Decarbonisation as strategic priority for the pharmaceutical industry

The healthcare and pharmaceutical industry are critical to global well-being. With extensive supply chains and energy-demanding operations, the industry also faces significant challenges in reducing climate change.

For pharma companies, prioritizing and striving towards reducing their environmental footprint put them in the same group as the majority of companies that today are crafting dedicated targets and/or resources to drive change and make decarbonization initiatives and budgeting a part of daily business practices.

Why should sustainability be a priority?

Material sustainability impacts companies’ entire value and supply chain, coming with operational and financial risks as well challenges and opportunities. For these companies, adding responsible practices and procurement with a focus on decarbonisation, and rating external suppliers against each other across sustainability parameters, can raise the bar and fast track the transformation towards decarbonised supply chains.

Drivers of this change include living up to regulatory standards, meeting expectations from key stakeholders such as consumers and investors and following industry organizations guidelines for how to do business while keeping environmental and social aspects in mind. All drivers inherently set the importance for transparency in how the businesses are run and how different parts of the value chain impact the environment.

A vital part of the pharmaceutical value chain is logistics, and this often falls beyond the company's own direct control. Within logistics, reduction of greenhouse gas (GHG) emissions is a high priority area. Together with the other 13 categories, scopes 3.4 and 3.9 encompass emissions from the transportation and distribution of products purchased by a company within the reporting year from its tier 1 suppliers to its operations. The two logistics related categories are fighting for the companies’ priority to lower GHG emissions. With tangible solutions already available logistics has become a possible solution within GHG emissions reduction initiatives, which in turn supports the pharma companies’ scope 3 reduction ambitions.

Decarbonisation within logistics will play a vital role in shaping the future of many supply chains, including medical and pharmaceutical ones. Where focus historically has been primarily on initial outbound distribution of products, scope will expand to also look at other methods, whether it is disposal of waste from product or packaging or product returns/recalls, which is a process that requires additional transportation and handling, leading to an increase of the overall GHG emissions footprint. In addition, for temperature-sensitive pharmaceuticals, efficient refrigeration systems are crucial. Improving cold chain efficiency by using equipment with the latest innovations in refrigeration technology can reduce use of energy and GHG emissions while maintaining product integrity.

Decarbonisation in pharma transportation is a strategic imperative. By adopting decarbonisation practices, companies can reduce their climate impact, improve efficiency, and meet the growing expectations of stakeholders. Despite progress, the industry still has a long way to go, but the potential benefits in terms of cost savings, mitigating risks, and enhanced corporate reputation make it a worthwhile endeavor.

Visibility empowers better decision-making

Optimizations across logistics activities have always been relevant due to lead time and costs. The ability of logistics service providers to deliver optimized solutions in complex supply chains including reliable schedules while navigating customer demands, inventory planning and production delays is crucial for their success.

In order to effectively analyze and take informed decisions related to GHG emissions reduction initiatives, it is essential to have an accurate visibility of one’s operations. Understanding your organization's logistics landscape and related GHG emissions baseline can guide the strategy, as well as support progress towards the reduction targets. The collection of GHG emissions data from different logistics service providers is not only a time, and effort, consuming task but it is also complex as GHG emissions data sets may have different data granularity across transport modes, calculation methodologies may differ and there could be gaps in data reliability. When addressing the visibility challenge, setting clear expectations for GHG emissions reporting and providing support to suppliers to enhance their own GHG emissions tracking capabilities is key.

Lowering GHG emissions with modal shifts

Optimizations and cost reductions are focal areas for most pharma companies. Zooming in on logistics and transportation involves looking at routing, asset utilization and fuel consumption -no longer merely from a time and price perspective - but also considering the impact of greenhouse gas (GHG) emissions. Pharma companies’ commitment to improving their transport GHG emissions landscape means modal shifts are increasingly being explored.

The nature of pharmaceutical supply chains is extensive and complex, often involving multiple modes of transport. Flexibility in transportation is a high priority for cargo owners in global trade. The freedom to switch modalities can be valuable for pharma companies when experiencing supply chains hiccups like production delays or inventory shortages. However, flexibility comes with a cost when it comes to climate impact as there is significant differences GHG emissions intensity across modes of transportation.

Combining different modes of transport, such as rail and ocean, can significantly reduce GHG emissions footprint compared to relying solely on air or road transport. In recent years the pharma sector has been increasing and showed a willingness to change transport modes and especially switching from air to ocean can result in significant reductions of GHG emissions, i.e. referring to EcoTransits calculation tool a transit from Hamburg to Shanghai would reduce 59,42 tCO2e(WTW) via air to 1,39 tCO2e (WTW) via sea. Another popular modal shift is changing long-haul trucking to ocean transport.

GHG emissions savings

Across all transport modes, energy and fuels with lower GHG emissions over their lifecycle than conventional fuels are winning territory. Transitioning logistics activities to non-fossil fuels and renewable energy sources is part of many pharma companies’ net zero roadmaps. By leveraging solutions already available in the logistics sector the pharma industry can significantly reduce GHG emissions.

According to a BCG/C2ES study published in 2024 called Innovate Collaborate Accellerate, decarbonisation affordability is a recurring topic. Demand needs to be accelerated by customers in order to reach that critical tipping point. So, unlocking the pharma companies’ request to decarbonize logistics end-to-end, is still in need of and relying on strong determination to act.

Close collaboration with logistics service providers enables pharma companies to optimize their modes of transportation.

Maersk has worked consistently with creating GHG emissions reduction solutions for our transportation customers. Driven by key stakeholders and customer demands, Maersk aims to lead the energy transition and scale GHG emissions reductions solutions. All interlinked with ambitious SBTi validated reduction targets, large investments and collaboration. For instance, our ECO Delivery product family helps lower the fossil fuel component and related GHG emissions from pharma’s customers’ logistics activities, with its processes and methodology audited and verified by a third-party entity.

Another solution, Maersk Emissions Dashboard helps customers get an overview of their supply chain related GHG emissions using aligned calculation methodology users get an in-depth understanding of where, when and how their GHG emissions landscape changes.

Explore the possibilities of Maersk ECO Delivery and learn more about Maersk Emission Dashboard.