Recent research from GlobalData analyzed the Net Zero strategies of the world’s top 18 pharmaceutical companies by revenue. All of them — including giants like Pfizer, AstraZeneca, and Johnson & Johnson — have committed to the green transition, particularly through the reduction of Scope 1 and 2 emissions arising from direct operations and the use of electricity. Between 2019 and 2022, 17 out of the 18 companies were successful in doing so, with total combined emissions dropping from approximately 14 million tonnes of CO₂ in 2019 to 11 million tonnes in 2022.[1]
Beneath these encouraging headlines, however, lies a more complex picture. Scope 3 emissions — indirect pollution generated further up supply chains — represent about 90% of total emissions for most pharmaceutical companies and are far harder to weed out.[2] Companies are also navigating the business opportunities, and challenges, that emerge from implementing sustainability policies. And how does the green transition relate to other major industry trends, like the rise of automation and artificial intelligence (AI)?
A new report commissioned by life sciences leader Cytiva sheds light on the sustainability landscape in biopharma. Drawing from insights provided by industry professionals across 18 countries, the report outlines both the progress being made and roadblocks hindering further advancements. As sustainability becomes a business imperative, the report answers many of the industry’s burning questions around how biopharma companies and suppliers should respond — and poses some important new ones for those that haven’t kept pace.
Sustainability takes center stage
There is little doubt that sustainability has moved from a peripheral concern to a central focus in biopharma. The recent report published by Cytiva confirms this, highlighting that 62% of companies now consider sustainability a top priority for the next five years. There are clear reasons for this shift: the need to be compliant with evolving regulations, the ability to attract investment, and the desire to meet customer expectations. It turns out, sustainability is both an ethical responsibility and a competitive advantage.
Companies are realizing that sustainable practices can improve efficiency and even open the door to new opportunities. For some, setting measurable sustainability goals has directly boosted business performance. As an example, 42% of companies surveyed reported improved relationships with regulators thanks to their sustainability efforts. A portion of respondents also say they’ve negotiated more favorable terms with suppliers and attracted new partnerships by making sustainability a priority.
But challenges remain, including the difficulty that comes from trying to measure sustainability’s return on investment (ROI). While 55% of companies that track ROI report their sustainability efforts are meeting expectations, many struggle to implement or get a grip on the robust analytics around their carbon footprints. The complexity of emissions monitoring, especially Scope 3, is a headache for compliance teams. And without data demonstrating the financial and environmental benefits of their efforts, companies may hesitate to allocate resources toward further sustainability investments.
Leading the way: Sustainability pioneers
Amid these challenges, the recent sustainability report zooms in on a growing group of companies who have put sustainability at the front and center of their business strategies — and these “leaders” are reaping tangible rewards from their proactive approach. Over the past year, more than half of companies leading in sustainability efforts have seen an increase in revenue, profits, and share prices.
Meanwhile, companies that are slow to adopt sustainability practices are feeling the effects. These “late adopters” are seeing fewer benefits and facing greater risks, with 40% saying they are struggling to attract talent due to their lacklustre sustainability strategies. The report underscores the need for these companies to act swiftly if they hope to remain competitive. So, what can these late adopters learn from sustainability leaders?
According to the sustainability review, working together is key to accelerating sustainability progress in multiple directions. Leaders are committed to measuring their progress and working together with partners across the value chain; from coordinating efforts with suppliers to setting shared environmental goals, sustainability has become a thread running through everything they do. They understand that real progress requires collaboration, not just within their own operations but across the entire supplier ecosystem.
This level of collaboration will prove to be especially essential to efforts aimed at reducing Scope 3 emissions, which can’t be addressed unless each link in the supply chain plays its part. Still, many companies are eschewing the example set by industry leaders, struggling to engage suppliers and partners in meaningful, streamlined sustainability strategies.
For companies yet to make the leap into a sustainability-first future, technology is another key path forward. Automation, AI, and data analytics emerge as critical tools for achieving sustainability targets. 64% of biopharma professionals believe automation will be either moderately or extremely important for driving their sustainability efforts — even though fewer than a third of companies are currently deploying it. New carbon management platforms, for example, enable businesses to track their emissions in real time, driving more informed decisions about how to reduce environmental impact.
The path forward
Biopharma companies must move quickly to integrate sustainability into their core business strategies. Those that already are report improvements in their bottom line, better relationships with regulators, and overall market competitiveness.
However, the challenges that remain are significant. The complexity of tracking emissions, particularly Scope 3, and the difficulty in measuring the ROI of sustainability efforts continue to pose major barriers. Companies must invest in the right technologies and foster greater collaboration across the value chain to overcome these hurdles.
The full review from Cytiva includes in-depth industry insights to provide a comprehensive survey of the state of sustainability in biopharma. It highlights key ideas and strategies from the companies paving the way, giving business leaders still contemplating their approach to sustainability all the tools they need to get moving. Fill in your details to download the full report for free now.
[1] GlobalData Thematic Intelligence, Net Zero Strategies in the Pharmaceutical Sector, April 2024.
[2] Ibid.
