Large Pharma Companies Make Progress Towards Net Zero, But Start-Ups Struggle Behind
My Green Lab’s latest annual carbon report highlights discrepancies between larger biotech firms and smaller companies.
The largest biotech and pharma companies continue to achieve yearly reductions in their greenhouse gas emissions. However, overall carbon emissions are still on the rise across the broader industry. This is driven predominantly by smaller companies and privately held firms, according to data from 765 publicly listed and 290 privately held companies included in My Green Lab’s latest update to its report, “The Carbon Impact of Biotech & Pharma”.
The report provides a snapshot of the greenhouse gas emissions associated with the full value chain of the biotech and pharma industry. First published in 2021, the report is updated annually with carbon emissions data and evaluates the industry's alignment with the goals of the 2015 Paris Climate Agreement.
Whilst carbon intensity is beginning to decline among the largest biotech and pharma companies, the 2025 report warns that more must be done to align the entire value chain with emission reductions.
Big wins for top firms, but smaller companies continue to drive emissions
The global biotech and pharmaceutical industry plays a vital role in ensuring a healthy society, but at no small cost to the environment. Estimates suggest that hundreds of thousands of laboratories worldwide consume up to 10 times the energy of a typical office space. Meanwhile, the biotech and pharma market continues to grow and is expected to expand at a compound annual growth rate of 13.9% by 2034.
While the overall biotechnology and pharmaceutical industry sector remains carbon-intensive, My Green Lab’s latest report finds that the last six years have shown signs of progress, particularly among the largest biotech and pharmaceutical companies by revenue.
Defining emission scopes
The report groups emissions according to the GHG Protocol Corporate Accounting and Reporting Standard categories:
- Scope 1 emissions: Direct emissions from controlled or owned services, such as company facilities and vehicles.
- Scope 2 emissions: Indirect emissions from purchased energy consumed by the reporting company.
- Scope 3 emissions: Indirect emissions upstream or downstream of a company’s value chain. This includes items such as purchased goods and services, transportation, processing of solid products, and end-of-life treatment of products.
This year’s report found that the top 25 companies have reduced their Scope 1 plus Scope 2 emissions annually by an average of 10% since 2019. However, when evaluating a broader cross-section of the industry, which included 243 companies, emissions intensity has shown an annual increase of 2% over the last 6 years.
A similar picture is observed for Scope 3 emissions, with the top 25 companies reducing emissions by 5% on average annually over the past 6 years. However, when including the broader dataset, the trend changes to an average annual increase in Scope 3 emissions of 2% over the same period.
These findings highlight the progress larger companies are making towards reducing yearly carbon emissions; however, the continued rise in carbon intensity across the broader industry points to potential challenges among smaller companies.
“I think it, in part, comes down to the number of resources that companies must devote to their broader sustainability efforts. In emerging companies, the focus is often on finding product-market fit, and sustainability efforts can be harder to prioritize early on due to limited resources,” said James Connelly, CEO at My Green Lab.
“Big public companies are faced with increasing pressure from investors, stakeholders, and governments to take an aggressive approach to tackling environmental issues,” Connelly added.
Besides limited resources, a less mature approach to sustainability may also hinder some smaller companies from achieving the successes observed by larger firms. “For a company going through a lot of change, pinning down what your carbon footprint is and how you can reduce it can be a little bit more challenging than if you're a more established company with a steadier growth rate,” explained Connelly.
The Environment, Social, and Governance framework is still relatively new, and so finding talent with expertise in sustainable practices can be challenging, with “talent often getting taken by the companies with the deepest pockets,” Connelly said.
Shared learning and eco-initiatives stand to benefit all
To reduce the divide observed between start-ups and larger biotech and pharma companies, collective-action programs that scale progress in decarbonization are needed across the full value chain, the report states.
“Smaller companies need support and incentives, and that's where the big companies can help, through the sharing of lessons learned,” explained Connelly. “Those companies that are deeper in the supply chain need large pharma to speak to them in a common voice. There are a lot of collective action initiatives detailed in the report that are doing this.”
One such initiative is Energize, a collective renewable energy procurement program that provides technical support, market education, and access to aggregated renewable electricity purchasing to help pharmaceutical suppliers reduce Scope 3 emissions.
Panel Discussion: Sustainability in the Lab
Laboratories drive science but consume huge resources and produce waste. Join our experts to explore practical strategies, tech, and cultural shifts that reduce environmental impact and align research with global sustainability goals.View Webinar
The Health System Task Force, launched at COP26 under the Sustainable Markets Initiative, offers supplier guidelines at a very high level. Its mission to accelerate the delivery of net-zero healthcare focuses on four priority areas: supply chain decarbonization, patient care pathways decarbonization, digital innovation, and consumer health and wellbeing.
“My Green Lab has its Converge Supplier Initiative, where the largest companies are asking their outsourced research partners to support them by getting My Green Lab Certification,” added Connelly. “My Green Lab has also started a new initiative where the largest companies are requiring their lab suppliers to have ACT Ecolabels.”
The ACT Ecolabel Request for Proposal Commitment is designed to incentivize manufacturers to provide transparent, third-party-verified product sustainability data, which will help companies understand and reduce the environmental impacts of the products they purchase.
“The problem is there are too many disparate ways that suppliers are pulled towards, and if even just the top 20 companies could harmonize and align on their expectations, then there would be clarity for the smaller companies on how to move forward,” explained Connelly.
“Standards and certifications are crucial because they give suppliers a clear, consistent baseline to align with across customer expectations. That's really what we're trying to promote with the My Green Lab Certification and ACT Ecolabel,” he added.
The biotech and pharma industry has emerged as a leader in the race to net zero, with 52% of companies included in the study having set Scope 1 and 2 targets aligned with a Net Zero pathway, up from 33% in 2024. Despite political and economic headwinds, the largest companies continue to achieve yearly reductions in carbon emissions aligned with their goals.
To ensure that smaller companies can keep pace with their larger counterparts, there is a need for aligned industry-wide reporting standards and harmonized expectations across the entire value chain. “This underscores the need for collective-action programs that scale progress in decarbonization across the full value chain—not just among the largest companies,” the report concludes.
Add Technology Networks as a preferred Google source to see more of our trusted coverage.
