As part of the wider healthcare system - which accounts for 4.4% of global emissions22 - Life Sciences companies have a key role to play in the transition to net zero. Positioned in the middle of the value chain, Life Sciences companies’ emissions are indirectly affected by the activities of their upstream suppliers, such as raw materials and ingredients manufacturers, as well as the direct emissions produced by their own operations.
From a double materiality perspective, Life Sciences are also impacted by climate change. The impacts of climate change increasingly affect human health and the vulnerability of global populations to concurrent health threats. Climate change already impacts the spread of infectious diseases and exposure of populations to a higher risk of emerging diseases.23 Extreme climate events, such as drought and flooding, can lead to a higher demand for life-saving drugs and treatments, but may also add significant risk to business continuity due to supply chain disruption.
22 Health Care Without Harm & ARUP. (2019). Health care’s climate footprint: How the health care sector contributes to the global climate crisis and opportunities for action. Retrieved from: https://noharm-global.org/sites/default/files/documents-files/5961/ HealthCaresClimateFootprint_092319.pdf23 Romanello, M. et al. (2022). The 2022 report of the Lancet Countdown on health and climate change: health at the mercy of fossil fuels. The Lancet, 400(10363), 1619–1654. DOI: https://doi.org/10.1016/s0140-6736(22)01540-9
Most Life Sciences emissions sit across the supply chain, so-called Scope 3 emissions. It is estimated that the supply chain accounts for more than 70% of emissions – arising largely from the manufacture, transport, and disposal of goods and services such as medical devices and pharmaceuticals.24
The remaining emissions are direct emissions (Scope 1) and purchased energy emissions (Scope 2). When focusing on decarbonization, Life Sciences companies should align with the decarbonization hierarchy – aiming to avoid and subsequently reduce emissions.Companies should consider neutralizing unavoidable emissions and investing in Beyond the Value Chain Mitigation (BVCM)25 to support the societal transition to net zero. A range of decarbonization solutions are available to the sector with some examples provided below.26
24 Health Care Without Harm & ARUP. (2019). Health care’s climate footprint: How the health care sector contributes to the global climate crisis and opportunities for action. Retrieved from: https://noharm-global.org/sites/default/files/documents-files/5961/ HealthCaresClimateFootprint_092319.pdf25 Science Based Targets initiative: SBTi. (n.d.). Beyond value chain mitigation - science based targets. Retrieved from: https:// sciencebasedtargets.org/beyond-value-chain-mitigation26 Based on research by KPMG’s Global Decarbonization Hub and KPMG in Ireland.
Life Sciences companies can drive the uptake of technical solutions through supply chain engagement and net-zero aligned procurement policies; investment in low carbon R&D; upskilling; and the development of sectoral decarbonization pathways to identify emission hotspots. Life Sciences companies should ensure they have a comprehensive understanding of their impact on and exposure to climate change – through the completion of a carbon footprint assessment and climate change risk assessment (including scenario analysis).
While decarbonization options are readily available for the sector, challenges remain, with cost being a critical barrier to achieving meaningful decarbonization.
Outside of cost, Life Sciences companies are challenged with complex, global supply chains making it difficult to influence decarbonization. Improved data tracking and traceability, and sectoral collaboration for value chain decarbonization, can help overcome this barrier. Life Sciences companies are highly regulated and often require approvals to implement changes to products and processes – this can act as a hurdle for scaling new low-carbon solutions.
The sector is already mobilizing on decarbonization. Sectoral initiatives have been established to drive action, such as the Sustainable Markets Initiative’s Health System Task Force members,27 which require their suppliers to set science-based targets by 2025. This progress by sector leaders is a critical step toward transitioning the Life Sciences to net-zero.
27 Sustainable Markets Initiative. (n.d.). Health Systems taskforce. Retrieved from: https://www.sustainable-markets.org/taskforces/ health-systems-taskforce/28 United Nations Environment Programme: UNEP. (2022). Historic day in the campaign to beat plastic pollution: Nations commit to develop a legally binding agreement [Press release]. United Nations. Retrieved from: https://www.unep.org/news-and-stories/press-release/ historic-day-campaign-beat-plastic-pollution-nations-commit-develop
We see an accelerated market trend and regulatory push – such as the UN’s Plastics Treaty Initiative28 - to reduce waste and shift to circular production and operation processes. Circularity has the capacity to shift the business model of Life Sciences companies and open new potential revenue streams, such as self-administered care and waste management.
It’s important to first acknowledge that there are some products or components that, for legal and hygienic reasons, will always require incineration at the end of their life cycle, with unavoidable emissions. This is mandated by law and not something Life Science companies
can mitigate in a sustainability strategy.
However, it’s not uncommon for clean waste materials (which could be recuperated/recycled) from the Life Sciences and healthcare sectors to still be incinerated alongside contaminated materials. Whether this is due to a lack of separation of materials from the collection point (healthcare providers or the Life Science companies themselves) or a 'better safe than sorry' approach from waste management companies, the result is that emissions from incineration may be higher than necessary.
