How life sciences companies are addressing Scope 3 emissions

Companies have traditionally focused on reaching sustainability goals by cutting back on their direct carbon emissions and electricity consumption.

However, they are increasingly addressing emissions from their partners and suppliers. It's a more challenging objective, but one that is recognized more and more as necessary to combat climate change.

For life science companies, Scope 3 emissions are particularly pressing. According to recent JLL research that looked at its Life Sciences clients, about 89% of their emissions fell into this category.

“By acknowledging the significance of Scope 3 emissions and taking proactive measures to reduce them, companies can not only drive positive environmental impact but also enhance their overall sustainability performance and contribute to the transition to a low-carbon economy,” says Ritu Rajashekar, JLL Sustainability Industry Lead - Life Sciences.

It’s not just climate change driving their actions. There are also looming regulations and a stricter definition of what net zero means (for instance, purchasing carbon credits no longer cuts it).

“What we are seeing is forward-thinking companies already collaborating with suppliers, implementing waste reduction initiatives, and streamlining their supply chain processes,” Rajashekar says. “These actions set standards and pave the path for others in the industry to follow and achieve their sustainability objectives.”

As companies embrace science-based targets and move forward in addressing Scope 3 emissions, there’s a broader story unfolding beyond carbon emissions, including considerations around water, waste, and supply chains.

“Developing a comprehensive approach requires operational and technological enhancements, as well as collaboration and support from various stakeholders along the value chain,” Rajashekar says. “This concerted effort is essential for driving meaningful change and creating a more sustainable future.”

For instance, companies can partner with suppliers to reduce the value chain's environmental impact. Merck, a multinational pharmaceutical company, has implemented supplier sustainability programs to encourage emission reductions and promote sustainable practices. The efforts are part of its goal to see a 30% reduction in its value chain emissions by 2030.

Streamlining the supply chain plays a crucial role in this strategy. Life sciences companies can improve their agility and responsiveness to meet market demands by optimizing logistics and reducing transportation-related emissions. Rajashekar emphasizes that collaborating with suppliers who share a commitment to sustainability creates a competitive advantage that resonates with environmentally conscious stakeholders.

Waste reduction is also pivotal in addressing Scope 3 emissions for life sciences companies. US-based company Pfizer has taken concrete steps to optimize its waste management processes, showcasing a commitment to sustainability and environmental responsibility.

Pfizer has implemented various initiatives to minimize waste generation and promote a circular economy. One key strategy involves recycling: by establishing recycling infrastructure and educating employees on proper waste disposal, Pfizer aims to divert a significant portion of waste away from landfills.

The company is also reducing packaging waste and seeking innovative solutions for waste reduction.

“Embracing circular economy principles is key to achieving substantial environmental footprint reductions while enhancing operational efficiency,” says Rajashekar. “A circular economy approach focuses on reducing, reusing, and recycling materials, enabling companies to minimize waste, conserve resources, and mitigate the environmental impact associated with traditional linear production and consumption models.”

While Scope 1 and 2 emissions receive much of the attention, Scope 3 emissions play a vital role in our sustainability goals. These emissions represent the indirect impacts generated throughout a company's value chain, including extraction, production, transportation, and product usage.

Neglecting Scope 3 emissions can result in missed operational optimization opportunities, reputational damage, regulatory non-compliance, supply chain disruptions, and increased vulnerability to market dynamics, says Paulina Torres, JLL research manager of ESG and sustainability. As businesses fail to anticipate and address Scope 3 emissions, they risk being ill-prepared for evolving expectations.

Scope 3 emissions are often overlooked due to complexity and lack of control, yet they hold immense significance for organizations striving for decarbonization, says Torres These emissions capture the hidden impacts that extend beyond a company's immediate operations yet encompass a large share of the emissions they are accountable for – even if indirectly.

“Neglecting to address Scope 3 emissions can not only harm a company's reputation and compliance efforts but also restrict their ability to optimize operations and adapt to market changes,” Torres adds. “Addressing Scope 3 emissions may entail working with the SMEs that commonly form part of organizations’ supply chains, but don’t always have the necessary resources to formulate decarbonization strategies on their own. Leaders in life sciences should look to collaborate with the companies along their value chains so that they may push the overall industry towards a low-carbon economy. Doing so can also foster a culture of innovation and ensure that the best sustainable solutions and products are being developed for the sector.”