Big Pharma and Sustainability: Tracking Companies’ GoalsBy
Pharma companies launch sustainability initiatives for internal operations and their supply chains to help achieve international climate-change goals.
By Patricia Van Arnum, DCAT’s Editorial Director, and Miranda Greenberg, DCAT’s Editorial Coordinator
Global action in motion
International initiatives, such as the Paris Agreement, a global treaty on climate change, and the recent United Nations Climate Change Conference, held in Glasgow, Scotland, in November 2021, have served as an impetus for stakeholders, including companies, to accelerate their sustainability targets. More than 195 countries have signed the Paris Agreement, which set a goal to limit global warming to 1.5°C, compared to pre-industrial levels. To achieve this, the overall goal is to cut greenhouse emissions globally by half before 2030 and to reach net-zero emissions by 2050. “Net-zero” emissions refer to a state in which the greenhouse gases going into the atmosphere are balanced by their removal out of the atmosphere. This goal takes collective action by governments and businesses, and the bio/pharmaceutical industry is part of that effort.
The large bio/pharma companies and their suppliers are part of that effort. Tables I–IV outline the key sustainability targets set by the large bio/pharma companies. Their goals reflect targets to reduce direct greenhouse gas emissions in their own operations (Scope 1 emissions) and indirect greenhouse gas emissions (Scope 2 emissions) that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, and vehicles). Another part of that effort is to reduce so-called “value-chain emissions” (Scope 3). Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but impacts its value chain, such as those emissions from logistics/transportation of product flows and emissions from suppliers.
Many of the large bio/pharma companies have accelerated their environmental targets to contribute to the long-term international targets to achieve net-zero emissions globally. Highlights from the top 20 bio/pharmaceutical companies are outlined below and in Tables I-IV.
|Table I: Large Pharma Companies’ Key Sustainability Goals: AbbVie, Amgen, Astellas Pharma, AstraZeneca, Bayer|
|AbbVie||Reduce absolute carbon emissions 25% by 2025 and achieve 100% zero waste to landfill by 2035.|
|Amgen||By 2027, achieve 100% carbon neutrality (Scope 1 [direct emissions] & Scope 2 (indirect emissions), a 40% additional reduction in water consumption, and a 75% additional reduction in waste disposed.|
|Astellas Pharma||By fiscal year (FY) 2030, Reduce greenhouse gas (GHG) emissions (Scope 1 [direct] and Scope 2 [indirect]) by 30% from FY 2015 baseline. By FY 2030, reduce Scope 3 emissions (value-chain emissions) by 20% from 2015 baseline.|
|AstraZeneca||Eliminate carbon emissions from its global operations by 2025 and to ensure its entire value chain is carbon negative by 2030. By 2025, to achieve zero carbon, convert 100% of its energy consumption to renewable sources for both power and heat, and have a 100% electric vehicle fleet. By 2030, engage suppliers to reduce their direct emissions and identify carbon removal options with the goal of becoming carbon negative across its entire value chain.|
|Bayer*||Achieve climate neutrality by 2030 (Scopes 1 [direct] and 2 [indirect] and net zero emission across its entire value chain (Scopes 1, 2 and 3) by 2050. This involves by 2030 to reduce CO2 emissions from its own business operations by 42% (base year 2019) in absolute terms and Scope 3 (value chain emissions) by 12.3% in absolute terms as well as to source 100% of procured electricity from renewable energies by 2030.|
Source: Company information
Highlights from AstraZeneca, Amgen, Bayer
AstraZeneca. AstraZeneca has dubbed its strategy for achieving net-zero emissions as “Ambition Zero Carbon.” In January 2020, AstraZeneca provided details of that strategy, which involves plans to invest $1 billion to achieve zero-carbon emissions from its global operations by 2025 and to ensure that its entire value chain is carbon-negative by 2030.
