12-13 - SUSTAINABILITY: Jolly green giants?

Pharma is not typically seen as a highly polluting industry, but it is far from green and, increasingly, its host of big names will need to attend the sustainability party with greater regularity.

Indeed, in its 2021 report ‘Delivering a Net Zero National Health Service’, the NHS attributes as much as a quarter of its carbon footprint to medicines. A deep carbon footprint is a common hallmark of energy intensive manufacturing processes and the manufacture of pharmaceuticals is no exception. Emissions levels, however, can be reduced by adopting a sustainable approach to process efficiency, energy generation and energy procurement.

In addition to the environmental benefits of reducing carbon emissions, a sustainable energy strategy has financial implications too. Increasingly volatile energy costs and punitive carbon taxes have a tangible impact on profitability.

On 1 January 2021, a UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS. The four governments of the UK established the scheme to increase the climate ambition of the UK’s carbon pricing policy, while also protecting the competitiveness of UK businesses. As a result, large carbon emitters have experienced dramatic increases in compliance costs in recent times.

There is also a reputational imperative to act on carbon emissions. As an industry comprising some of the world’s most trusted brands, it has a corporate social responsibility to ‘do the right thing’. Key stakeholders, including investors, want to see positive action on carbon emissions as part of a comprehensive environmental and social governance policy.

For many pharma companies, with complex, multinational operations, the challenge is formulating a net-zero roadmap that is both effective and sustainable.

Figuring out where to start on the road to sustainability can be daunting. Considering energy strategy alongside corporate sustainability goals is key to delivering a comprehensive, strategic road map with impact.

The first step is to gather and analyse data to build foundations for the strategy, while also creating a benchmark to measure action against. Calculating the emissions inventory – including operational and indirect emissions – is possible with the right software and systems in place.

To capture the environmental benefits of sustainability programmes, carbon reporting should be an integral part of any software solution. This allows organisations to track data associated with the purchase, consumption and generation of energy, including its impact on sustainability goals and environmental benefits using market and location-based emission calculations.

Voluntarily reporting emissions through a globally recognised framework demonstrates a credible commitment to sustainability. Furthermore, a carbon disclosure rating or ‘CDP score’ is a measurement of the environmental sustainability of a corporation. CDP scores are visible through several investor platforms and, alongside other initiatives such as RE100 for businesses committing to use 100% renewable energy, they will help to drive change across an organisation and signal intent to shareholders.

Independently run workshops are a powerful way to support the development of a decarbonisation road map for any organisation, enabling information to be shared and improving levels of understanding about energy efficiency, generation and procurement. The outcome should be a strategic plan that maps out energy strategies to support the business’s sustainability goals.

Going green is not without its challenges. As the global demand for energy increases, industrial and commercial energy users are increasingly concerned with security of supply and the reliability of outdated grid infrastructure.

As we reduce our dependence on fossil fuels for energy generation and shift to renewables such as solar and wind, the intermittent nature of these sources of power can disrupt the balance of supply and demand needed to maintain grid stability. Large energy users such as pharmaceutical manufacturers can play an important role in protecting grid stability while enabling more renewable generation.

Participation in energy flexibility programmes, such as demand response (DR), supports the electricity grid operator to handle increasing amounts of energy from renewable sources. At times of peak electricity demand or reduced levels of production from renewable sources, an energy intensive facility that can temporarily adjust its overall consumption can receive significant payments without impacting on business operations. Additionally, DR can act as an early warning of grid problems and provides realistic opportunities to test standby power systems.

Procuring renewable contracts successfully is a complex task. A typical requirement is to make a PPA with an energy company that can guarantee to supply clean electricity sufficient to meet an organisation’s growing needs.

Like other energy-intensive businesses, pharma companies are choosing to become off-takers using PPAs to buy renewable energy and to complement the use of on-site generation. It’s a system which increases the percentage of renewable energy utilised, thus reducing emissions. This approach also guarantees supply, allows companies to reliably predict future costs and signals a long-term commitment to zero carbon.

With a comprehensive energy strategy, pharmaceutical businesses can reduce carbon emissions, maintain resilience, predict future energy costs and enhance environmental, social and corporate governance performance.

An effective strategy must include optimising energy use, implementing a procurement strategy and exploring ways to co-operate with energy companies and grid operators. Ultimately, by adopting a sustainable energy strategy, pharmaceutical manufacturers can reduce carbon emissions, help maintain the stability of the grid and create valuable sources of new income.

Jolly green giants?

Winning formula

Resiliency and renewables

Energy bar