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If your company is a supplier of either goods or services to the pharmaceutical industry, you surely will have noticed the rapid changes around sustainability. This can be bewildering, especially if you are engaged in a business relationship with more than one major pharmaceutical supply chain. This is driven by a rapidly changing political, demographic, and physical climate that has introduced serious risks to the long-term health of the business environment and the physical health of humans around the planet. This, in turn, has caused industry leaders to stake out leadership positions that force rapid action from their suppliers and other vendors. If it feels like a lot to process, don’t worry. Here’s what you need to know:
First, the root cause of the whole issue is one we should all be familiar with, but just in case, this video is a quick explainer about what is driving climate change. This global threat to human health and welfare has been calculated, with the World Health Organization (WHO) identifying that climate change is expected to kill 250,000 people per year on average in the next couple of decades. The WHO used its ability to convene international leaders by assembling the Alliance for Transformative Action on Climate and Health (ATACH), which put together several working groups. Of note:
A parallel effort called the Sustainable Markets Initiative (SMI) was convened by England’s King Charles III in 2020 to bring together many of the same players in government, finance, and industry. This entailed creating a Health Systems Task Force, which included the leaders of NovoNordisk, Merck, Sanofi, Samsung Biologics, Roche, AstraZeneca, GlaxoSmithKline, and others. These leaders concluded their work by creating a series of supplier targets published in an open letter. It commits their companies to sourcing from suppliers that do the following:
Finally, the pharmaceutical industry is particularly sensitive to climate regulations, as over 34% of the industry (by market cap) is headquartered in Europe, including the majority of the leadership of the SMI Task Force. This is important, as regulations in Europe and the UK lead the world in the transition to our net zero future. You can read about these regulations on Aclymate’s website or get a summary in the video, but it is important to understand that these climate commitments are backed by diverse regulatory requirements that are only increasing with time. This is here to stay.
The first thing to focus on here is that the time to get started is very short. You will need to both put together a climate emissions accounting solution this year, but you’re also going to need to set climate goals in line with SBTi. The climate solution you choose will need to capture Scope 3 emissions and help you to reduce your emissions moving forward, so this is pretty unlikely to be something you do by spreadsheet yourself. Your environmental branding will likely require you to work with a solution that specializes in carbon accounting.
The next thing to understand about climate is that it expands the definition of a supplier to include more than those who provide physical products. Now, service providers that are in general service categories such as marketing or consulting will be required to report. Aclymate is already helping companies like this, including Xavier Creative House and Reason Research.
Pfizer has not only been a leader within the pharmaceutical industry on climate, but a leader globally on climate, establishing one of the first Science Based Targets with the Science Based Targets Initiative (SBTi) in 2015. Notably, this happened before the agreement in Paris which set the goals to be more internationally known, making Pfizer a true leader on the issue. Their leadership on climate goes back even further, with recognition from CDP all the way back in 2007 for their position on climate.
In the present, Pfizer’s laudable goals for 2040 (ten years ahead of the net-zero standard requirement) include:
Pfizer suppliers must have established an emissions baseline by 2022 and set a greenhouse gas reduction target in line with SBTi goals by the end of 2025.
Bottom line: If you want to do business with Pfizer or companies that do business with Pfizer, you’d better rapidly start accounting for and reducing your climate-related emissions and have the ability to demonstrate your track record.
Johnson & Johnson hasn’t taken as ambitious a position as Pfizer and seems to be getting caught up in industry standards rather than leading them. That said, Johnson & Johnson has set climate goals.
According to Johnson & Johnson’s Position on Responsible Supply Base, vendors should be “embracing sustainability and operating in an environmentally responsible manner”, and will be selected based upon adherence to this standard. They take this further by stating that they look to take a leading role in sustainability beyond compliance, leaning particularly into green business certification programs, specifying CDP’s Supply Chain Program and EcoVadis scores by name.
GSK has committed to reducing its carbon footprint and environmental impact, including a SBTi-approved 2045 Net Zero commitment. Its commitments include:
Across its value chain, about 93% of emissions come from Scope 3 emissions, with 40% of GSK’s footprint coming from its supply chain.
GSK is a signatory to the Sustainable Markets Initiative’s Health Systems Task Force and has already demonstrated commitment to the reduction of supply chain emissions. This includes their Sustainable Procurement Programme, which requires suppliers to take action and report results on emissions, energy, heat, transport, waste, water, and biodiversity. They are also working through their Energize program to help suppliers acquire renewable energy. Finally, they are sponsoring Converge, a collaborative supply chain initiative to address the environmental impact of labs within their supply chain.
If your company is working with GSK, you likely know that they put a premium on EcoVadis scoring, so make sure to find a good carbon accounting company or carbon accounting tool to help you find ways to decrease your carbon footprint.
AstraZeneca has a strong focus on sustainability and has set ambitious targets to reduce carbon emissions. Similar to Pfizer, AstraZeneca is a true leader in climate, being one of the first seven pharmaceutical companies in the world to set an SBTi-approved goal for their Scopes 1-3 emissions. They are also one of the signatories to the SMI Health Systems Task Force on supplier emission reductions.
Their Ambition Zero Carbon plan includes both strong emissions reductions goals and one of the best carbon offset programs anywhere in corporate sustainability. Specifically, it includes:
AstraZeneca is actively engaging and requiring its supply chain to measure, reduce and report its carbon footprint. Any company interested in working with AstraZeneca or their suppliers will need to do the same.
Sanofi – like GSK and AstraZeneca – is a signatory to the SMI Health System Task Force letter, committing to reducing supplier-related emissions and has made a SBTi Net-Zero commitment. They also use EcoVadis scores to evaluate members of their supply chain. Their goals include:
While specific data requirements may not be publicly disclosed, these pharmaceutical companies are committed to sustainability and expect their suppliers to align with their environmental goals and initiatives, including efforts to reduce carbon emissions and improve overall environmental performance. While there are too many pharmaceutical and healthcare companies to list here, the industry is clearly trying to become a leading sector in decarbonization, including throughout its supply chain.
Companies that operate within these supply chains, including lower-tier suppliers, must rush to incorporate sustainability principles and practices into their operations. Not only will it help with gaining and retaining the customers you need, it will help your company with positive environmental branding, hiring and retention from the climate generation, and it will set you up to best weather our climate-constrained future.
It is unclear whether companies that invest in carbon credits will be able to count them towards their sustainability audits, but they should report their carbon credit certificates as many SBTi claims will require offsetting of their supply chain and will likely priortize purchases from suppliers that have already offset their emissions.
If you’re ready to get started, connect with us here at Aclymate! We’re the most affordable climate solution on the market and we were built with you in mind. Pharmaceutical suppliers have a special offer by signing up here.