In order to achieve zero carbon by 2025, AstraZeneca plans to reduce total energy consumption by 10%, double energy productivity (based on a 2015 baseline), convert 100% of its energy consumption to renewable sources for both power and heat, and have a 100% electric fleet. In addition, the company has pledged to engage its suppliers to reduce their direct emissions through 2030 and identify carbon removal options that will lead to more carbon dioxide removed from the atmosphere than added to it. This will result in AstraZeneca becoming carbon negative across its entire value chain by 2030. To achieve that, the company aims to reduce selected Scope 3 emissions (i.e., value chain emissions) by 20% from 2015 to 2025.
In addition, the company has set a goal by 2025 to develop near-zero Global Warming Potential (GWP) propellants for pressurized metered-dose inhalers used in its respiratory products. AstraZeneca expects the propellant used in the next generation inhalers to have a GWP that is 90-99% lower than propellants used in older products.
The company is also involved in a reforestation plan as trees naturally remove carbon dioxide and can mitigate the effects of climate change. The company is partnering with reforestation organizations and governments in a number of countries to plant 50 million trees over the next several years; the first programs started in 2020.
Amgen. The “Road to Net Zero,” Amgen’s set of environmental sustainability targets, focus on achieving carbon neutrality from its operations, further reducing water use by 40%, and reducing waste disposal by 75% by 2027. Amgen’s 2027 environmental sustainability targets are designed to track the plan’s progress using a baseline taken from performance in 2019. This was because impacts from COVID-19 resulted in atypical results in 2020. Amgen’s approach to achieving carbon neutrality has a primary focus on innovative and efficient technologies to reduce and eliminate carbon emissions from Amgen-owned operations and procurement of renewable energy. For operations in which carbon emissions cannot be eliminated, Amgen supports additional environmental and sustainability projects that sequester or avoid greenhouse gas emissions. Additionally, Amgen’s plan includes engaging with its partners to assist with and encourage carbon reductions throughout its value chain.
Bayer. Bayer has set a goal of achieving net-zero emissions in its entire value chain (Scopes 1, 2, and 3) by 2050 and to be climate neutral (Scopes 1 and 2) by 2030. To achieve this, it has set a goal of reducing CO2 emissions from its own business operations by 42% (base year 2019) in absolute terms and Scope 3 (value chain emissions) by 12.3% in absolute terms as well as source 100% of procured electricity from renewable energies by 2030. These targets apply to all of Bayer’s businesses: pharmaceuticals, crop protection, and consumer healthcare.
In 2020, the company undertook a Scope 3 (value chain emissions) analysis to identify relevant reduction potentials. Possible implementation measures include giving suppliers incentives to use electricity from renewable energies, further optimizing logistics, and reducing packaging. Bayer is a member of the Together for Sustainability industry initiative, which provides a framework for assessing and auditing sustainability performance of supply chains for chemical companies and their suppliers through a shared infrastructure. Bayer heads up a working group on emissions reduction in the supply chain under that initiative.
Last month (December 2020), Bayer announced it is investing EUR 100 million ($113 million) for sustainable packaging in its Consumer Health Division to reach a target that 100% of Bayer Consumer Health’s packaging will be recyclable or reusable by 2030 and all packaging will include consumer-friendly recycling information. Within the same timing, the division’s packaging will include an average of 50% recycled content, and 100% of purchased paper will be sustainably sourced. Progress to-date includes: having shipping boxes include 80% recycled content by the end of 2021; started conversion of paper packaging across global brands to use certified paper from responsibly managed forests; implemented programs to transition to digital marketing and reduce the footprint of the division’s printed promotional materials; and assess 100% of new product development projects for sustainability performance across health, the environment, and product access.
