Pharmaceutical Sustainability: Strategy, ESG Priorities and Key Challenges

The pharmaceutical industry operates at an unusual intersection of public health mission and significant environmental footprint. It accounts for an estimated 4.4 to 5% of global greenhouse gas emissions — more per unit of revenue than the automotive sector — while depending heavily on water, land, and supply chains exposed to climate and nature-related risk.

Regulatory pressure, investor scrutiny, and supply chain vulnerability are converging to make sustainability a strategic priority rather than a reporting exercise for pharmaceutical companies.

The Sector’s Environmental Footprint

Pharmaceutical manufacturing is energy-intensive. The synthesis of active pharmaceutical ingredients (APIs) involves heat-intensive chemical reactions, purification and distillation processes, and solvent management — all of which drive direct energy use and GHG emissions.

Research commissioned by Health Care Without Harm estimates that the global healthcare sector generates around 4.4% of net global GHG emissions. Within that, pharmaceutical manufacturing has a carbon intensity roughly 55% higher than the automotive sector on a revenue-adjusted basis — driven by the complexity of API synthesis, cold chain logistics, and high-volume solvent use.

Scope 3 emissions — those upstream and downstream of direct operations — account for 70 to 80% of a typical pharmaceutical company’s total carbon footprint. API sourcing, contract manufacturing, logistics, and distribution are the dominant contributors. Without addressing the supply chain, absolute emissions reduction targets are unlikely to succeed.

Without sector-wide action, the pharmaceutical industry’s environmental footprint is forecast to triple by 2050, driven by population growth, expanding healthcare access in emerging markets, and increasing pharmaceutical complexity.

Net Zero and Emissions Reduction

Leading pharmaceutical companies have made significant early progress on Scope 1 and 2 emissions through renewable energy procurement and energy efficiency programmes. Roche and Novo Nordisk have each reached 100% renewable electricity across their direct operations. AstraZeneca has committed to 2025 carbon neutrality for Scope 1 and 2, with net zero across the full value chain by 2045.

The harder challenge is Scope 3. Pharmaceutical companies are increasingly applying Science Based Targets initiative (SBTi) methodology to set credible, independently validated Scope 3 reduction targets — requiring suppliers to report and reduce their own emissions, and shifting procurement towards lower-carbon API sources and contract manufacturers.

For a practical breakdown of Scope 3 measurement, our guide to Scope 3 emission categories covers the fifteen emission categories and how pharmaceutical companies typically approach each.

Water Stewardship

Water is both a direct operational input and a nature-related dependency for pharmaceutical manufacturing. API synthesis requires large volumes of water for reactions, cooling, and cleaning. Many pharmaceutical manufacturing sites are located in regions that face water stress, making abstraction a material operational and reputational risk.

GSK’s experience at its Nashik manufacturing site in Maharashtra, India, illustrates what water stewardship looks like in practice. Nashik is classified as highly water-stressed. GSK identified the site as a priority through its nature dependency assessment and implemented water efficiency measures that reduced abstraction by 28%. In October 2024, GSK became the first pharmaceutical company to receive validated science-based targets for nature from the Science Based Targets Network (SBTN), covering freshwater quality and quantity at its priority manufacturing locations.

Sanofi achieved an 18% reduction in water consumption across manufacturing in 2023. Several pharmaceutical companies are now using the Alliance for Water Stewardship standard as a site-level certification for priority facilities in water-stressed basins.

For more on the SBTN framework and how it applies across sectors, our guide to science-based targets for nature covers the five-step process and the current validation pipeline.

Nature Targets and Biodiversity

The pharmaceutical industry’s nature dependencies extend beyond water. API sourcing relies on stable agricultural and forest ecosystems for botanical raw materials; supply chain disruption from ecosystem degradation is a material risk. Antimicrobial resistance — a critical public health priority — is linked to environmental contamination from pharmaceutical manufacturing discharge, particularly in regions with inadequate effluent treatment.

The WWF Living Planet Report 2024 recorded a 73% average decline in monitored vertebrate populations between 1970 and 2020, with freshwater species declining by 85%. These trends affect the ecological stability that pharmaceutical supply chains depend on for reliable ingredient sourcing and regulatory compliance in global markets.

