Navigating the path to sustainable pharma: Insights from sustainability leaders

In the dynamic landscape of life sciences, the importance of Environmental, Social, and Governance (ESG) considerations has never been more evident. In this industry, where we strive to improve and save patient lives, ESG is an integral component of contributing to good health by considering the risks of climate change. It comes down to respect and concern for fundamental human rights, which drives so many in our field.

As we look to the future, companies in our sector must embrace sustainability and responsible corporate practices as an integral part of their operations. The data supports this imperative - a recent survey found that over 80% of investors now consider ESG factors when making investment decisions in the life sciences sector.

Opportunities

The life sciences industry is uniquely positioned to drive meaningful change through ESG initiatives. Our work impacts the health and well-being of individuals around the world. As such, we have a responsibility to ensure that our operations align with the broader goals of sustainability and societal well-being.

For any company looking to add new ESG opportunities to their business strategy and goals, an annual sustainability report and proactive reporting are key ways to assess where you are and where you can go.

Barriers

However, despite the immense potential for positive change, there are challenges that must be navigated. The complex regulatory environment, stringent compliance requirements, and the need for significant investment in sustainable practices can present hurdles for companies aiming to integrate ESG principles into their core operations. Overcoming these barriers requires a strategic approach that aligns ESG goals with broader business objectives.

Another thing to beware of is that this work cannot be done in silos; it's not feasible for just the ESG department to be thinking about these ideas. For real change, we need all employees to feel empowered to understand the ambitions for ESG and be comfortable discussing it with clients.

It starts with data

One of the critical steps in any ESG journey is robust data reporting. Without accurate and transparent data, it is impossible to measure progress towards sustainability goals or demonstrate accountability to stakeholders. Implementing robust data collection processes and leveraging technology solutions can streamline this effort, ensuring that companies have the insights they need to drive meaningful change.

While 95% of the largest global companies disclosed their ESG impacts in 2021, the reporting landscape continues to be rife with swiftly changing regulations and a myriad of unknowns.

Mounting investor, customer, and employee concerns regarding greenwashing necessitate more robust sustainability disclosures. It is not enough to just talk the talk — organisations need to walk the walk. This is easier said than done, especially if a company is early on in its ESG journey.

The following list shows the ESG data that pharmaceutical companies commonly report on.

Environmental:

• Greenhouse gas emissions, including Scope 1, 2, and 3
• Energy consumption across operations
• Water consumption and conservation, especially in water-scarce regions
• Waste generation and disposal practices, including efforts for waste reduction and recycling

Social:

• Workforce diversity, pay equity, employee turnover rates, and employee engagement initiatives
• Labour practices, including adherence to labour standards, fair wages, and worker safety
• Efforts to ensure responsible and ethical practices in the supply chain
• Measures taken to ensure the safety and quality of pharmaceutical products
• Health and safety of employees and communities in which the company operates

Governance:

• Details on the company's governance structure, board composition, and executive compensation
• Measures taken to ensure ethical business practices, including compliance with regulations and industry standards
• Engagement with shareholders, employees, vendors, and local communities
• Efforts to improve access to medicines, especially in underserved or low-income regions

One thing that national and international companies should be aware of is that the landscape becomes very complex when it comes to regulations and required data across governments.

Each locality has regulations about what can or can't be disclosed, some of which are confidential. It becomes essential to create a sense of cohesion across the company, rather than different operating strategies to meet other local targets. Our strategy is to activate locally, but align it all with our global goals.

To accomplish this, communication and transparency are key. It’s critical that ESG teams partner with global and local leadership from human resources, legal, finance, and operations to ensure accurate data is captured and shared. Teams can also benefit from investing in data collection systems to help automate the process and remove human error when managing data across multiple spreadsheets. This will streamline data collection, validation, and analysis processes, reducing the resource and time-intensive nature of collecting ESG data from diverse sources.

An additional best practice is to avoid the unnecessary collection of irrelevant data or non-material topics by conducting regular materiality assessments. This will help teams stay on track and keep the data collection process aligned with the evolving ESG landscape. With changing stakeholder expectations, emerging trends, and shifting reporting standards, conducting regular assessments helps ensure reporting remains up-to-date and relevant.

Final advice

As we reflect on the journey toward ESG excellence in the life sciences industry, it is clear that the path has its challenges. The most challenging aspect is getting traction because we want to integrate sustainability into our everyday business practices. The initial push can take time, like setting big cogs in motion, but once they start moving, we gain significant momentum. Our first step is figuring out how to embed sustainability, making concrete plans, establishing communication channels, and ensuring people can access information and fully embrace these goals.

The imperative for ESG integration in the life sciences industry is clear. The data, the opportunities, and the moral imperative all point towards a future where sustainability is not just an add-on, but an integral part of our industry's DNA.

About the authors

Kate Martin is the sustainability manager at Envision Pharma Group. She is IMEA-trained in sustainability practices and uses her expertise to work across the company to create collaborative, cross-functional teams, and spearheaded the company's most recent sustainability report.

Greg Carpenter is senior vice president of ESG Strategy and Sustainable Operations at Envision Pharma Group. His expertise covers communications, strategic planning and implementation, coalition and consensus-building leadership development, omnichannel marketing, and change management.