|Table II: Large Pharma Companies’ Key Sustainability Goals: Biogen, Boehringer Ingelheim, Bristol-Myers Squibb, Lilly, Gilead Sciences|
|Biogen||By 2032, reduce absolute Scope 1 (direct) and Scope 2 (indirect) greenhouse gas (GHG) emissions 55% from a 2019 base year. By 2040, reduce GHG emissions by 100% from a 2019 base year.|
|Boehringer Ingelheim||By 2030, become carbon neutral in company operations: Scope 1 (direct) emissions and Scope 2 (indirect) emissions. Further reduce its overall water footprint, operational waste to landfill and resource use. Apply eco-design and green-chemistry concepts to all new products.|
|Bristol-Myers Squibb||Be carbon neutral in its Scope 1 (direct) and Scope 2 (indirect) emissions and reach targets of equitable water use, zero waste to landfill, and 100% electric vehicles in its fleet by 2040. These goals include 10% reduction in energy-use intensity and greenhouse gas emissions intensity, 25% reduction in waste to landfill, and 5% reduction in water intensity. Purchase 100% of the electricity it uses from renewable sources by 2030.|
|Eli Lilly and Company||By 2030, be carbon neutral in in its own operations: Scope 1 (direct) and Scope 2 (indirect) emissions. Secure 100% of purchased electricity from renewable sources and enhance tracking and reporting of emissions from its full value-chain.|
|Gilead Sciences||By 2025, reduce greenhouse gas emissions across Scope 1 (direct) emissions and Scope 2 (indirect) emissions by 25%, compared with its 2016 baseline.|
Highlights from Biogen, Bristol-Myer Squibb, Lilly
Biogen. In 2014, Biogen became carbon neutral by matching 100% of its electricity with renewable electricity (via unbundled renewable energy credits) and retiring carbon offsets (from certified landfill gas to energy projects) against the remainder of its Scope 1, 2 and 3 emissions. Following new guidance that avoided emission carbon offsets (i.e., offsets that still involve emitting activity as compared to
a negative emitting activity, which are referred to as “negative emission carbon offsets/credits”), which are not consistent with the Paris Agreement, Biogen re-evaluated its carbon neutral strategy and moved away from carbon offsets in 2019. While its long-term objective is to become fossil-fuel free, it says it may use both avoided emission and negative emission carbon offsets/credits in the short term as part of its overall climate strategy. It The company has set a goal of reducing absolute Scope 1 (direct) and Scope 2 (indirect) greenhouse gas emissions 55% by 2032 and 100% by 2040 from a 2019 base year. This new target is deemed consistent with reductions required to keep warming to 1.5°C, as outlined in the Paris Agreement.
As with other companies, green chemistry plays a role in Biogen’s sustainability strategy. In 2020, the company established formal green processes and standardized metrics across all modalities and for every drug it develops. The company’s small-molecule group began that process in late 2020 with other modality groups to follow in 2021.
Bristol-Myers Squibb. Last month (December 2020), Bristol-Myers Squibb updated its sustainability strategy on a global basis by setting new 2030 and 2040 goals. By 2030, the company will purchase 100% of the electricity it uses from renewable sources, and by 2040, it will be carbon neutral in its Scope 1 (direct) and Scope 2 (indirect) emissions and reach the targets of equitable water use, zero waste to landfill, and 100% electric vehicles in its fleet.
Eli Lilly and Company. Eli Lilly and Company has set several key sustainability targets for 2030: achieve carbon neutrality in in its own operations—Scope 1 (direct) and Scope 2 (indirect) emissions; secure 100% of purchased electricity from renewable sources; and enhance tracking and reporting of emissions from its full value chain. Although the company currently does not have specific reduction targets for Scope 3 greenhouse gas emissions (value-chain emissions), it is expanding the transparency and quality of related data and disclosures to identify opportunities to reduce its overall footprint as reflected in its 2030 goals.
