Biotech and Pharma’s Carbon Impact: Insights From My Green Lab
My Green Lab's new report provides an overview of the industry’s carbon footprint and identifies key opportunities for change.
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The biotech and pharma industry has a significant carbon footprint ‒ with total carbon emissions of 193 million tCO2-e in 2022. The sector is also rapidly growing, with an expected compound annual growth rate (CAGR) for the global biotech market of 13.9% from 2023 to 2030. Together, this makes improving our understanding of the industry’s impact on climate change and working to reduce its carbon emissions crucial to ensure global warming is limited to the 1.5 °C target set by the Paris Agreement.
Using data provided by Intercontinental Exchange, My Green Lab – a non-profit organization that aims to build a global culture of sustainability in science – has produced a report providing key insights into the current state of the sector’s carbon emissions. As an update to My Green Lab’s 2021 study, the report The Carbon Impact of Biotech and Pharma: Collective Action Accelerating Progress to the UN Race to Zero is based on data from 226 publicly listed companies and 147 privately held companies.
“What this report does is it quantifies the total carbon impact of the industry, looking across all three scopes, so both up and down the value chain, as well as the emissions controlled by the companies themselves,” James Connelly, CEO of My Green Lab told Technology Networks. The environmental impact of scientific research has historically been somewhat ignored due to the importance attributed to advances in areas such as medical treatments and technical innovations Connelly explained, but the report provides an overview of the industry’s carbon footprint and identifies key opportunities for change.
Progress seen, but it’s not universal
Encouragingly, the report found that the largest companies by revenue are making progress, with the top 25 companies reducing their annual Scope 1 and 2 emissions by an average of 5.31% per year since 2015, and the top 15 by 8.06%.
“We're starting to decouple growth of the biotech and pharmaceutical industry from increased carbon output, so that overall trend is really exciting,” Connelly said.
However, progress has not been universal. “Unfortunately, while the top companies are driving reductions, particularly in the past year, if you look at the broader industry as a whole, we're actually seeing carbon intensity increase,” Connelly added.
The report also found a strong correlation between region and carbon intensity. “One thing that was very interesting in the data was the carbon impact of companies based in Asia-Pacific tend to be about twice as high for Scope 1 and 2, compared to companies based in Europe or North America,” Connelly said. The report authors note that this may be attributed to greater outsourcing of manufacturing by North American and European companies.
Scope 1 emissions – direct emissions from owned or controlled sources, such as a natural gas boiler burning fuel onsite.
Scope 2 emissions – indirect carbon emissions from purchased energy consumed by the reporting company, such as electricity.
Scope 3 emissions – all other indirect emissions upstream or downstream in a company’s value chain. For example, upstream could include the materials required to make a vaccine, while downstream would include the energy used to store and dispose of the vaccine.
Only 10% of the 91 public companies studied in the report were found to have targets validated by the Science Based Targets Initiative (SBTI) to be aligned with a 1.5 °C world. “The Science Based Targets Initiative is a global initiative to help bring some rigor and accountability when a company says they're going to be net zero carbon,” Connelly explained. A company’s emission reduction target is evaluated to determine if it is aligned to a 1.5, 2 or 3 °C world.
Despite the seemingly low percentage, Connelly noted that “10% is actually pretty good when you look across all of our global industries.” He was optimistic that this figure will increase as more corporate sustainability teams hold their suppliers accountable to an SBTI-aligned target. Some of the largest companies have begun working together through the Sustainable Markets Initiative to set a standard for suppliers.
The interconnected global supply chain shared by biotech and pharma presents great opportunities for collective action Connelly explained: “When they act together, and in fact, only if they act together, are they able to influence their suppliers and create the change necessary at scale, to get the whole industry to drive towards net zero by 2050, or sooner.”
More companies adopting zero carbon targets
On a positive note, the number of biotech and pharma companies that have joined the UN Race to Zero has increased from 30 to 35 since last year, now accounting for 53% of the sector by revenue. The report highlights that this is beaten only by the financial services, consumer goods, fashion, and information and communication technology sectors.
Importantly, 63% of pharma and med tech companies in the campaign have started a green lab program, nearly half of which have achieved the My Green Lab Certification at a global scale.
“My Green Lab Certification is a tool to take high-level organizational goals and turn them into practical action on the ground in an area of research that's often left behind because the idea is you can't do something about it,” Connelly said.
It is an “important way to align overall corporate values with what's happening at the lab,” and can help the people within a company to feel involved in their sustainability initiatives he added.
My Green Lab Certification is the global gold standard for laboratory sustainability best practices, providing scientists with actionable ways to make meaningful change. Over 2,000 labs in a range of sectors have been supported by the program which covers fourteen topics related to energy, water, waste, chemistry/materials and engagement.
This certification was selected as a key indicator of progress for the UNFCCC High-Level Climate Champions’ 2030 Breakthroughs in 2021, with a goal that 95% of biotech and pharma labs have to be certified at the highest level by 2030.
As part of efforts to scale up the number of companies on the pathway to achieving Certification, My Green Lab has recently announced a collaborative supply chain initiative with the largest pharma companies. Through collective action, the Converge initiative will incentivize and ultimately request CROs, CDMOs and CMOs within the supply chain to pursue My Green Lab Certification.
The report found Scope 3 emissions were almost five times larger than Scope 1 and 2 combined, and with purchased goods and services accounting for the majority of these Scope 3 emissions, improving supply chains can make a big impact on the industry’s carbon footprint. In addition to Converge, several other collective initiatives have been developed to address Scope 3 emissions, including Energize, which aims to accelerate renewable energy adoption, and Activate, a program to gather data on active pharmaceutical ingredient manufacturers.
Continued need for change
The improvements noted in the report are positive signs that the biotech and pharma industry is committed to reducing its carbon footprint, but further change is needed to achieve the Paris Agreement target. Key areas of focus highlighted by the authors are the need for more accurate reporting and practical action plans for reducing carbon emissions.
“We have to move at this point beyond commitments to real action. And what that takes to go from commitments to real action is the establishment of good baselines from which to measure from,” Connelly said.
Scope 3 data is calculated using a lot of assumptions, which can make it hard to establish baselines and subsequently measure the impact of changes Connelly noted.
However, the authors remain optimistic that the industry is well-equipped to take on this challenge and act as a model for other industry sectors to achieve net zero carbon. Tools like My Green Lab Certification can play a key role in helping to put organizational-level carbon goals into action.
“It's time, not only to set big goals, but we’ve got to get to work and make them happen on the ground,” concluded Connelly.
About the interviewee
James Connelly serves as the chief executive officer of My Green Lab. Prior to his role at My Green Lab, Connelly held the position of Vice President of Strategic Growth at the International Living Future Institute (ILFI). In this capacity, he spearheaded international growth strategies and was a founding board member of Living Future Institute Europe. During his time at ILFI, James initiated several cutting-edge sustainability programs, earning numerous scholarships and awards for his impactful research and contributions. Connelly was named a Greenbiz 30 under 30 Sustainable Business Leader in 2016 and a Net Zero Energy Trailblazer in 2019.
