Top 10 Most Environmentally Sustainable Pharma Companies in 2023/2024

Top 10 Most Environmentally Sustainable Pharma Companies in 2023/2024

The pharmaceutical industry is a significant producer of greenhouse gas emissions, so it has a tough task in reducing its carbon footprint.

While individuals are encouraged to do their part to safeguard the planet, big corporations have perhaps a more significant role to play given their large carbon footprints.

The pharmaceutical industry is a large contributor to greenhouse gas (GHG) emissions. According to a 2019 study, the pharmaceutical industry produced 48.55 tonnes of CO2 equivalent (CO2e) for every $1 million earned. The sector accounts for 4.4 percent of the world’s emissions and its CO2 footprint is projected to triple by 2050 if left unchecked, according to the World Economic Forum (WEF).

The study also found that the pharmaceutical industry’s emission intensity was about 55 percent higher than that of the automotive industry. There was also significant variability in emissions, up to five times, between pharma companies with comparable revenues.

For example, Proctor & Gamble was found to emit almost five times more CO2e than Johnson & Johnson despite the two companies having similar revenue levels and producing similar lines of products. Similarly, Eli Lilly’s emissions were 5.5 times greater than Roche’s in 2015. In comparison, the variability between General Motors as the highest intensity emitter and Bavarian Motor Works as the lowest in the automotive industry was 3.5 times.

The report also found that 70 percent of healthcare emissions come from the pharmaceutical supply chain.

Sustainable efforts not only benefit human and animal health and the environment, but also benefit companies. According to Pfizer’s 2021 ESG report, the company saved about $3 million to $5 million after implementing emission reduction projects.

Many companies have pledged commitments to becoming more environmentally sustainable.

ESG Measure

The Environmental, Social and Governance (ESG) measure is a set of criteria used to evaluate a company’s impact and sustainability practices in three specific areas: environmental, social and governance. The indicator was introduced in 2004 but took off significantly in recent years, particularly during the COVID-19 pandemic, as it is seen as an overarching indicator of corporate responsibility in the areas that it covers.

The environmental criteria consider how a company performs as a steward of the natural environment relating to issues like climate change policies, carbon footprint, waste management, recycling practices, energy efficiency, use of renewable energy sources, conservation of biodiversity and management of environmental risks and opportunities.

Social criteria examine how a company manages relationships with its employees (such as gender and racial equity), suppliers, customers and the communities where it operates, while governance involves a set of standards for a company’s leadership, audits, internal controls and shareholder rights.

A strong ESG score can indicate that a company is well-positioned to withstand environmental and social challenges and has robust governance structures in place. Conversely, weak ESG performance may signal potential risks and liabilities.

A company’s ESG risk rating is comprised of a quantitative score and a risk category. Companies often produce their own ESG reports yearly to highlight their sustainability achievements, milestones and goals.

How Pharma Companies Can Be More Sustainable

Pharmaceutical companies can enhance their sustainability through a variety of strategic and operational initiatives that can include:

  • Implementing continuous manufacturing instead of batch manufacturing
  • Efficient packaging of materials to reduce transport space
  • Investing in green chemistry to reduce the use of hazardous substances and minimize waste in drug formulation and manufacturing processes
  • Adopting water conservation techniques and wastewater treatment processes to minimize water usage and pollution
  • Shifting towards renewable energy sources for manufacturing operations
  • Implementing a sustainable procurement policy that prioritizes materials and services that have a lower environmental impact
  • Designing drugs and packaging with the end-of-life in mind to enhance recyclability and reduce environmental impact
  • Implementing take-back programs for unused or expired medicines to prevent pollution and misuse
  • Partnering with governments, non-governmental organizations (NGOs) and other organizations to improve healthcare infrastructure and delivery in low and middle-income countries

Most Sustainable Pharma Companies in 2023/2024

Below are some of the most environmentally sustainable pharma companies in 2023/2024 (in no order) based on data from several different sources. These include the Corporate Knights’ 2024 Global 100 list, Barron’s 100 Most Sustainable US Companies 2024 list and insights from Sustainalytics.

Corporate Knights’ global sustainable companies list highlights the top companies increasing investments in green solutions such as renewable energy, energy efficiency and the circular economy. The assessment includes a measure of carbon productivity, which is based on a company’s revenue to scope 1 (direct GHG from sources like boilers, furnaces and vehicles) and scope 2 (indirect GHG emissions associated with the purchase of electricity, steam, heat or cooling) CO2e ratio. It also includes metrics of percent sustainable revenue, which is the revenue earned from products and services categorized as “sustainable” under the Corporate Knights Sustainable Economy Taxonomy, and sustainable investment, which is the percentage of capital expenditures, R&D and acquisitions deemed sustainable.

