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Monitoring and Analysing the Impact of Industry on the Environment
Monitoring and Analysing the Impact of Industry on the Environment
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Rarely does mention of the pharmaceutical industry conjure up images of smoke stacks, pollution and environmental damage, yet the sector’s impact on every facet of our environment is vast.
A recent study carried out by researchers at McMaster University found the global pharmaceutical industry is not only a significant contributor to global warming, but it is also dirtier than the global automotive production sector.1
It was a surprise to find how little attention researchers have paid to the industry’s greenhouse gas emissions. Only two other studies had some relevance: one looked at the environmental impact of the U.S. healthcare system2 and the other at the pollution (mostly water) discharged by drug manufacturers.3
The study, by Lotfi Belkhir and Ahmed Elmeligi of McMaster University, was the first to assess the carbon footprint of the pharmaceutical sector.
More than 200 companies represent the global pharmaceutical market, yet only 25 consistently reported their direct and indirect greenhouse gas emissions in the past five years. Of those, only 15 reported their emissions since 2012.
One immediate and striking result is that the pharmaceutical sector is far from green. We assessed the sector’s emissions for each one million dollars of revenue in 2015. Larger businesses will always generate more emissions than smaller ones; in order to do a fair comparison, we evaluated emissions’ intensity.
We found it was 48.55 tonnes of CO2e (carbon dioxide equivalent) per million dollars. That’s about 55 per cent greater than the automotive sector at 31.4 tonnes of CO2e/$M for that same year. We restricted our analysis to the direct emissions generated by the companies’ operations and to the indirect emissions generated by the electricity purchased by these companies from their respective utilities companies.
The total global emissions of the pharma sector amounts to about 52 megatonnes of CO2e in 2015, more than the 46.4 megatonnes of CO2e generated by the automotive sector in the same year. The value of the pharma market, however, is smaller than the automotive market.
“emissions of the pharmaceutical sector were found to be 55 per cent greater than the automotive sector”
By our calculations, the pharma market is 28 per cent smaller yet 13 per cent more polluting than the automotive sector.
We also found emissions’ intensity varied greatly within the pharmaceutical sector. For example, the emissions’ intensity of Eli Lilly (77.3 tonnes of CO2e/$M) was 5.5 times greater than Roche (14 tonnes CO2e/$M) in 2015, and Procter & Gamble’s CO2 emissions were five times greater than Johnson & Johnson even though the two companies generated the same level of revenues and sell similar lines of products.
“emissions’ intensity varied greatly within the pharmaceutical sector”
We found outliers, too. The German company Bayer AG reported emissions of 9.7 megatonnes of CO2e and revenues of US$51.4 billion, yielding an emission intensity of 189 tonnes CO2e/$M. This intensity level is more than four times greater than the overall pharmaceutical sector.
In trying to explain this incredibly large deviation, we found that Bayer’s revenues derive from pharmaceutical products, medical equipment and agricultural commodities. While Bayer reports its financial revenues separately for each division, it lumps together the emissions from all the divisions. The company also reports and tracks its emission intensity in terms of tonnes of CO2e produced for each tonne of manufactured goods, whether fertiliser or Aspirin, for example.
This level of opacity makes it not only impossible to assess the true environmental performance of these kind of companies; it also raises questions about the sincerity of these companies’ strategies and actions in reducing their contribution to climate change.
We also estimated how much the pharmaceutical sector would have to reduce its emissions to comply with the reduction targets in the Paris Agreement.4
We found that by 2025, the overall pharma sector would need to reduce its emissions’ intensity by about 59 per cent from 2015 levels. While this is clearly a far cry from their current levels, it is interesting to note that some of the 15 largest companies are already operating at that level, namely Amgen Inc., Johnson & Johnson and Roche Holding AG.
If those performance levels are achievable by some, why can’t they be achieved by all?
These three leading companies are also the ones with the highest level of profitability and revenue growth in the whole sector. Indeed, Roche, Johnson & Johnson and Amgen showed revenue increases of 27.2 per cent, 25.7 per cent and 7.8 per cent respectively between 2012 and 2015, while managing to reduce their emissions by 18.7 per cent, 8.3 per cent and eight per cent, respectively. This supports the premise that environmental and financial performance aren’t mutually exclusive.
The Paris Agreement
At COP 21 in Paris, on 12 December 2015, Parties to the UNFCCC reached a landmark agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. The Paris Agreement builds upon the Convention and for the first time brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort.
The Paris Agreement central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. Additionally, the agreement aims to strengthen the ability of countries to deal with the impacts of climate change, and at making finance flows consistent with a low GHG emissions and climate-resilient pathway. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The Agreement also provides for enhanced transparency of action and support through a more robust transparency framework.
The Paris Agreement requires all Parties to put forward their best efforts through “nationally determined contributions” (NDCs) and to strengthen these efforts in the years ahead. This includes requirements that all Parties report regularly on their emissions and on their implementation efforts. There will also be a global stocktake every five years to assess the collective progress towards achieving the purpose of the agreement and to inform further individual actions by Parties.
