Sustainability already high on pharma agendas

Climate change important issue for pharmaceutical industry

Without question, climate change is a central issue for the pharmaceuticals industry and all organisations involved in the business of healthcare.

Many of the health issues facing the world today are a direct result of global warming, including illnesses caused by poor access to clean water during periods of drought.

But more than that, the pharmaceuticals industry itself is responsible for a sizeable chunk of the world’s carbon footprint. Much of this is generated by lengthy supply chains that criss-cross the globe, as well as the use of fossil fuels in many feedstocks.

With consumers increasingly seeking green cosmetics and governments demanding clean production and pollution controls on the industry as a whole, sustainability is an agenda item found in many pharma board meetings.

Atradius specialists explore clean energy issues

We asked our pharmaceuticals specialists from the world’s major markets to look at the industry’s opportunities and risks through the lens of clean energy transition. Could the industry reduce greenhouse gas emissions?

Our underwriters noted that there was a focus on carbon footprints in markets with government subsidies, or non-compliance sanctions, or both. This was picked up on, in particular, by our underwriters in Europe, but also in the US and Asia.

Some colleagues also pointed to the potential presented by non-government programmes, such as the Schneider Electric Energize programme, which presents opportunities for collaborations between pharmaceuticals firms and energy providers.

Outlook for oil and gas markets

While global demand for oil has been increasing, this is expected to peak and start declining by the second half of the 2020s.

Global demand for gas is predicted to peak even sooner than oil, although demand is expected to continue to grow in Asia-Pacific, the Middle East and Africa until 2030, after which it should begin to decline.

Innovation takes centre stage for pharmaceuticals

Interestingly, despite vast geographical distances and significant legislative differences across markets, our underwriters from each region agreed that new technology will play a key role in improving sustainability in the industry.

This is no surprise. The industry’s entire business model lives at the cutting edge of innovation, with new medicines and medical devices acting as the driving force of profit. In fact, the industry is arguably better suited than any other to understand the importance of innovation in creating change.

Can pharmas benefit from sustainability?

The majority of our underwriters are pretty positive when it comes to associating clean energy transition with industry opportunities. Using innovation to improve efficiency and deliver cost savings (along with carbon savings) was highlighted as a significant opportunity. Self-generation of electricity and improved reputations also present opportunities for the industry.

Will the industry seize these? The answer is, undoubtedly yes. How quickly is a different question entirely. The answer to this will most likely lie with regulation and the potential cost of non-compliance.

Download our Clean Energy Transition: Pharma report