases in access to medicines in low and middle-income countries, while also creating long-term value for shareholders.
Teva has been a signatory of the UN Global Compact since 2010 to help achieve the UN SDGs. In 2021, its ESG rankings included top 17% of sector companies in the S&P Global, top 12% in the EcoVadis rating. The company has linked its ESG targets to executive compensation.
Teva also reported reductions in its impact on the planet with the following reductions:
- 9% in scope 1 and 2 GHG (greenhouse gas) emissions since 2019,
- 0% total scope 3 GHG emissions since 2020, and
- 8% total water withdrawal in projected water stress areas since 2020.
The company also increased its energy efficiency by 6% over 2020. EcoVadis ranked Teva in the top 1% on sustainable procurement, with the company’s prioritization of sustainability in their supply chain partners.
What these short company summaries tell us is that the leading pharmaceutical companies around the world are operating more transparently than ever—they are setting a wide range of Environmental, Social, and Governance goals and they seem to be delivering on commitments to reduce their carbon footprint in line with international standards. Let’s hope the leadership shown by these companies serves as an example for how revenue and shareholder value are enhanced by ESG programs. It results in good and healthy business.