|Table III: Large Pharma Companies’ Key Sustainability Goals: GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Pfizer|
|GlaxoSmithKline*||Reach net zero carbon by 2030 through several targets. By 2030, achieve net zero Scope 1 (direct) and Scope 2 (indirect) emissions across all its Biopharma and Consumer Healthcare* operations. By 2030, achieve net zero emissions across its entire value chain for its Biopharma business and select consumer healthcare brands/formats. By 2025, use 100% renewable electricity for Biopharma business and Consumer Healthcare* businesses.|
|Johnson & Johnson*||By 2045, achieve net zero carbon emissions across its value chain. By 2030, achieve carbon neutrality for its operations by reducing absolute Scope 1 (direct) and Scope 2 emissions (indirect) 60% from 2016 levels. By 2030, reduce absolute upstream value chain (Scope 3) emissions 20% from 2016 levels to deliver nearly 2.5 times the carbon footprint reduction compared to that of its own operations. By 2025, source 100% of electricity needs from renewable sources.|
|Merck & Co.||By 2025, achieve carbon neutrality across its operations. By 2030, reduce Scope 1 (direct) and Scope 2 (indirect) emissions 46% and Scope 3 (value-chain) emissions 30% by 2030.|
|Novartis||Achieve net zero emissions by 2040. By 2025, become carbon neutral in its operations: Scope 1 (direct) and Scope 2 (indirect) emissions. Be carbon neutral across its entire value chain (Scopes 1, 2 and 3) by 2030 and be plastic- and water-neutral by 2030.|
|Pfizer||By 2030, be carbon neutral across internal operations, including reducing Scope 1 (direct) and Scope 2 (indirect) emissions by 46% from a 2019 baseline and influence reductions in its value-chain emission by 2025. By 2030, purchase 100% renewable energy.|
**Note: Targets for all of J&J. In, November 2021, company announced plans to split the company into two separate, standalone publicly traded companies, one focused on pharmaceuticals and medical devices, and the other on consumer health, effective 18-24 months from date of announcement.
Source: Company information.
Highlights from GSK, J&J, Merck & Co., Novartis, Pfizer
GlaxoSmithKline. GlaxoSmithKline (GSK) has set a goal of achieving net-zero carbon emissions by 2030 through several targets. By 2030, it aims to achieve net-zero Scope 1 (direct) and Scope 2 (indirect) emissions across all its Biopharma and Consumer Healthcare operations. By 2025, it has targeted 100% renewable electricity for its Biopharma business and Consumer Healthcare businesses. By 2030, it is targeting net zero emissions across its entire value chain (Scope 3 emissions) for its Biopharma business and select consumer healthcare brands/formats.
Last September (September 2021), GSK announced updates on efforts to achieve the company’s environmental goals, including new investment in renewable electricity at global manufacturing sites in the UK and US and a new initiative to reduce greenhouse gas emissions from its rescue-metered-dose asthma inhalers, which account for almost half of the company’s carbon emissions.
GSK is investing £50 million ($68 million) in the UK and US manufacturing sites to secure renewable power generation to support the target of sourcing 100% of global electricity usage from renewables by 2025. At its Irvine manufacturing facility in Scotland, the largest consumer of energy in the GSK global network, the company will invest in a long-term project for two new wind turbines: a 56- acre solar farm through a new 20-year power purchase agreement with its partner, The Farm Energy Company. The project will save 10,000 metric tons of CO2 annually and make a major contribution to reaching 85% onsite energy generation (55% from renewables). In addition, at Oak Hill in New York, a manufacturing facility in GSK’s Consumer Healthcare network, GSK is invested in solar energy production to achieve a target goal by the end of 2021 of converting 70% of power consumption to solar energy. GSK estimates that it has reduced carbon emissions in its operations by 10% over the last year, including switching to renewable energy for its Wavre vaccine site in Belgium.
GSK also announced last September (September 2021) that it has initiated an R&D program to redevelop and redesign its metered dose inhalers. A new lower greenhouse gas propellant is in preclinical assessment, with the potential to reduce greenhouse gas emissions from its inhalers by 90%. Approximately 45% of GSK’s carbon emissions come its metered dose inhalers.
Johnson & Johnson. Johnson & Johnson (J&J) has set an overall goal to achieve net-zero carbon emissions across its value chain by 2045. To reach this goal, it seeks to achieve carbon neutrality for its operations by 2030 by reducing absolute Scope 1 (direct) and Scope 2 emissions (indirect) 60% from 2016 levels. By 2030, it has set a target to reduce absolute upstream value chain (Scope 3) emissions 20% from 2016 levels to deliver nearly 2.5 times the carbon footprint reduction compared to that of its own operations. By 2025, it plans to source 100% of its electricity from renewable sources.
