Biotech and Pharma Aim for Net Zero, But Their Supply Chains Lag

Since 2021, the biotech and pharmaceutical sectors have had their sustainability performances closely monitored. Near the end of every year, the carbon output data of the industries are published by My Green Lab, a non-profit organization that awards its coveted certificates to lab companies that demonstrate a commitment to a net zero carbon future.

So, just how green are the biotech and pharmaceutical sectors? Well, certain companies have honorably low carbon outputs, but, according to the “My Green Lab’s 2024 Carbon Impact of Biotech & Pharma Report”, there’s still plenty of work to be done to improve the sustainability of the industries’ supply chains.

Reducing the scope

“At its core, biotech and pharmaceutical companies have a mission focus on protecting human health,” James Connelly, chief executive officer at My Green Lab, told Technology Networks.

“And what the industry has started to realize is that it can’t say ‘we’re about protecting human health’ while, on the other hand, be creating a huge amount of pollution, which is ultimately damaging to human and environmental health. This industry has recognized that health and climate change are interrelated, and that they have a responsibility.”

To gauge the proportion of biotech and pharmaceutical companies that adhere to this interpretation of their business ideology, My Green Lab analyzed data from 149 companies to produce a comprehensive profile of the carbon emissions of the industries.

According to this analysis, 31% of biotech and pharmaceutical companies are successfully reining in their carbon output – at least, the carbon output they directly control.

“Over 31% of companies within the data set that we looked at actually had Scope 1 and 2 commitments that were aligned or below the temperature rise of 1.5 °C,” Connelly said.

My Green Lab orders carbon emissions in three categories: Scope 1, 2 and 3. The first two fall within a company’s own remit; Scope 1 includes direct emissions from owned or controlled sources, Scope 2 includes carbon emissions from purchased energy consumed by the reporting company.

These are the areas where companies are having the most sustainability success, according to My Green Lab. The 2024 report found that the top 25 biotech and top 15 pharmaceutical companies have continued to reduce their annual Scope 1 and 2 carbon intensity by an average of 12% per year since 2018.

Even when evaluating a broader cross section of the industry made up of 140 companies with the best quality data available for the last 6 years, industry emission intensity has still decreased, but less dramatically – 2% per year on average.

“[There’s been] really aggressive growth in the number of companies that are setting Scope 1 and 2 targets aligned with a 1.5 °C world,” Connelly said. “What is less encouraging is that a lot of those companies don’t have targets yet that includes Scope 3, so we need to expand and include Scope 3 as well.”

Laundered carbon

Under My Green Lab’s categorization, Scope 3 includes all other indirect emissions upstream or downstream in a company’s value chain. According to the organization’s 2024 report, private companies have seen an 11% rise in Scope 3 emission over the past year.

“The majority of emissions from labs – which themselves are very resource-intensive – actually come from the lab supply chain,” Connelly said.

Fortunately, Connelly said there are easy steps companies can take to reduce these Scope 3 emissions, such as using services in their supply chain that have been My Green Lab certified.

“It’s really important that equipment vendors are involved in the sustainability effort and working to reduce the environmental impact of the products and services that they’re offering as well,” he opined. “For example, My Green Lab has a certification for products, and it’s a way for manufacturers to measure and reduce their environmental footprint and have a transparent communication tool with their customers so that they can know they’re buying a lower carbon [service].”

“It’s really crucial,” he emphasized, “Because Scope 3 is 5.4 times higher than Scope 1 and 2, and it’s actually those Scope 3 emissions from the value chain that are the most difficult to address.”

Given the admirable work achieved with their Scope 1 and 2 emissions, Connelly is optimistic that many more biotech and pharmaceutical companies can reign in their Scope 3 emissions, too, with a little cooperation: “One of the beauties of the biotech and pharma industry is it’s very collaborative,” he said.

“For a lot of these particular supply chain challenges that the industry faces to reduce Scope 3 emissions, you can’t do it through one company alone; companies have to band together. They have to ask common requests of their supply chain if they’re going to drive change and support those suppliers in those initiatives.”

“One example of that is My Green Lab’s converge initiative,” he added, “where we’ve now got seven of the largest pharma companies that are actually asking all of their suppliers to get on board and reduce their carbon footprint through My Green Lab certification. That collaborative nature, the resources, the mission, focus and the mindset to make long-term investments really positions pharma as an industry that can lead on these issues.”