Biotech and pharma are among the many global industries that now find themselves under pressure to disclose and reduce their carbon footprints. But before they can decarbonize, companies in this sector must thoroughly understand the specific factors that contribute to their overall climate impact.
To establish a baseline picture of where the industry’s GHG emissions come from, Persefoni analyzed data from the CDP (formerly Climate Disclosure Project), the largest global database of carbon reporting.
Below, we examine leading emissions sources in the biotech and pharma sector and outline the steps companies can take to calculate and manage their carbon footprints.
What is an Emissions Profile?
An emissions profile serves as a roadmap for carbon accounting.
One of the first steps in your carbon accounting journey is identifying which emission sources you need to track to measure your specific footprint. An emissions profile helps answer this question by providing an overview of a sector or company’s greenhouse gases, with details on material sources. It serves as an initial guide that allows you to pinpoint the business activities that add to your carbon footprint and understand the financial and operational data you’ll need to collect for robust, audit-grade carbon accounting.
We’ll dig deeper into the specific emissions profile for biotech and pharma later in this article.
The Biotech and Pharma Landscape
Climate change threatens the future of the sector.
Biotech and pharma companies have a crucial role to play in driving down carbon. The sector is an economic giant — it was valued at an estimated $1.55T USD in 2023 and is growing rapidly. It is also under tremendous threat from climate change.
Production of medicines relies heavily on water availability and biodiversity, which are increasingly at risk due to climbing temperatures. Supply chain disruptions, including from climate-induced disasters, are a growing concern. At the same time, more and more investors and stakeholders want to see sustainability commitments and progress on net zero goals.
The sector has responded: In an effort to become more sustainable, it is beginning to embrace circular economy principles and responsible sourcing. Top brands in the industry have been successfully reducing their scope 1 and 2 emissions over the past decade.
However, biotech and pharma companies face a unique hurdle in upgrading their operations, as it can take years to receive regulatory approval for products, and changing manufacturing processes after the fact can be highly complex and expensive.
What are Material Emissions in Biotech and Pharma?
Significant emissions come from a variety of sources.
Emissions are considered material if they significantly contribute to a company’s carbon inventory. In this context, ‘material’ refers to sources that account for at least 5% of total GHG emissions in scope 1, 2, or 3 categories.
Commonly Reported Material Emissions Sources
For biotech and pharma companies that report to the CDP, material emissions sources vary but the most commonly reported include:
- Purchased Electricity: This is often a heavy contributor, especially in manufacturing processes. It can be a relatively simple area to tackle, due to the increasing availability of clean energy.
- Purchased Goods and Services: This category includes supply chain emissions (scope 3) from the production of goods and services procured by companies. These emissions can be challenging to calculate and manage.
- Capital Goods: Emissions from a company’s fixed assets, such as manufacturing equipment, can make up a significant portion of the overall emissions profile.
- Fugitive Emissions: Air conditioning and cooling equipment used in manufacturing facilities and offices can leak fugitive emissions, a not-so-obvious but critical contributor to climate change.
- Stationary Combustion: Burning fuels in a company’s fixed installations, like furnaces or boilers, can add to the carbon footprint.
- Mobile Combustion: Owned or leased vehicles and equipment used by the company can be a heavy source of emissions.
- Purchased Heat/Steam: Occasionally, businesses will purchase heat (district heating) or steam instead of using on-site stationary combustion, and they must account for these emissions.
- Transportation and Distribution (Upstream and Downstream): This category covers GHG gases that come from transporting goods to and from the company.
- Business Travel: Company air travel can be a relevant source of greenhouse gases for pharma and biotech companies.
- Employee Commuting: Employees who travel by fossil fuel vehicles add to the total carbon footprint.
- Waste: The waste generated by biotech and pharma companies — from plastic used in labs to medicine packaging — can add up to a significant climate impact.
- Use of Sold Products: Some products require electricity or fuel during consumer use, which can drive up the company’s greenhouse gases.
- End-of-Life Treatment of Sold Products: For many organizations, the disposal or recycling of sold products can create material emissions.
We’ll get into how these sources are categorized when we take a closer look at the biotech and pharma emissions profile, below.
What Does the Emissions Profile Look Like for Biotech and Pharma?
A variety of upstream and downstream emissions contribute to the industry’s footprint.
Understanding the climate footprint of biotech and pharma isn't just about overall numbers; it's about evaluating the specific impact of different factors throughout the industry’s processes and product lifecycles. This sector’s emissions profile includes a variety of direct and indirect sources—from the energy a company uses to manufacture its products to the goods it purchases to the eventual disposal of its products.
Here, we’ll examine common categories of upstream and downstream emissions within the three scopes of the Greenhouse Gas Protocol (GHGP).