Suzanne Kuiper Director of Circular Economy and Product Decarbonization KPMG's Global Decarbonization Center
There is an opportunity for Life Sciences companies to work in partnership with healthcare providers and waste disposal companies to better inform and educate one another on what happens to waste products and end-of-life disposal and investigate ways to reduce waste and limit emissions – either at the source, or at disposal.
Where there are new technologies available for greater accuracy in waste sorting, there are also opportunities to transform this process to contribute to the overall sustainability of the value chain.
Meanwhile, when it comes to choosing materials for products and designing packaging, for example casings for certain types of medical devices, there is significant potential for the industry to seize the possibilities offered by alternatives. Companies that are not already doing so could expand their offering to patients and healthcare customers by creating new service lines for reusing, reprocessing, repairing, and/ or recycling parts of medical instruments and devices. This would help the Life Sciences sector to shift from a linear industry, to one which is instead a regenerative partner29 to the communities and markets in which it operates.
As the healthcare industry shifts from centralized to more self-administered care, we fully expect the demand for single-use products to increase.
Single–use items and other disposables can have a waste impact on the environment – especially the marine environment, where most plastics and microplastics are found. This was particularly noticeable during the COVID-19 pandemic, when single-use products such as commercially sold surgical masks and PCR self-test casings were increasingly found amongst waste in rivers and the marine environment. These can then become choking hazards for animals that mistake them for food or break down into microplastics which enter the food chain, with negative heath consequences for plant, animal, and human life at every trophic level; the long-term health effects of which are only just beginning to be understood.
29 Silverthorne, K. (2021). Doughnut Economics and the Circular Economy: Implications for the healthcare industry and the role of medical writers and communicators. In Medical Writing (Vol. 30, Issue 3). Retrieved from: https://journal.emwa.org/medical-decision-making-and-health-technology-assessment/why-would-the-healthcare-industry-need-a-doughnut/article/10015/why-would-the-healthcare-industry-need-a-doughnut_.pdf
Circularity is not limited to plastics, of course. Especially for medical devices, there are also the electronic components, gases (e.g., helium for MRI machines), rare earth minerals and metals, and batteries to consider, which have associated challenges when it comes to resource scarcity and end-use recyclability. In the EU, there are regulatory imperatives for medical device producers to be able track a device throughout its complete life cycle - right up to the point of disposal.30
Companies are expected to maximize opportunities for circularity throughout the life cycle of medical devices, reprocessing and collecting for re-use where possible, and facilitating safe and responsible waste disposal for components that cannot be re-used or recycled.31
All-in-all, we expect that there will be increased scrutiny of companies contributing to plastic, waste, and biochemical pollution of land, air, and water systems, implying significant reputational and regulatory risk for companies that have not taken steps to reduce these impacts.
30 KPMG. (2023). From Linear to Circular - Sustainability in the Medical Device Industry. Retrieved from: https://assets.kpmg.com/content/ dam/kpmg/be/pdf/2023/From-Linear-to-Circular-Sustainability-in-the-Medical-Device-Industry.pdf 31 KPMG. (2023). From Linear to Circular - Sustainability in the Medical Device Industry. Retrieved from: https://assets.kpmg.com/content/ dam/kpmg/be/pdf/2023/From-Linear-to-Circular-Sustainability-in-the-Medical-Device-Industry.pdf
“Novo Nordisk is embracing a circular approach to achieve net zero environmental impact. We’re designing and producing products that can be recycled, while reshaping business practices to minimise consumption and turn waste into new resources.
As part of this, we’re spearheading a take-back industry solution to recycle plastic from injection pens. Plastic and the injection pens are very tangible - the patient has it in their hands, and everybody can relate to it – so it’s both easy to communicate and understand.
Our returpen™ pilot started with three cities in Denmark, then scaled to a national project. In May 2023, we teamed up with peers and competitors to launch an industry pilot. Hence, we are now four leading pharmaceutical companies (including us), a pharmaceutical association, two patient organizations, a medical industry association, hundreds of pharmacies, clinics, competing distributors, and a recycling partner collaborating on solving the end-of-life product challenge. Furthermore, we are running Novo Nordisk pilots in the UK, France, and Brazil, and are expanding.
At management level, we’ve experienced the impact of thinking differently about sustainability - joining forces with peers and competitors to share capabilities, benefits, and risks. It’s groundbreaking to work this way. We compete head-to-head in commercial markets but believe it’s better to collaborate on sustainability.
We’ve also seen that employees, regulators, and other stakeholders respond well to such explicit examples of action. For instance, the UK’s National Health Service is highly committed to net zero and only wants to collaborate with manufacturers that share this vision. It’s increasingly critical to demonstrate a circular approach, communicating data with granularity and evidence of impact. The take-back program resonates well because it’s action-oriented, with tangible results, while helping to build a circular system across the whole value chain for the future.”
Niels Otterstrøm Jensen Head of ReMed Programme Corporate Environmental Strategy Novo Nordisk
The Life Sciences sector plays a pivotal role in human health and wellbeing, constantly striving to develop new ways to combat illness and disease. However, amid the pursuit of medical advancements, it is essential for Life Sciences companies to recognize the profound impact and dependencies they have on biodiversity and the environment. As stakeholders increasingly demand sustainability and responsibility, Life Sciences companies have an opportunity to embrace their unique position in the value chain and take proactive measures to become champions of biodiversity conservation.
