ESG has been topping the pharma agenda for some time, but recently, there’s been a step change, with growing momentum.
Individual businesses are moving away from working in silos, adopting a collaborative approach, sharing insights and learnings to benefit from the whole pharma industry’s ESG credentials. Greater emphasis is also being placed on ESG in tender and investment decisions – a cause for optimism.
This new phase in pharma’s ESG journey is an opportunity for the sector to make new inroads towards more sustainable, inclusive and responsible practices. Just as ESG cannot be shouldered by one department in any business, meaningful change will be accelerated if organisations work together and exchange learnings.
Pharmanovia has long been committed to doing business responsibly. Back in 2021, we set out to formalise our approach to ESG and launched our first sustainability report last year. This included integrating our ESG strategy into our business strategy, applying greater rigor to how we measured our carbon footprint and setting science-backed stretch targets, challenging us to re-think how we do business.
One year on, our second report shares the results of novel pilot schemes and what we’ve learned so far.
Pharma must not neglect Scope 3 emissions
The pharma industry is not historically a strong performer in terms of sustainability. The sector is a bigger polluter than the automobile industry, estimated to directly generate about 52 mega tonne of CO2 emissions. The operative word here is ‘directly’.
Indirect – Scope 3 – emissions from pharma’s value chains haven’t been factored into this figure and for a non-manufacturing company like Pharmanovia, these emissions account for a significant proportion of its carbon footprint.
To put this into context, Scope 3 emissions accounted for 99 per cent of Pharmanovia’s CO2 emissions in 2022. Yet, a recent industry report found just 16 of the 500 pharma companies polled currently measure their entire Scope 3 emissions. Understanding your carbon footprint across the supply chain is the first step towards a more sustainable business, but many aren’t accounting for the indirect impact they are having in their measurements.
We believe it’s our responsibility to hold our partners to the high standards we expect of ourselves and to choose to work with responsible, value-aligned third parties. Continual monitoring of third-party progress and commitment to ESG initiatives, must form a significant pillar of pharma’s ESG strategy. Holding partners accountable for how they conduct business and helping those falling behind to develop plans for improvement, offers pharma an opportunity to influence meaningful change.
Innovation can lead to carbon, waste and cost reduction benefits
After measuring our Scope 3 emissions in 2021, we recognised that global transportation was having one of the biggest impacts on our carbon footprint, so we challenged ourselves with mapping out a pathway to manage these emissions.
Last year, we launched a pilot programme to understand the impact transitioning from air to sea freight could have, focussing on our Spain-to-Australia freight route.
The pilot successfully avoided an estimated 470,000kg in potential CO2 emissions in 2022, equating to an 18 per cent reduction in our Scope 3 upstream transport emissions.
The innovative pilot not only delivered benefits in terms of carbon, but in waste and cost reduction, too.
Air freight is reportedly responsible for up to 80 per cent of all temperature excursions in the pharma industry, requiring medicines to be destroyed. During our pilot, no sea shipments experienced temperature excursions, thus reducing waste.
The transition also presented the opportunity for us to re-evaluate the expiry period of our medicines. Following testing, we were able to successfully increase the shelf-life of some products, once again mitigating and reducing waste, all while continuing to serve patients around the world.
We have now made a landmark pledge to divert 40 per cent of our air shipments to sea in 2023, and 75 per cent by the end of 2028.
Employees have the power to drive change
Sustainability shouldn’t be something we just talk about but something that we do. According to the World Economic Forum employees play a vital role as advocates and enablers of ESG strategies.
To engage our people with our strategy, we wrote ESG goals into employees’annual performance objectives, with everyone across our global officestied to ESG targets. This was an important move to encourage proactivity and ensure a sustainable lens was applied to our day-to-day work. We also have four employee groups designed to drive new initiatives in support of our ESG goals.
We can confidently say that we have seen first-hand how empowering employees can lead to great strides. Employees achieved a 98 per cent completion rate of compliance training, which included ESG modules.
It’s an approach that we will continue to adopt with new targets set for all employees each year.
The climate crisis is often badged as the challenge of our time and Pharmanovia has made rising to this challenge and sharing learnings its mission. The health of the planet is intrinsically linked to the health of its citizens, which is why baking ESG into every layer of our business is so important to us.
The strategies we have piloted have yielded great success, defining novel paths towards a more sustainable sector. This is not box ticking exercise though and there’s far more to be done. In the spirit of striving for continual improvement, we now look forward to new ambitious targets and working with our partners to deliver a healthier planet.