Setting sights on suppliers: How biopharma is tackling the environment in its ESG commitments

When it comes to the health of the planet, it’s not enough for pharmaceutical companies to simply clean up their own operations.

“We can’t make changes happen at a large scale individually as companies,” James Goudreau, head of environmental sustainability external engagement at Novartis, said on a recent Fierce Biotech panel.

“Even as we clean up our own operations and move as quickly as possible, we know we have to not just demand that our partners improve their performance … but we have to provide them avenues, education, opportunities to collaborate,” Goudreau said. “We have to remove obstacles and barriers for them as well.”

The sentiment was shared by all panelists—five executives engaged in environmental sustainability efforts at some of the biggest and most ecologically conscious biopharmas in Europe and the U.S.

Ultimately, they agreed initiatives can’t stop with emissions from a company’s own factories and sales fleets. Instead, drugmakers need to “be willing to partner with their supply chain” at all levels, Goudreau said.

Nature's call to action

According to reports from Health Care Without Harm—a nongovernmental organization focused on reducing the healthcare sector’s environmental footprint—healthcare contributes between 4% and 5% of global greenhouse gas emissions.

“[I]f it was a country, healthcare would be the fifth largest country in terms of greenhouse gas emissions,” Jason Snape, global head of environmental protection at AstraZeneca, said on the panel.

“So as a sector, we’re both part of the problem—but we’re also part of the solution,” he said.

“We also know that we’re already seeing disproportionate impact of the effects of climate change on the health of vulnerable communities,” Goudreau added. 

“This has to be a connection where people understand that human health is tied to planet health,” the Novartis executive said.

The issue isn’t purely internal, either, stressed Katrine DiBona, vice president of global public affairs and sustainability at Novo Nordisk.

“I think it’s important to stay focused on, you could say, two parts of our contribution: One is our own footprint and opportunities—we have to minimize that,” DiBona explained. The other major piece of the puzzle, according to DiBona, is drugmakers’ supply chains.

Focusing on scope 3

Novartis is representative of many manufacturers—and not just in pharma, either—insofar as 90% of the company’s environmental footprint is scope 3, Goudreau explained.

Scope 3 emissions, according to carbon accounting platform Net0, refer to the indirect environmental footprint that comes from a company’s value chain. For drugmakers, those scope 3 emissions could stem from suppliers, distributors or manufacturers.

Scope 1 emissions, by comparison, refer to direct emissions from sources owned or controlled by the company, such as manufacturing plants and sales force automotive fleets. Scope 2, for its part, refers to indirect emissions from the generation of electricity, steam, heating and cooling bought by the company.

“If you look at our industry, the majority of companies, over 80% of their carbon footprint is scope three, and so that’s the area where we have to focus as companies,” Jim Weidner, executive director of engineering technical authority and sustainability at Amgen, pointed out. As with Novartis, scope 1 and 2 emissions only comprise about 10% of Amgen’s environmental footprint, he added.

Beyond drugmakers’ own use of green energy and on-site renewables, “let’s collaborate on leveraging with suppliers and teaching them some of the things we’ve learned ourselves,” Weidner stressed.

Pharma’s green sentinels

Amgen, Novartis, AstraZeneca and Novo Nordisk form a sizable chunk of the industry’s environmental vanguard—each engaged in multipronged campaigns to cut carbon emissions, reduce waste and more. Even still, generics newcomer Viatris, born from the combination of Mylan and Pfizer’s Upjohn established medicines unit, agrees that the health of its patients and the health of the planet are inextricably linked.

For those just embarking on their sustainability quest, such as Viatris, one key piece of advice from Lara Ramsburg, the company’s head of corporate affairs, is to “just start.”

“Start where you are,” she said. “You have to start and build your way there.”

Viatris did just that in May with the debut of its 2021 sustainability report, which outlined the progress the company’s made so far as well as its goals for the future.

While Viatris may be new, it comes from two legacy organizations with a strong commitment to sustainability, Ramsburg said during the panel.

“2021, for us, our first full year as a company, also entailed our first year of really diving in and understanding our baseline, our footprint, how we worked together,” she said.

The company has set scope 1 and scope 2 emissions reduction targets of 42% and, by 2030, aims to hit a scope 3 reduction target of 25%, among other goals, Ramsburg added.

For the other drugmakers on Fierce Biotech’s panel, their current environmental initiatives are merely the latest steps in long-running sustainability programs. That’s the case for Amgen, for instance, which is currently rocking the third initiative in its Healthy Planet program dubbed "The Road to Net Zero."

Under the company’s “2027 ambition,” Amgen aims to achieve scope 1 and 2 carbon neutrality. Like many companies on the panel, Amgen hopes to tackle scope 3 by engaging closely with its suppliers, Weidner told Fierce.

Denmark’s Novo Nordisk, for its part, aims to have “zero environmental impact,” DiBona said on the panel. It’s accomplishing this by, among other measures, switching to renewable energy, designing eco-friendly products and working with suppliers who “share” the company’s mindset.

Under AstraZeneca’s "Ambition Zero Carbon" program, meanwhile, the British drugmaker is angling to achieve net zero greenhouse gas emissions by maximizing energy efficiency, tapping into renewable sources and investing in nature-based removals to compensate for its leftover footprint.

And Novartis, for its part, is rolling out renewable energy programs and natural climate solutions in order to become net zero by 2040. By 2030, the Swiss drugmaker aims to be carbon neutral across its value chain, too.

It’s important to note that decarbonization comprises just one part of the panelist companies’ wide-ranging sustainability tactics.

By your powers combined

Again, however, companies can’t stop with their own operations.

“If we’re going to ask our suppliers to change, we have to do what we can to try to remove barriers to enable access and to accelerate the rate of change across our shared supply chain,” Novartis’ Goudreau said.

One means of removing those barriers could be the Energize program, which Novartis, AstraZeneca, Novo Nordisk and seven other large pharma companies unveiled with Schneider Electric and Carnstone at the 2021 United Nations Conference of Parties (COP26) on climate change.

The concept is to engage “hundreds of suppliers in bold climate action and decarbonization of the pharmaceutical value chain,” Schneider Electric said in a release last year. The “pre-competitive” collaboration will specifically seek to help suppliers address scope 2 emissions through green power procurement, which will in turn reduce the participating companies’ scope 3 emissions.  

When it comes to collaborative programs like Energize, the next step for other companies is simple, according to Amgen’s Weidner: “If you’re not part of that program, or a similar program, please join.”

What’s more, “I think folks really need to understand how much you can benefit shareholders at the same time that you’re benefiting the environment,” he added.

At Amgen’s facility in Singapore, for instance, the company charted a 70% reduction in energy consumption. In tandem with that, the plant had one-fourth the capital cost, Weidner said.

“And again, that’s not theoretical. We’re comparing how much it costs to build our facilities for traditional and new designs: It was half the construction time, and it’s half the operating cost.”

“Please don’t look at sustainability at something you add to your program,” he added. “Incorporate it upfront. Incorporate it into your business processes, incorporate it into your designs and incorporate it into how you operate.”