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Pharma’s vital role in sustainability and corporate social responsibility

Pharma is in the spotlight as tough questions about sustainability commitments continue to arise

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It’s interrogation time for the pharmaceutical industry with a clamour of questions and demands firing in from all angles on sustainability and corporate social responsibility.

If the pharma industry was a country, it would be the fifth largest emitter of carbon on the earth, and it is facing the glare of scrutiny lasering into every process and action that could influence its impact on the health of society – and the health of the planet.

How organisations tackle these challenges – alongside the day job of discovering, developing, manufacturing and getting therapies to patients – is having an increasing effect on their ability to function, connect with HCPs, identify with patients, attract investors and build a brand reputation with the wider public.

It is a mountainous task even for an industry that thrives on facing and overcoming the intractable. Pharma supply chains range far and wide – Novo Nordisk has 60,000 suppliers and 90% of the Novartis environmental footprint is from its network.

An ambitious response runs through all layers of the industry, with global companies prominent at COP27 outlining decarbonisation plans across active pharmaceutical ingredient supply chains, but the Lancet Countdown 2022 Report framed both the jeopardy and opportunity, stating: ‘The world faces a critical juncture. A health-centred, aligned response to the compounding crises can still deliver a future where people can not only survive, but thrive.’

It is now clear that devising corporate social responsibility (CSR) programmes aligned solely to an organisation’s therapy areas or narrow corporate responsibilities will not be enough.

Nick Hoile, Senior Director of the Health practice at MHP, the public relations and public affairs company, said: “CSR has evolved. Focusing on such things as access to medicines for low and middle income countries (LMICs) or collaborating with the patient and clinical trials community, although critically important, are no longer sufficient.

“Those things are now table stakes. Companies have to go much further and deeper because they are now facing a new set of questions that focus on an organisation’s environmental footprint and its sustainability profile.

“Some will have to fundamentally rewire the way in which they work to achieve big, overarching ambitions such as reaching carbon net zero and deal with more detailed questions about what a small bit of packaging is made of, along with other supply chain issues.”

An urgent need for change
The pressures are building on every aspect of pharma company performance, with regulators making sustainability a factor for reimbursement. Healthcare payers and systems are being blunt about their expectations for improvement, and patients are making health choices based on sustainability factors.

“The urgency for change is coming from all sides,” added Hoile, who helps MHP clients respond to challenges and build narratives that showcase sustainability credentials. “We are seeing regulatory authorities take the environmental impact of a medicine into account in reimbursement decisions and we know patients are comfortable applying the judgements they make on consumer products, packaging and ingredients to their healthcare choices.

“There is a medical education and communications piece that needs to be done at all levels, including the conversations sales teams have with individual physicians. We now have to demonstrate that a medicine is clinically the most effective product for the patient and to make sure there are no non-clinical barriers to an HCP prescribing it if, for instance, there were two or products in the same class available.”

These ‘soft’ influences are harder to quantify and measure, but the impact of sustainability on the bottom line is evident.

The United Nations Development Programme (UNDP) – a regional hub for 128 nations – recently pledged to use its annual $6bn purchasing power to leverage improvements in sustainability from its suppliers, while the NHS in England has given its supply chain five years to fall in line with its plans to hit carbon net zero by 2045. Those that don’t will be excluded from contracts.

But improvements don’t come with the flick of a switch and a report by L.E.K. Consulting, a global strategy consultancy, stated that although 71% of companies are taking a proactive approach to sustainability, only a shade over 20% believe they have the structure or skills to meet these goals.

“This is a new challenge that companies are grappling with for the first time, but it clearly impacts profitability,” said Hoile. “The narrative around the environmental or sustainability footprint of a product could make the difference between a really successful launch and reimbursement or not. It is brand critical.”

Responding confidently
Companies that rely on public sustainability statements and disconnected CSR projects to insulate them against a negative image could be playing with fire, he added. The best way to guard against brand and balance sheet damage, Hoile suggested, is to place communications and external affairs teams at the heart of sustainability and CSR approaches so they can respond to challenges and champion its profile. But not everyone gets it yet.

“Some organisations have done really well in embedding comms from the start so they can tell a strong, engaging story,” he said. “They are the ones who will be answering questions such as: ‘Why are we using that packaging or why can’t you get rid of that process more quickly?’ A company needs to be able to respond transparently and confidently about their ethos and articulate the practical steps they are taking across the supply chain.

“Comms teams can be the lynchpin, supplying technical detail to regulators, HCPs and policymakers, and humanising a company’s approach for public and patient audiences.

“Not all companies are there yet, and some are still on a journey to understand how strong some of the commercial challenges might be, or how firm the pushback from regulators might be in the future.”

Pharma is a highly regulated sector so change can take more time than the environmental lobby would like. Hoile believes this is a factor that needs sensitive handling.

“We are already seeing pressure from some policymakers and health systems to restrict access to medicines in a way that could be harmful to patients. These forces are being driven by environmental specialists rather than healthcare experts,” added Hoile. “Flagging up the carbon footprint associated with a medicine is fine, but restricting access could create health issues and even create a change that displaces the carbon emission to another part of the supply chain.

“There are clearly good intentions but they could lead to unintended consequences that we need to manage. But it does signal a need for industry to think more broadly about engaging with environmental and sustainability decision-makers so they don’t view pharma through a narrow lens. “We need collaboration and the ability to look at issues in the round. For pharma, that means broadening its view and listening to a range of insights.”

New conversations
Pharma’s CSR response has been impressive across the spectrum, with larger companies expanding access to medicines and clinical trials, empowering diverse workforces, improving global health and enshrining ethical approaches and standards across their functions. Start-ups and SMEs also embed green practices in their operations, while the concept of the triple bottom line that commits firms to measuring their social and environmental impact along with their financial performance is taking hold across life sciences.

MHP itself, which employs more than 200 staff in offices across the UK and Europe, has energy, water and waste reduction policies, and has pledged to generate 25% of its revenues from environmental, societal and governance (ESG) work by 2025.

“It is important to who you are as a company,” said Hoile. “It’s also a key factor in attracting and retaining talent, but CSR must be clearly linked to your purpose as an organisation and its performance on the global scale, and also at a local level where the company is based and the communities where its employees live. The local issues they care about are another important focus for CSR efforts.

“No one is saying it is easy – pharma supply chains are complex – but throughout COVID-19 we saw a willingness from regulators to be flexible and work collaboratively in urgent times.

“And what could be more urgent than our climate crisis? There is a really clear call to action for industry and regulators to work openly together on the way forward. It calls for new types of conversations across business, HCPs and patient communities to build consensus on new approaches that improve patient outcomes while also protecting our environment.”

Danny Buckland is a journalist specialising in the healthcare industry

9th December 2022

Danny Buckland is a journalist specialising in the healthcare industry

9th December 2022

From: Marketing, Regulatory

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