Barron’s Most Sustainable US Companies annual lists include various ESG metrics ranging from workplace diversity to GHG emissions. Sustainalytics conducts independent ESG and corporate governance research, ratings and analytics.

1.      Merck

In Barron’s 100 Most Sustainable US companies annual lists, Merck & Co., Inc. has consistently come out on top as the most sustainable pharma company for the past several years. In Barron’s 2024 report, Merck placed 38th overall, slipping nine spots from 29th overall in 2023. It made a major leap from 2022 when it was number 67 overall.

According to Sustainalytics, Merck had a medium ESG risk rating of 22.1.

In a 2023 statement, Merck said it was also recognized as an industry leader among America’s Most JUST Companies by JUST Capital and CNBC and America’s Most Responsible Companies by Newsweek and Statista for its sustainability efforts.

In its 2022/2023 Impact Report, Merck outlined its 2021 launch of its Low Carbon Transition Playbook (LCTP), a platform that includes a gap assessment to help the company’s global sites evaluate the maturity of their energy programs and help create plans to reduce carbon intensity. It also reaffirmed its commitment to green chemistry, having received the Peter J. Dunn Award for Green Chemistry and Engineering Impact, awarded by the American Chemical Society, for the third year in a row. Merck said the team that won the 2022 award reduced an 11-step synthesis for a product to just two steps, replacing toxic solvents with biorenewable ones. Merck has also won nine Green Chemistry Awards for innovative process improvements, with six awarded consecutively since 2017.

The company also outlined its waste diversion and water successes, including diversion of 60 percent of landfill waste from the company’s highest landfill-generating sites and a 17 percent reduction in water use compared to a 2015 baseline.

2.      Pfizer

According to Sustainalytics March 2024 update on Pfizer’s ESG ranking, the company scored a 18.1 low risk rating.

Pfizer has set environmental sustainability goals that include achieving a net-zero standard by 2040. Along the way, key milestones that the company is targeting include reducing its Scope 1 and Scope 2 emissions by 46 percent by 2030 compared to a 2019 baseline as an interim milestone to reduce the company emissions by 95 percent by 2040.

Pfizer says that “recognizing that value chain (Scope 3) emissions account for approximately 80 percent of our GHG footprint, we aim to reduce value chain emission by 90 percent by 2040.” As an interim target, by 2025, the company is aiming for 64 percent of its suppliers of purchased goods and services (by spend) to set their own science-based GHG reduction targets. It is also looking to reduce emissions, from a 2019 baseline, for upstream logistics by ten percent and business travel by 25 percent.

3.      STADA

Germany-based pharmaceutical manufacturer STADA Arzneimittel AG reported in December 2023 that it was among the most sustainable pharmaceutical companies globally, according to an assessment by Sustainalytics. The firm’s report found STADA as low risk with a rating of 18.4 in its ESG risk ratings recorded on December 7, 2023, ranking it among the top six percent of all companies within its pharmaceuticals sector that was made up of almost 900 companies appraised in terms of ESG risk.

The company said it remains committed to decarbonization, reporting that its GHG emissions have dropped by 16.5 percent since 2020. As a supplier of around 1.2 billion medicines packs per year, STADA said it makes a significant contribution to affordable access to medicines.

4.      Ultragenyx Pharmaceutical

Apart from Merck, rare and ultrarare disease drug developer Ultragenyx Pharmaceutical made Barron’s list, taking the last 100th spot. According to Sustainalytics, it had an ESG risk rating of 19.7, putting it in the low-risk category as per its latest update on January 13, 2024.

In its 2022 ESG report, the company outlined some of its environmental aspirations and progress, including purchase of 1,988 megawatt-hours of renewable electricity, installation of additional electric vehicle charging ports, bringing the total to 11, avoiding an estimated 465 MT of CO2e and partnering with a waste services vendor to launch a medical waste takeback program.

5.      Eisai

Eisai Co., Ltd. made it onto Corporate Knights’ 2024 Global 100 ranking of the world’s most sustainable companies, marking its eighth inclusion. The company made a significant jump on the list, from the 53rd spot in 2023 to the 35th spot in 2024. The Tokyo, Japan-based company’s carbon productivity was $188,590 along with a sustainable revenue of 49 percent and sustainable investment of two percent.