The pharmaceutical industry is responsible for some serious environmental impacts beyond greenhouse gas emissions. For example, the waste water from drug manufacturers in Patancheru, India, has left river sediment, ground water and drinking water polluted. Researchers estimated that in a single day, 44 kilograms of ciprofloxacin, a broadspectrum antibiotic, was released5 – enough to treat everyone in a city of 44,000 inhabitants.
Along this same vein, comes the European Commission’s recent communication outlining a set of actions addressing the multifaceted challenges that the release of pharmaceuticals poses to the environment.6
The “Strategic Approach to Pharmaceuticals in the Environment”7 as presented by the European Commission, identifies six action areas concerning all stages of the pharmaceutical life cycle, where improvements can be made. It addresses pharmaceuticals for human as well as for veterinary use, and covers all stages of the lifecycle of pharmaceuticals: from design and production to disposal and waste management, in line with the principles of the staff working document of the Commission on Sustainable Products in a Circular Economy.8
The six areas identified include actions to raise awareness and promote prudent use, improve training and risk assessment, gather monitoring data, incentivise “green design”, reduce emissions from manufacturing, reduce waste and improve wastewater treatment.
Karmenu Vella, Commissioner for Environment, Maritime Affairs and Fisheries said: “Most of us have had reason to take some form of medicine in our lives, and we are fortunate that we can be helped in this way. Pharmaceuticals are also essential for ensuring animal health. Many of us are, however, not aware that some of what is consumed ends up in the environment having an effect on wildlife such as the fish in our rivers. We must reduce the entry of pharmaceuticals into our rivers and soils for our own benefit and in order to protect the wildlife and the environment.”
Vytenis Andriukaitis, Commissioner for Health and Food Safety, added: “It is essential that medicines are safe and effective for our health, but we should be aware of the environmental impact they may have. Drugresistant bacteria is one of the major health threats worldwide, therefore in our fight against antimicrobial resistance, everyone benefits not only from the prudent use of medicines, but also from a well thoughtthrough production and disposing system. It is time for us collectively to draw attention to the risks of the antimicrobials for the environment. This Communication identifies areas where action is needed and serves us as a stepping stone for our future discussions.”
Pharmaceuticals discarded in the environment have been shown to pose a risk to fish or other wildlife, for example by affecting their ability to reproduce, by altering their behaviour in ways jeopardising their survival, or through direct toxic effects. In addition, incorrectly disposed medicines may contribute to the serious problem of antimicrobial resistance. Increased awareness has prompted further investigation, as well as calls and proposals for action to reduce emissions to the environment, in particular to water but also to soil.
“awareness has grown in recent years of the possible risks from pharmaceuticals in the environment, but so far the knowledge and active policy for reducing the risks are still limited to only parts of the EU”
The European Commission’s communication places an emphasis on sharing good practices, on cooperating at international level, and on improving understanding of the risks. This is crucial in the context of addressing antimicrobial resistance, a problem that is growing at a global level. Several actions in the strategic approach are intended to contribute to the objectives of the European One-Health Action Plan against Antimicrobial Resistance (AMR).9 The Action Plan stresses the need for a One-Health approach, taking account of the interconnections between human and animal health and the environment.
The Commission will follow up the actions set in the Communication, and invites Member States and other stakeholders to take action as well.
Pharmaceuticals are found in surface and groundwater across Europe that is used for irrigation and drinking water production and that is essential for wildlife. Awareness has grown in recent years of the possible risks from pharmaceuticals in the environment, but so far the knowledge and active policy for reducing the risks are still limited to only parts of the EU. The aim of the “Strategic Approach to Pharmaceuticals in the Environment” is to draw attention to those risks.
In 2013 the EU adopted legislation requiring the Commission to develop a strategic approach to pharmaceuticals in the environment, including proposals for measures, where appropriate, to address the possible impacts. The Strategic Approach has been developed, taking into account information gathered through two scientific studies, as well as other information gathered from EU Member States, other stakeholders and research sources. The second study included an analysis of the results of a public and targeted stakeholder consultation on options for possible inclusion in the approach.
Clearly, there is a dire need for more extensive and sustained research as well as more scrutiny of the pharmaceutical industry’s environmental practices and performance. In concert with the above, appropriate regional and global environmental policies need to be deployed to address these unwarranted practices. Healing people is no justification for killing the planet.
Lotfi Belkhir, McMaster University
Lotfi Belkhir is a physicist by training turned successively into an engineer, manager, then business man, and eventually an academic and scholar. In his current role, his teaching and research revolve around innovation, entrepreneurship and sustainability. The three are closely linked as he strongly believes that it is the entrepreneurs who will be able, through innovation, to create superior sustainable products and services that will disrupt the current unsustainable businesses. In his past life, Lotfi worked at Xerox in various roles of research scientist, product development manager and business development executive. He then left Xerox to start his own company in Silicon Valley, Kirtas Technologies. Kirtas developed the world’s first and fasted automatic book scanner and was ranked by Inc. 500 Magazine as one of the fastest growing companies in America two years in a row. The Company also received in 2013 one of the most coveted innovation awards in the world; the Popular Science Best of What’s New Award (the BoWN Award).
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