The company says it will achieve these goals through five main areas: (1) advancing energy and process efficiency; (2) sourcing renewable electricity (the company currently sources 50% of its electricity from renewable sources; (3) sourcing renewable heat (company is developing renewable heating systems and investigating zero-/low-carbon fuel use); (4) working with suppliers to develop emission-reduction targets; and (5) using nature-based climate solutions, such as carbon compensation and removal partnerships.
Merck & Co. Last April (April 2021),Merck & Co. announced goals to achieve carbon neutrality across its operations by 2025 and reduce its value-chain emissions by 30% by 2030. Merck says it will achieve carbon neutrality by increasing efficiency, reducing carbon emissions, applying sustainable building standards, and continuing to transition away from fossil-fuel use. Remaining Scope 1 emissions, which are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles), will be offset each year with a portfolio of carbon credits, including carbon removals.
Merck is also accelerating its previous 2040 goal by 15 years to source 100% renewable energy for its purchased electricity. Merck signed three new virtual power purchase agreements for utility-scale energy projects based in Texas and Spain. These projects will address approximately 35% of Merck’s Scope 2 emissions by collectively adding 145 megawatts of solar and wind energy to the grid. Scope 2 emissions are indirect greenhouse emissions associated with the purchase of electricity, steam, heat, or cooling.
To achieve the 30% reduction in Scope 3 emissions (i.e., value-chain emissions) by 2030, Merck says it will continue to engage with its suppliers to reduce their emissions, promote opportunities for suppliers to source renewable energy, and use existing procurement and supply-chain processes to drive additional ways to decrease emissions. Scope 3 emissions are the result of activities from assets not owned or controlled by a reporting organization, but that the organization indirectly impacts in its value chain.
Last month (December 2021), Merck announced its inaugural issuance of a $1-billion sustainability bond, which was part of an $8-billion underwritten public offering of notes that closed on December 10, 2021. Merck intends to use the net proceeds from this bond offering to support projects and partnerships in the company’s priority environmental, social, and corporate governance (ESG) goals. The bond transaction is in line with Merck’s newly introduced Sustainability Financing Framework, which facilitates the company’s use of sustainable capital markets to finance or refinance eligible projects that align with its ESG commitments.
Novartis. Novartis has an overall goal to achieve net-zero emissions by 2040. To achieve this goal, by 2025, it is seeking to become carbon neutral in its operations: Scope 1 (direct) and Scope 2 (indirect) emissions and be carbon neutral across its entire value chain (Scopes 1, 2, and 3) by 2030. It has also set a goal of becoming water- and plastic-neutral by 2020.
To achieve these targets, the company has an energy-management program that first involves right-sizing its business and improving energy efficiency; using renewable energy sources, such as wind and solar; and, finally, offsetting unavoidable emissions via carbon sequestration projects, such as tree planting. To increase its use of renewable energy, it has decarbonized its procured electricity in the US and Europe through the use of virtual power purchase agreements and also invested in four carbon offset projects in South America, Africa, and China.
As part of a supplier qualification process as it relates to sustainability, suppliers are required to disclose information and outline targets as it relates to emissions and water usage. Novartis works with various groups, including the Science-Based Target Initiative, the Carbon Disclosure Project, EcoVadis, and the Pharmaceutical Supply Chain Initiative. The qualification process is the first step and is followed by an implementation phase, with concrete actions and continuous improvements. In 2021, the company planned to release a dedicated Suppliers’ Sustainability Playbook to provide guidance to suppliers on how to efficiently manage the qualification and implementation phases and contribute to Novartis’ environmental sustainability targets. Based on the stage reached in the qualification and implementation phases, respectively, Novartis will assign a maturity level to each supplier to facilitate an open, transparent, and motivating environment for continuous improvement.
Pfizer. Pfizer has set goals to be carbon neutral across internal operations by 2030, including reducing Scope 1 (direct) and Scope 2 (indirect) emissions by 46% from a 2019 baseline. It is also targeting influencing reductions in its value-chain emission by 2025 by catalyzing suppliers to establish science-based targets by 2025. In addition, by 2030, it has set a goal to purchase 100% renewable energy.
