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Net Zero Leaders in the Pharmaceutical Industry

The Pharmaceutical industry is responsible for 4.4% of global emissions.

The pharmaceutical sector, faced with rising stakeholder expectations and tightening regulations, is accelerating efforts to reduce its environmental impact. Several major players in the industry have committed to achieving Net Zero emissions as part of their corporate sustainability strategy. These leader are blazing the trail by implementing policies and undertaking initiatives, including the purchase of carbon credits, to accomplish this ambitious objective.

The pharmaceutical industry’s carbon footprint

The pharmaceutical sector is a significant contributor to global emissions. If it were a country, its carbon footprint would rank 9th in the world. Energy-intensive manufacturing processes, extensive distribution networks, and greenhouse gas-emitting propellants in inhalers drive up the industry’s climate impacts. Experts urge pharmaceutical companies to act, as unmitigated warming could strain global health systems and hinder access to vital medications.

While daunting, the mission is not impossible. Industries like tech and retail are demonstrating that reaching Net Zero is achievable. These commitments raise the bar for pharmaceutical companies to take equally bold climate action.

Major industry players are stepping up. AstraZeneca, Novartis, and Takeda have set ambitious Net Zero targets while investing in renewable energy, green chemistry innovation, and carbon removal. Their efforts are having ripple effects as peers follow suit. With collaboration and persistence, the pharmaceutical industry can curb its emissions in line with climate science.

AstraZeneca’s U$1bn of climate commitments

With over $26 billion in annual revenue, AstraZeneca is one of the world’s largest pharmaceutical companies. It manufactures blockbuster treatments ranging from diabetes to oncology medications.

In 2020, AstraZeneca announced its Ambition Zero Carbon strategy, aiming to achieve carbon neutrality across its entire value chain by 2030. This bold pledge puts AstraZeneca at the vanguard of climate action in pharma.

To meet its goal, AstraZeneca is transitioning to 100% renewable electricity at its sites by 2025. It is also optimizing manufacturing to curb emissions while partnering with suppliers to reduce their carbon footprints. AstraZeneca also plans to eliminate fossil fuel vehicles from its fleet by 2030.

Beyond its operations, AstraZeneca is developing a portfolio of over $1 billion in green investments. These include carbon removal and storage solutions expected to offset about 2.5 million tonnes of CO2 annually by 2025.

AstraZeneca’s commitment is spurring the industry to accelerate sustainability initiatives. Being the pioneer in the pharmaceutical industry to establish a bold net-zero objective that encompasses its entire value chain, AstraZeneca is setting a remarkable example that its competitors will have to strive to emulate.

Novartis to use 100% renewable energy by end of 2023

Headquartered in Switzerland, Novartis is a leading global medicines company with over $48 billion in 2021 revenue. Its therapeutic areas span eye care, immunology, and cardiovascular treatments.

In 2021, Novartis announced its aim to achieve carbon neutrality across Scopes 1, 2, and 3 by 2040. Scope 1 and 2 cover direct emissions from Novartis’ operations, while Scope 3 includes indirect emissions across its supply chain.

Novartis’ environmental policies are publicly available on the internet. The company has made meeting its Net Zero ambition a top priority, with a strong and focused approach in four crucial areas: sourcing renewable electricity, enhancing energy efficiency, promoting innovative green chemistry, and investing in carbon removal offsets.

Novartis is already sourcing 80% of its electricity from renewables. It is also optimizing production processes, deploying automation, and modifying fleet vehicles to curb emissions. The company is on track to source 100% of its power from renewables by the end of 2023.

Additionally, Novartis is pioneering molecular design techniques to develop medicines with lower environmental impacts. The company is actively investing in projects that focus on nature-based carbon removal, such as collaborating with Carbon Direct to expand the implementation of carbon forestry offsets.

By working toward Net Zero science-based targets, Novartis is positioning itself as a leader in green pharmaceutical manufacturing. Its multipronged approach can serve as a model for other companies.

Takeda Pharmaceuticals shows the way for Asia

Japan’s largest pharmaceutical company, Takeda Pharmaceutical generates over $30 billion in annual revenue from medicines treating conditions from cancer to rare diseases.

In 2021, Takeda announced its commitment to achieving Net Zero greenhouse gas emissions by 2040. It is working to reduce and offset its entire carbon footprint, including Scope 3 emissions from its supply chain.