Its ESG risk rating according to Sustainalytics was medium with a score of 26.7 as of March 24, 2024.

In its 2023 Environmental Report, Eisai outlined its participation in RE100, an international initiative that aims to use 100 percent renewable energy-derived electricity (RE) for business activities. The company’s RE ratio increased to 95.4 percent in 2022 and the company said its goal of 100 percent RE, set for 2030, is “already within sight.” The company is also aiming to achieve carbon neutrality by 2040.

6.      Roche

Roche was named among the top three most sustainable healthcare companies in the Dow Jones Sustainability Indices. This marks the 15th consecutive year Roche has been recognized, reflecting its long-term commitment to sustainability.

The company’s sustainability goals include sustainable buildings with LEED green building certification standards, sustainable manufacturing with paperless factories, cold-storage cooling systems free of ozone-depleting substances and reduction of water and chemical use, among others. Roche also aims to achieve sustainable delivery using more sustainable packaging and redesigning packaging so that it uses 40 percent fewer raw materials and weighs less.

7.      Novo Nordisk A/S

Denmark-based Novo Nordisk, maker of semaglutide GLP-1 drugs Ozempic and Wegovy, made Corporate Knights’ 2024 Global 100 Most Sustainable Corporations in the World list for the first time, coming in at number 53. The company’s carbon productivity was $336,603 and a percent sustainable revenue of four percent and zero percent sustainable investment. Novo’s ESG risk rating was medium at 23.1 as of September 2, 2023, according to Sustainalytics.

In its 2023 annual report, Novo outlined its commitment to net zero emissions across the company’s entire value chain by 2045. It is also a part of RE100, the UN Sustainable Development Goals and CDP, a nonprofit that runs the global carbon disclosure system for companies, investors and cities. Novo Nordisk reported that 78 percent of its waste is recycled and only 0.3 percent of its total waste is sent to landfills. All of its power sourced for production sites in 2023 was derived from renewable energy. The company is targeting zero CO2e by 2030.

8.      Novozymes A/S

Novo Nordisk’s biotech spinout Novozymes fell in the ranks on Corporate Knights’ list from 23rd in 2023 to 58th in 2024. Its carbon productivity was $7,348 in 2024 along with a 67 percent sustained revenue and 14 percent sustainable investment.

The company had a low ESG risk rating of 16.2 at its last Sustainalytics update on March 30, 2024. According to its 2023 annual report, Novozymes said it achieved a 67 percent reduction of GHG emissions from the company’s operations from a 2018 baseline, and sourced 84 percent of its electricity from renewable sources. The company’s total scope 1, 2 and 3 emissions also decreased by 32 percent since 2018, with most emissions coming from supply chain (scope 3). The company aims to hit net-zero emissions across scopes 1, 2 and 3 by 2050.

9.      Sanofi

Sanofi was number 66 on Corporate Knights’ list compared to its number 61 position in 2023. With a carbon productivity of $93,914, 27 percent sustainable revenue and ten percent sustainable investment, the France-based company’s ESG rating was 21.2 as of November 7, 2023 according to Sustainalytics, putting it in the medium risk category.

In its 2023 annual report, the company reported a two percent reduction in energy consumption in 2023 compared to 2022. It also reaffirmed its “Planet Care” global environmental sustainability program that includes a commitment to carbon neutrality by 2030 and net zero emissions (all scopes) by 2045. It also aims to reduce the company’s Scope 1 and 2 GHG emissions by 55 percent in absolute terms by 2030 as per a 2019 baseline. It has also committed to deriving 80 percent of the company’s annual supply of electricity from renewable sources in 2025 and to 100 percent in 2030.

10. AstraZeneca

AstraZeneca PLC’s position on Corporate Knights’ 2024 rank at position number 97 was just a two-point drop from its 95th spot on last year’s list. It had a carbon productivity of $100,380, sustainable revenue percentage of 13 percent and no sustainable investment.

Its ESG risk rating of 22.0 as of February 7, 2024, placed it in the medium risk category according to Sustainalytics.

In its 2023 annual report, AstraZeneca said it achieved a 67.6 percent reduction in Scope 1 and 2 GHG emissions since 2015 and is targeting a 98 percent absolute reduction by 2026. The company also outlined its aims to reduce energy consumption by ten percent and double energy productivity (EP100) from 2015 to 2025.

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