Pharma Inc, Climate Change, Decarbonisation

Earlier this year Microsoft announced that it will become Carbon-negative by 2030. This boldness was not forced by COVID-19. It was a matter of course. Part of its strategic long-term plan. In doing so, it openly acknowledged the environmental damage caused by the industrial world that’s resulted in a one-degree Celsius rise in temperature, most of it in the last 70 odd years. It went a giant step further by stating that it will also reverse, by 2050, the Carbon emitted directly or through the energy it has consumed since 1975, the year it was founded. The company has also committed $1 bill to a Climate Innovation Fund. Importantly the company has confirmed that it has not only set ambitious goals but has a robust implementation plan grounded in math and science. And in principles that support continuous investment in relevant technologies, empowering its entire value chain towards sustainability, pushing the agenda on advocacy and providing new opportunities to its own employees in propelling this change. 

Microsoft is not alone. Some 1000 companies are taking action by setting science-based targets. Roughly 50 per cent have confirmed setting them and have announced them to the world. In this group are 15 Indian companies that have set and announced targets, notable names being Wipro and multiple Mahindra group companies. Just three per cent of the Universe!

Globally there are less than 20 pharma companies that have set and announced climate change-related emission targets. The boldest among them may be Novartis and Novo Nordisk. The latter has promised to reduce by 2030, 100 per cent of its Scope 1 and 2 emissions based on a 2019 base. The former will reduce by 2030, its Scope 1,2,3 emissions by a third from a 2016 base. There are no generic companies in this list and no Indian pharma company yet. Why are climate change and de-carbonisation not a big deal yet for the generic pharma industry? 

To be sure, references to UN Sustainability Goals have started making an appearance in Annual Reports of a few companies. There are efforts that some are making on reducing wastage and water footprint and increasing the use of renewable energy. These efforts are yet to take a lead role in shaping overall corporate strategy. It is only an extremely evolved leadership that is aware of India’s obligations as part of the Paris Treaty. To recap, the country has three obligations – 

1. Reduce emissions by a third by 2030, from 2005 baseline, 
2. Increase share of the power generated by non-fossil fuels to 40 per cent by 2030, 
3. Create an additional carbon sink of 2.5-3 Gigatons of CO2e by 2030 – from enhanced tree and forest cover (this would need 25 million acres of new forests with five billion native trees – a 15 per cent increase – roughly the size of Tamil Nadu in new forest cover). 

It is a fact that generic pharma companies have had some serious challenges in the last decade – shrinking health budgets, consolidating value chains, exponentially increasing regulatory expectations that have led to rapid commoditisation and shrinking growth and margins. Those that have ventured on the innovation curve have found the going tough. These challenges are non-trivial. And then came COVID-19. The pandemic gave an opportunity to the industry to do what it does best – focus on access amidst twin challenges of business continuity and China dependence. Access, affordability, value chain innovation, COVID-triggered workflow re-imagination, productivity, supply chain sustainability will continue to