Life Sciences companies also need to consider the impact of their products' active ingredients on water, soil, and air after use. Improper disposal of expired pills and medical waste is unfortunately common, leading to biochemical pollution and the release of resistant active ingredients32 into the environment. Together with microplastics, active pharmaceutical ingredients (APIs) can disrupt the endocrine functions of many species, which can impact fertility and hormonal functions necessary for healthy populations. Lower fertility rates amongst wild species can reduce genetic diversity in natural species populations over time – both flora and fauna – which could have significant consequences for the future potential of these ecosystems as resources to support innovation in the Life Sciences sector.
32 Kumar, V., Bansal, V., Madhavan, A., Kumar, M., Sindhu, R., Awasthi, M. K., Binod, P., & Saran, S. (2022). Active pharmaceutical ingredient (API) chemicals: a critical review of current biotechnological approaches. Bioengineered, 13(2), 4309–4327. DOI: https://doi.org/10.1080/21 655979.2022.2031412
As climate change intensifies, migration and ecosystem patterns of wildlife are also changing, bringing them ever closer to human and livestock populations in search of food and shelter. If these species are carrying communicable diseases caused by bacteria, due to biochemical waste in the natural environment, this will have severe consequences for livestock and human health.
There is already a rising number of zoonotic diseases being transmitted between animals and humans through closer proximity of wildlife, livestock, and human populations. Addressing the issue of communicable diseases related to biochemical waste is therefore crucial to mitigate the Life Sciences sector's impact on biodiversity and the effects that unhealthy ecosystems’ wildlife populations can impose on human health.
There is an opportunity for biotech and pharmaceutical companies to take the lead on improving end-user education around the dangers of overuse of antibiotics and anti-viral medications (e.g., by livestock producers and fisheries). There is also an ecosystem development opportunity for Life Sciences companies to work more closely in partnership with retailers, healthcare providers, and waste management services to develop improved waste management pipelines through sharing expertise and resources.
The growing understanding and severity of the material impacts of APIs on society and the environment requires the targeted attention of executives and board members. Biochemical waste must be urgently prioritized as the most critical effect on biodiversity that biotech and pharmaceutical companies need to address in their corporate strategy.
By 2050, it is expected that the world will experience a 20-30% increase in global water demand,33 with 75% of the global population facing issues with drought, potable water shortages, and water pollution.34 We will face challenges with both the quantity and quality of available fresh water. Europe is no exception to this, with approximately 30% of European territories already experiencing water scarcity for a significant part of the year, and the situation is worsening.35
This will not only affect individual households but place significant strain on companies that rely on water for their operations. As a highly water-intensive sector, there are major risks and dependencies related to water that Life Sciences companies need to address by investing in long-term resilience and adaptation. This is especially the case for Life Sciences operations that require highly purified water (e.g., pharmaceutical R&D and production) and need additional measures to avoid contamination with pathogens, bacteria, and viruses.
We foresee that there will be fiercer competition for quality water resources in the coming years, with demand outstripping supply in many countries.36 In extreme cases, this could also lead to governments rationing national water supplies among critical industries. To mitigate these possibilities, it’s important for biotech and pharmaceutical companies to find solutions to reduce the water intensity of their product development, production processes,
and facilities. This includes investing in water circularity infrastructure and solutions for greater water independence, so that companies are less reliant on freshwater withdrawals from reservoirs and underground water supplies. For forward-thinking companies that are especially skilled at this, there is an opportunity to both become net water positive and develop water-efficient technologies that can then be patented and sold to generate additional revenue.
Of course, water management is not just about water intake, but also how wastewater is processed to prevent active ingredients, chemicals, and other biological materials from contaminating the natural environment.
Systems thinking is useful to identify co-benefits from wastewater management. For example, innovative solutions in wastewater treatment and circular solutions will help reduce greenhouse gas emissions, and nature-based solutions at the watershed level can increase availability and quality of water.
33 UNESCO World Water Assessment Programme & UN-Water. (2023). The United Nations World Water Development Report: Partnerships and Cooperation for Water. UNESCO Publishing. Retrieved from: https://www.unwater.org/publications/ un-world-water-development-report-202334 United Nations Convention to Combat Desertification: UNCCD. (n.d.). Drought. United Nations. Retrieved from: https://www.unccd.int/ land-and-life/drought/overview
35 European Environment Agency. (2023). Water scarcity conditions in Europe (Water exploitation index plus). European Union. Retrieved from: https://www.eea.europa.eu/en/analysis/indicators/use-of-freshwater-resources-in-europe-136 Kuzma, S. (2023). 25 countries, housing one-quarter of the population, face extremely high water stress. World Resources Institute. Retrieved from: https://www.wri.org/insights/highest-water-stressed-countries#:~:text=According%20to%20data%20from%20 Aqueduct%2C%2031%25%20of%20global,%2415%20trillion%20%2824%25%20of%20global%20GDP%29%20in%202010.