Takeda is achieving its goal by increasing renewable electricity usage, improving energy efficiency at its sites, electrifying its vehicle fleet, and reducing emissions from business travel. It aims to cut Scopes 1 and 2 emissions 46% by 2030.

Takeda also collaborates with pharmaceutical industry partners and suppliers to curb emissions across its value chain under the Pharmaceutical Supply Chain Initiative. And it plans to utilize carbon removal offsets for hard-to-abate emissions.

Takeda’s pledge to achieve Net Zero marks a groundbreaking moment for the pharmaceutical industry in Asia and beyond, as they lead the charge towards comprehensive decarbonization. It’s 2040 target and interim science-based milestones demonstrate meaningful leadership.

Pharma’s challenges in reaching Net Zero

Despite strong commitments from sustainability front-runners, achieving net-zero emissions poses complex challenges for pharmaceutical companies. Many production processes inherently rely on fossil fuels as heat sources and for transporting materials. Companies need major capital investments to transition these operations to clean energy alternatives.

Pharmaceutical distribution and long, complex supply chains also make emissions reductions difficult. Cold chain storage and last-mile delivery result in substantial greenhouse gas outputs. Meanwhile, developing green chemistry solutions requires years of research and development, along with new manufacturing infrastructure. These costs can be prohibitive.

Overcoming Challenges

While obstacles exist, experts emphasize they can be solved through collaboration, innovation, and policy action.

Companies can join forces and share their knowledge and resources through initiatives like the Pharmaceutical Supply Chain Initiative. This collaboration enables them to  expand their renewable energy procurement, boost their efficiency, and make strides in green chemistry.

Governments can help by offering incentives for clean technology investments and funding research into pharmaceutical process improvements.

International cooperation can accelerate decarbonization of global supply chains. And standardized offset methodologies will ensure carbon removal credits have integrity.

Ultimately, reaching Net Zero will depend on persistence, investment, and cross-industry partnership. But the health and environmental benefits make it imperative for pharmaceutical companies to see it through.

Opportunities from Net Zero efforts

Pursuing Net Zero targets also opens up opportunities for pharmaceutical companies to add business value, beyond environmental benefits. Optimizing processes for energy efficiency provides cost savings from reduced power consumption and heating needs. Streamlining supply chains also cuts costs over the long term.

First movers on Net Zero goals can boost their reputations with consumers and investors, who increasingly prioritize sustainability. These companies may have better talent recruitment and retention.

Developing and marketing lower carbon medicines can become a competitive advantage. Doctors and health systems are paying more attention to the climate footprint of drugs.

AstraZeneca’s partnerships have the potential to unlock opportunities for companies to venture into the burgeoning green investment markets. Through these collaborations, businesses can not only contribute to the sustainability of our planet but also reap financial benefits by investing in carbon removal and renewable energy projects.

Finally, building climate resilience helps ensure business continuity as the physical impacts of climate change accelerate.

Government policy propels climate action

Governments are ramping up policies aimed at decarbonizing pharmaceutical value chains through incentives and requirements.

The Inflation Reduction Act of 2022 in the United States presents an extraordinary opportunity, providing over $60 billion in incentives dedicated to fostering energy efficiency, electrification, and groundbreaking advancements in green chemistry. This can offset costs for companies pursuing these strategies.

The EU’s pharmaceutical strategy aims to make drug manufacturing and distribution more sustainable by implementing green product design and procurement requirements. This will help reduce emissions.

India released a roadmap in 2022 pushing pharmaceutical companies to adopt renewable energy and assess Scope 3 climate impacts. It aims to help India meet its national climate targets.

Such policies encourage pharmaceutical companies to take ownership of their emissions and are likely to expand as more governments declare net-zero commitments.

The Road Ahead

While the 2030s and 2040s may seem like distant milestones, reaching Net Zero requires immediate action across pharmaceutical supply chains. Industry leaders have provided a blueprint – including renewable energy procurement, distribution optimization, green chemistry, and carbon removal.

New technologies and nature-based solutions are expanding decarbonization opportunities. With collective willpower, strategic investment, and transparent reporting, Net Zero is within the pharmaceutical industry’s reach. All stakeholders must maintain pressure and hold firms accountable for their pledges for a sustainable future.

Photo credit

Photo by Myriam Zilles on Unsplash