The pharmaceutical industry presently contributes 4.4% of the world’s greenhouse gas emissions, a value that is expected to rise with a projected 15.9% growth by 2030.
Recently, the industry has placed a greater emphasis on reducing its impact on climate change, as shown by the surge in membership of rating agencies, employment of ESG officers, and disclosure statements and target setting in major public corporations.
Aurelio Arias, Director of Thought Leadership at IQVA
But much work is still to be done.
According to CPhI’s Sustainability Report 2023, despite growing demands to lessen environmental impact, the supply chain remains a major contributor to the pharmaceutical sector’s carbon footprint.
The principal issue is that this sector remains highly inefficient and has shown limited evolution over time. The report highlights that many processing methods used in business today are outdated and entrenched in tradition. The document estimates that these methods contribute to 90% of a company’s total consumption.
To tackle the pressing issue of environmental sustainability, a fundamental shift in the entire supply chain is necessary. The industry needs to assess these longstanding methods to update infrastructure and support eco-friendly practices.
As a significant contributor to climate change and global warming, the pharmaceutical sector has a rare opportunity to lead a cultural shift towards sustainability and ESG practices, inspiring other sectors to do the same.
The CPhI Sustainability Report 2023: Towards a Greener Future.
The emissions of others
When assessing a company’s emission sources, an international categorisation is employed which differentiates between three scopes: Scope 1 and 2 quantify emissions that can be attributed directly to the company. This includes both direct fuel consumption, e.g. for heating or transport, and emissions produced through the generation of energy purchased and consumed by the company, such as electricity bought from the grid.
In the pharmaceutical supply chain, Scope 1 emissions are apparent but only make up a minor portion of total emissions. Conversely, Scope 2 emissions have a substantial impact, notably in production processes.
According to the report, though, the most crucial emissions for the pharmaceutical industry are Scope 3 emissions. These involve third parties linked to the company, such as customers and suppliers. Scope 3 emissions make up the bulk of a company’s carbon footprint, but are challenging to measure accurately.
To limit global warming within the bounds of the Paris Agreement (below 2°C and potentially below 1.5°C), it is crucial that industries enhance their monitoring of emissions in this category and encourage their partners to significantly decrease them.
The problem of the small ones
Although numerous large firms have initiated the required alterations by creating novel facilities and production locations, smaller businesses are encountering difficulties. This is owing to the substantial expenditure involved in executing these endeavours.
This raises another issue: sustainability must become the goal of all in order to maximise the impact of different initiatives, but given the scale of the investment required, smaller companies may struggle to make the necessary changes to their existing systems and may need financial support from institutions.
To overcome this obstacle, the report also suggests the use of wider collaborative arrangements, where more advanced companies and innovative start-ups can share their knowledge, accelerating progress towards the goals of even those organisations that are struggling to keep up.
The regulatory knot
A final obstacle, according to the CPhI paper, is the regulatory framework: global environmental regulations, the paper explains, are too heterogeneous, complicating the work of companies that have to comply with requirements in different geographical areas. The researchers also denounce “a distinct lack of regulation and legislation on sustainability in the pharmaceutical sector, leading to reduced reporting and accountability”.
They therefore hope that companies will continue to lobby institutions for more harmonious regulation in the sector, thereby widening the pool of companies that can make sustainability commitments.
