Pharma companies are making commitments to environmental sustainability, yet practical barriers are making it hard to deliver on that commitment.
That’s according to a recent report out from global consulting firm Oliver Wyman that identified ways in which pharma companies can start to implement changes now that will have a large impact on the climate in years to come.
Fierce Pharma Marketing spoke with Oliver Wyman’s Health and Life Sciences Director Arun Mishra and Partner Oliver Eitelwein on the barriers standing in the way of environmental changes and what can be done to overcome them.
According to the report, the two biggest barriers to implementing environmental changes within the pharma manufacturing industry today include measuring and reducing Scope 3 emissions up/down the supply chain, followed by the upfront cost and difficulty in creating a financial business case.
In fact, the report showed a unifying theme of pharma lacking strategy on how to make a positive environmental change.
While many pharma companies have recently set environmental and emission goals, the team at Oliver Wyman worries that the goals may be too ambitious to fulfill in the next 15 years without a clear, tactical plan. And the biggest barrier to reaching these goals lies in Scope 3.
- Scope 1: Everything within the company’s production and buildings
- Scope 2: Supplied energy consumption
- Scope 3: Everything that originates from a supplier, third-party
“The problem is that 95% of suppliers are contractors and so changing a contractor’s processes is really hard,” Eitelwein said. “And the first step to getting there is to have transparency and a clear strategy, not just a target date. We work with clients and help them define these targets and face some of the current challenges.”
So while Scopes 1 and 2 rely heavily on transparency and the life cycle of a company’s assets internally—and seem more attainable by pharma organizations—Scope 3 relies on contractors truly understanding their contribution to the process.
This means Big Pharma has the responsibility to educate suppliers on compliance, understanding individual country’s drug regulations, a country’s energy supply regulations, etc.
Beyond regulations, a target and strategy for reducing environmental impact relies heavily on leadership buy-in.
“First, top leadership needs to buy in and take the long-term vision and break it down into smaller steps,” Mishra said. “Then there needs to be evaluation of the progress and accountability for your actions within the ecosystem as you move through the process. It’s not easy and that’s important to acknowledge—take it as you go.”
Some pharma companies are choosing to bring together their suppliers and train them in order to help them understand the science-based targets for sustainability. The idea is that if the suppliers better understand their carbon footprint, they will be better able to change it.
Eitelwein admits there are trade-offs to making a transition and financing these changes, but, in the end, it’s an important way to ensure good standing with investors.
“As pharmaceutical companies, we take pride and have a sense of duty—that emotional connection to what we actually do. So the climate is a problem, and we realize that it’s close to our lives and our responsibilities,” Mishra said.
“The commitment and transparency are important to progressing forward, even if they are just small steps,” Mishra added.