GSK’s SBTN validation — the first for any pharmaceutical company — signals a shift in how the sector approaches nature risk: from reputational consideration to a governed, target-backed commitment with independent validation.

Product Sustainability and Lifecycle Assessment

A pharmaceutical product’s environmental impact extends well beyond manufacturing. The lifecycle encompasses raw material extraction, API synthesis across geographically distributed contract manufacturers, packaging, cold chain logistics, patient use, and disposal. Understanding that full lifecycle is increasingly required by procurement bodies, regulators, and investors.

In December 2025, PAS 2090:2025 became the first globally applicable standard for environmental lifecycle assessment (LCA) of pharmaceutical products. The standard was developed through a steering group of twelve major companies including GSK, AstraZeneca, Pfizer, Johnson & Johnson, and Novartis. PAS 2090 establishes a consistent methodology for calculating and comparing the carbon footprint of pharmaceutical products — enabling supply chain decisions, green procurement claims, and regulatory submissions to be grounded in comparable, auditable data.

Supply Chain Sustainability

With 70 to 80% of pharmaceutical emissions sitting in Scope 3, supply chain sustainability is where the material work happens. Large pharmaceutical companies are increasingly flowing sustainability requirements down to contract development and manufacturing organisations (CDMOs), API suppliers, and logistics providers.

The requirements vary: some companies mandate supplier SBTi commitments; others set minimum energy efficiency standards or require disclosure via CDP. The direction of travel is consistent — pharmaceutical procurement is becoming a forcing function for supplier sustainability improvement, particularly as CSRD extends reach to non-EU suppliers of large EU-headquartered companies.

For companies navigating CSRD’s biodiversity and supply chain disclosure requirements, our guide to CSRD biodiversity and TNFD reporting covers double materiality assessment and disclosure obligations.

ESG Reporting and Sector Maturity

Roland Berger’s pharmaceutical sustainability benchmarking identifies three bands of company maturity. Initiators have basic reporting infrastructure in place but limited target coverage. Aspirers have set Scope 1 and 2 targets and are developing Scope 3 strategies. Frontrunners have credible, validated commitments across the full value chain, including nature targets, and have embedded sustainability into procurement and product development.

The gap between Initiators and Frontrunners is widening as regulation and investor expectations accelerate. One area consistently underrepresented across the sector is social sustainability in the supply chain. Roland Berger’s research found that social criteria — labour rights, community impacts, supplier wages — are severely underreported relative to environmental metrics, creating a material blind spot as CSRD and investor frameworks extend expectations.

Key Sustainability Priorities for Pharma

The following priorities reflect where leading pharmaceutical companies are focusing effort and where regulatory and investor pressure is highest:

• Scope 1 and 2 decarbonisation: renewable energy procurement and energy efficiency across manufacturing, with third-party verification
• Scope 3 measurement and reduction: supply chain emissions baselining across API suppliers and CDMOs; SBTi-aligned targets with supplier engagement programmes
• Water stewardship: site-level water risk assessment using WRI Aqueduct; SBTN target-setting for priority water-stressed sites; Alliance for Water Stewardship certification
• Nature and biodiversity targets: SBTN engagement for companies with significant land and freshwater dependencies in the supply chain
• Product lifecycle assessment: LCA methodology aligned with PAS 2090:2025 for carbon footprinting at the product level
• CSRD and regulatory disclosure: double materiality assessment; ESRS E1 (climate), E3 (water), E4 (biodiversity), and G1 (governance) disclosures for in-scope EU companies

Getting Started

The effective entry point depends on where a company currently sits. For those without a sustainability baseline, the priority is data infrastructure: Scope 1 and 2 emissions measurement, Scope 3 screening by category, and site-level water data. For companies with existing Scope 1–2 targets, the next moves are a Scope 3 SBTi commitment and a nature dependency assessment using ENCORE or the SBTN’s free tools.

For pharmaceutical companies with operations in water-stressed regions, a water risk assessment using WRI Aqueduct and engagement with the Alliance for Water Stewardship standard is a practical near-term step that builds the data foundation needed for SBTN target-setting.

Brightest helps pharmaceutical companies build the data infrastructure, measurement systems, and reporting workflows that underpin credible sustainability commitments. Speak to an advisor.