Giving Pharma Companies A Holistic View Of Net Zero Efforts
Life sciences companies have set ambitious targets to reach net zero emissions between 2030 and 2050. However many are running into significant challenges in their efforts to strategize, develop, and implement successful carbon emission reduction initiatives. Roughly 53% of pharmaceutical and biotech companies by revenue have committed to the United Nation’s Race to Zero initiative, according to the most recent data from My Green Lab. Although My Green Lab points to improvements in reporting and greenhouse gas reductions, the non-profit research organization notes that life sciences companies have a long way to go if the sector is going to reach its net zero goals. The longer companies wait, the group writes, “the steeper the climb” to meet annual reduction goals.
Based on work across multiple net zero transformation projects, Oliver Wyman has identified six interconnected reasons why life science companies fail to reach their emission reduction targets:
1. Lack of a holistic view: There are multiple dimensions to identify, measure, and track carbon initiatives. As we pointed out in a previous article in this series, life sciences companies must simultaneously capture and track progress across scopes 1, 2, and 3. And they need to look at their entire supply chain. Without a holistic view of measuring and tracking progress, companies miss out on crucial insights and opportunities for improvement. A comprehensive assessment that considers all dimensions is essential for meeting net zero goals.
2. Limited transparency on industry standards: Another challenge is a lack of understanding of what constitutes good performance and where companies stand compared to industry standards. Without clear benchmarks, companies will struggle to assess their performance accurately.
3. Inadequate resource allocation: Life sciences companies may not allocate resources effectively towards their net zero transformation. That typically stems from not having a clear understanding of which areas require more investment or attention, leading to inefficient resource allocation and limited progress in emission reduction initiatives.
4. Lack of stakeholder engagement: Some life science companies lack a comprehensive view of stakeholder involvement such as employees, suppliers, and customers, resulting in siloed or fractured efforts and support for emission reduction initiatives.
5. Insufficient data management: Effective data management is crucial for measuring and tracking progress in emission reduction initiatives. Without data management, life science companies may lack the necessary systems and processes to collect, analyze, and report accurate data. This can hinder their ability to make informed decisions and monitor the effectiveness of their net-zero strategies.
6. Limited transparency and accountability: Without an up-to-date view of targets and progress, companies struggle to supervise and monitor stakeholders involved in the implementation of their initiatives. This lack of transparency and accountability can undermine trust and hinder collaboration in achieving net zero goals.
Developing a 360-degree view
Life sciences companies must pick up the pace if they are going to meet their 2030 and 2050 carbon reduction goals. One of the most important tactical decisions to make is ensuring leaders have a full view of their company’s efforts. We call it a 360 Maturity Model, where companies execute across four key areas: carbon strategy and steering; carbon controlling; IT support; and carbon cultures and mindset. The goal is to provide transparency on the current state of preparedness to manage and reduce carbon footprint and identify key areas for improvement towards being a high carbon system maturity organization.
Key focus areas:
1) Carbon strategy and steering: A clearly defined carbon strategy is an essential guiding principle for action, together with clearly defined roles, objectives, and incentives
2) Carbon controlling: Carbon controlling gauges the success of CO2 reduction measures, with maturity driven by complete coverage across scopes 1, 2, and 3, as well as real-time carbon reporting and risk analysis
3) IT support: IT systems should support data analytics, carbon accounting, and carbon forecasting systems to allow end-to-end tracking and scenario testing
4) Carbon cultures and mindset: Culture can be measured across capabilities, training, and mindset. A highly mature culture should ensure the alignment of incentives and goals with a carbon-neutral or negative mindset
This 360-degree approach is not a one-time, static project. The assessment must be regularly updated to reflect the latest trends and best practices, ensuring that the model remains relevant and useful to companies in a variety of industries. The tool is designed not only for measuring and reducing scope 1, 2, and 3 carbon emissions but also for assessing the maturity of biodiversity and water management initiatives. By extending its application to these areas, the model can address additional climate-related challenges and contribute to sustainable practices.
The exhibit is illustrative of companies’ progress across 17 dimensions in the key four areas we identified, highlighting the disparity between a company’s status versus leading practices. The better a company performs, the more it advances from level 1 to level 5. The model helps lay out areas where a company should focus its resources. The model creates an opportunity for companies to do a better job of assessing their performance and identifying gaps that need to be addressed.