Scope 1 and 2: Manufacturing Emissions
Manufacturing is a leading driver of emissions in biotech and pharma. That’s because most manufacturing processes require heavy consumption of fuel and electricity. For businesses that own manufacturing or distribution facilities, greenhouse gases can be substantial. These include direct scope 1 emissions from sources owned or controlled by the company, like vehicles, boilers, and other equipment, as well as scope 2 emissions from energy the company purchases.
Upstream Scope 3: The Extended Impact
Scope 3 emissions includes both upstream and downstream emissions from activities outside of a company’s own operations. Within biotech and pharma, there are several GHGP categories of upstream scope 3 emissions to pay attention to. Significant sources include:
Category 1
This covers purchased goods and services and is a heavyweight player. It encompasses greenhouse gases from everything a company buys or uses — from raw materials to contracted services — and is typically the largest source of emissions across all three scopes.
Category 3
This category covers fuel and energy use not included in scopes 1 and 2 and can be significant, particularly when a company's operations are energy-intensive.
Downstream Scope 3: The Ripple Effect
Scope 3 emissions from downstream in the value chain can also be material. This is where the lifecycle of a product is assessed — how it's used, disposed of, or transported. In biotech and pharma, where products range from disposable lab supplies to complex medical equipment, understanding and managing these downstream emissions is crucial. They represent the ripple effect of a product in the wider world — an effect that can extend well beyond the point of sale.
Measuring Your Emissions in Biotech and Pharma
A step-by-step approach to assessing your footprint
The world has changed. To meet growing regulatory requirements and stakeholder demands for climate transparency, biotech and pharma companies now must provide traceable, transparent, and reliable data about their greenhouse gas emissions.
Below, we outline a step-by-step approach to help you get started with comprehensive carbon accounting.
1. Create a Project Management Plan
- Designate a project leader: Appoint a dedicated individual to lead your GHG inventory project. This person should have the authority, knowledge, and resources to drive the project effectively.
- Secure buy-in: Ensure top-level management supports the project, as their backing is crucial for resource allocation and the project’s overall success.
- Set internal deadlines: Establish clear timelines for each phase of the project to maintain momentum and accountability.
- Develop an IMP: Create a detailed inventory management plan (IMP) that outlines procedures and methodologies for GHG data collection, calculation, and reporting. This plan should be regularly updated to reflect any changes in operations or reporting standards.
- Ensure consistency: The IMP should establish consistent and repeatable processes for each reporting period. Automated carbon accounting software can help ensure you’re working with reliable and comparable data.
2. Identify and Assess Emission Sources
- Review potential sources: Examine all possible emission sources, as outlined by the GHGP. These include direct emissions (scope 1), indirect emissions from purchased energy (scope 2), and all other indirect emissions (scope 3).
- Assess materiality: Determine which sources are 'material’ — meaning they account for more than 5% of total emissions in each scope.
- Create a checklist: Develop a Footprint Source Checklist detailing all material sources identified for tracking and data collection.
3. Gather Emissions Data
- Assign data owners: Identify individuals responsible for collecting data for each emission source. These could be department heads or facility managers.
- Set data collection deadlines: Ensure timely collection of data by establishing and communicating clear deadlines.
- Collect data: Each category of data will present different challenges. Scope 1 and 2 data will generally be straightforward as they rely on internal information, while scope 3 will be more complex. You can start by identifying top suppliers and understanding the carbon intensity of your raw materials. For downstream emissions, specific data can be scarce, and you might need to rely on modeling.
- Conduct quality assurance: Designate a person or team to review the collected data for accuracy and completeness.
4. Collaborate for Better Data
- Engage suppliers directly: Establish communication with suppliers to gather detailed data, understand their processes, and set expectations for future improvements. Using the same shared carbon accounting tool can make this process easier.
- Seek Product Carbon Footprint (PCF) data: A Product Carbon Footprint measures the total emissions created by a product over its lifecycle, from extraction of raw materials to disposal. This type of data offers a higher level of accuracy in calculating emissions from purchased goods.
- Incentivize emissions reductions: Use the collected data to preferentially source from lower-emission companies and encourage suppliers to adopt practices that reduce their carbon footprints.
Conclusion
If you’re in biotech and pharma, understanding and managing your emissions profile is a critical task, and it can seem daunting. Getting a clear picture of your carbon footprint will require careful planning, robust supplier engagement, and the collection of detailed emissions information from a variety of sources. Carbon accounting software can help by ensuring your data is traceable, transparent, and credible — and by facilitating communication with your suppliers and other stakeholders.
Ready to calculate your carbon footprint? Get started for free with Persefoni Pro.