In March 2020, Pfizer launched a $1.25-billion sustainability bond, which the company says was the first to be issued by a bio/pharmaceutical company. Proceeds from the bond will be used for meeting the company’s overall sustainability goals, including those related to environmental impact; increasing access to Pfizer’s products, especially to underserved populations; and the company’s overall social impact. In addition, in 2021, the company launched a $1-billion sustainability bond to help fund COVID-19 vaccine expenses.
Source: Company information
Highlights from Roche, Sanofi, Teva
Roche. In 2019, Roche began the process to develop and define new safety, health, and environmental goals for the next five years, with 2020 being the base year to compare with in 2021–2025. (Note: in 2021, the company changed the reference year to 2019 for some of the goals and correspondingly adjusted these goals because of distortions in the numbers in 2020 due to the COVID-19 pandemic).
Roche has begun a 10-year goal to reduce the environmental impact of its operations and products by 50% from 2020–2029, compared to 2019 levels. This involves, by 2029, achieving a 50% reduction of total environmental impact (eco-balance for operations and product stewardship score, based on internal company criteria) for products. Longer term, by 2050, it has set a goal to achieve real-zero greenhouse gas emissions for Scope 1 (direct) and Scope 2 (indirect) emissions. “Real-zero” greenhouse gas emissions refer to actual emissions reductions without offsetting through CO2 reduction certificates. By 2050, it is seeking to reduce Scope 3 (value chain) emissions.
Sanofi. Sanofi has a goal to achieve carbon neutrality by 2030 and achieve a 55% reduction of direct greenhouse emissions related to its operations (Scopes 1 [direct] and 2 [indirect] emissions). It is also seeking to improve the environmental profile of its products. Key targets include use of eco-design for 100% of new products by 2025, use of 100% of renewable electricity at all sites by 2030, and achieving a 100% carbon-neutral car fleet by 2030.
To help finance its sustainability projects, which include environmental targets as well as societal projects, such as increasing access to medicines, last month (December 2021), Sanofi announced two sustainability-linked revolving credit facilities: (1) a new EUR 4-billion ($4.3-billion) revolving credit facility expiring December 2025, with two extension options of one year each and (2) an amendment of EUR 4 billion ($4.3-billion) revolving credit facility that expired in December 2021 with the addition of two extension options of one year each.
Sanofi first signed a sustainability-linked loan in 2020 with 16 lenders, and the new sustainability-linked credit facilities reflects its strategy to become an active repeat issuer of sustainable finance instruments. In addition, in December (December 2021), the company issued its Sustainability-Linked Bond Framework to outline its criteria and goals for sustainability-linked bonds.
For value-chain emission reductions, Sanofi has also partnered with nine other bio/pharmaceutical companies to facilitate suppliers’ adoption of 100% renewable electricity and reducing greenhouse gas emissions through the ENERGIZE program. Members also include AstraZeneca, Biogen, GSK, J&J, Merck, Novartis, NovoNordisk, Pfizer, and Takeda. Companies in the program support suppliers in reducing their Scope 2 greenhouse gas emissions, i.e., the electricity companies buy, which in turn will reduce Scope 3 emissions, those that occur throughout the value chain such as transportation and distribution. The program is designed to enable pharmaceutical suppliers to learn more about renewable energy adoption and contracting. This gives suppliers, which may not otherwise have the internal resources or expertise available, the opportunity to participate in the market for power purchase agreements.
Teva Pharmaceutical Industries. Teva has set a goal by 2030 to reduce Scope 1 (direct) and 2 (indirect) greenhouse gas emissions by 33% vs. 2017 levels. It has also set a 2030 target to reduce Scope 3 (value-chain) emissions by 25%. Together, these environmental targets aim to reduce emissions across Teva’s value chain in line with the Paris Climate Agreement.
To meet these goals, last November (November 2021), the company issued a $5-billion sustainability-linked bond, the proceeds of which are linked to three targets, including a 25% reduction in Scope 1 and 2 greenhouse gas emissions and a 150% increase in access to essential medicines for patients in low- and middle-income countries by the end of 2025. Teva says that the $5-billion bond is the largest of its kind from any sector and the first issued by a generic-drug company.