Enhancing environmental sustainability

Planetary health has a direct impact on human health. Our commitment to environmental stewardship as a global healthcare company is directly aligned with our purpose to reimagine medicine to improve and extend people’s lives. Our ambition is to be a leader in environmental sustainability, driving positive change through our operations and those of our suppliers.

“You have to deliver every day in order to live up to your own standards and to meet the expectations of patients. This is the mindset that we also need to apply to our environmental sustainability efforts. We need to make these an essential element of how we run our business”

In September, we announced a bold new target to achieve carbon neutrality across our value chain (Scope 1, 2 and 3) by 2030, replacing our existing target for a 50% reduction in emissions. Our supply chain makes up 89% of our overall carbon footprint. To achieve our new target, we plan to develop accurate assessments and benchmarks for the carbon footprints of our suppliers. This will be a challenging process, and it will require close collaboration with our suppliers to help them decarbonize the services they provide to Novartis.

In addition, we are pursuing carbon neutrality in our own operations (Scope 1 and 2) by 2025. In this respect, we have made significant progress since 2016, reducing our carbon emissions by 19%. At the same time, we achieved a 35% reduction in water consumption and a 36% reduction in waste sent for disposal (both versus a 2016 baseline). Our efforts and progress have been recognized; in 2020, Novartis was included in the CDP Water A-List and achieved an A- rating in CDP Climate.

Environmental sustainability targets are included in senior leaders’ personal performance objectives. Additionally, the environmental sustainability dashboard, which tracks quarterly progress across the company, is regularly presented to the Environmental Sustainability Strategy Implementation Steering Committee and the Trust & Reputation Committee. For the first time in 2020, progress against our environmental sustainability targets was presented to the Novartis Board of Directors, which also endorsed our new 2030 carbon-neutrality target.

In 2020, we created the position of Chief Sustainability Officer to lead the strategy and execution of environmental sustainability across Novartis, and drive an effective stakeholder engagement strategy with our external stakeholders and across our value chain.

All these steps signal our commitment to further integrate environmental sustainability in our organization.

Decarbonizing our operations and supply chain

The COVID-19 pandemic created challenges but also opportunities with respect to carbon reduction and energy efficiency. Company travel emissions were reduced to near zero, and engineers were able to upgrade and optimize equipment in buildings that were unoccupied during lockdowns. However, we recognize that the shift to remote working simply displaced the consumption of energy from within our buildings to home offices. Further, changes to building ventilation systems have increased airflow rates and the use of fresh air, which has increased energy consumption.

To meet our 2025 carbon-neutrality target, we continued to work in line with our four key drivers:

Switch to renewable energy: All energy used in our US facilities is compensated with renewable energy credits generated through a virtual power purchase agreement (VPPA) with the Santa Rita East wind farm in Texas. In 2020, this project produced 417 000 megawatt hours of carbon-free electricity, which is the equivalent of powering 481 000 average American households for one year. We are on track to achieve the same ends in Europe. In 2020, we signed five VPPAs with three developers for wind and solar energy projects to address the company’s carbon footprint across its European operations over a period of 10 years from the start of operations. This is equivalent to removing approximately 113 000 passenger vehicles from the road each year. This move makes Novartis the first pharmaceutical company set to achieve 100% renewable electricity in its European operations through VPPAs.

Reduce our demand for energy by improving energy efficiency: The workshops Novartis held in 2019 to identify energy reduction opportunities across our sites have generated more than 300 projects, of which approximately 120 are currently being implemented across the organization. For instance, a steam condensate recovery project at one of our sites in Slovenia saved more than 5 000 gigajoules of energy and reduced the site’s carbon footprint by more than 300 tonnes per year.

Update our manufacturing technology: We are continuing our long-term, strategic shift from traditional chemistry toward highly innovative, sustainable approaches that reduce our carbon footprint, resource consumption and waste. At our facility in Schaftenau, Austria, we are in the process of comparing the use of plastics with traditional stainless steel technology for manufacturing plants and equipment. Initial results suggest that while plastic has a lower overall carbon footprint, it generates more waste, and end-of-life management is more challenging. The information we gather from this experiment will inform how we balance our aim to reduce waste with our carbon neutrality target.

Invest in greener infrastructure: We continue to factor in a price of USD 100 per ton of carbon for investments greater than USD 20 million. Further, the Novartis ECN approved a new global fleet policy that mandates the switch to zero- and low-emission vehicles in at least 22 countries before the end of 2025.

Environmental targets

We have identified a partner to diversify our portfolio of natural climate solutions. This entails moving beyond forestry to explore regenerative agriculture, blue carbon projects and mangrove restoration, with a focus on carbon removal that also benefits health, biodiversity and climate resilience.

We continued to assess the carbon footprints of select products to identify and address hot spots. For example, we completed lifecycle assessment studies of two Breezhaler inhaled products (Atectura and Enerzair), factoring in emissions from raw material production to consumer use and disposal. Carried out in accordance with the Greenhouse Gas Protocol Product Standard, the studies showed that the products had a much lower carbon footprint than metered dose inhalers on the market. We are evaluating if we can certify them as the first Novartis carbon-neutral products, which would likely make them the first pharmaceutical products certified as carbon neutral. That analysis is informing the development of a strategy for reducing product-associated emissions as much as possible, and then offsetting residual emissions that cannot be eliminated. We hope it will lead to a companywide approach to neutralizing carbon emissions across the Novartis product portfolio, which aligns with our new 2030 carbon neutrality target.

In addition, we continued to embed environmental sustainability objectives related to carbon, water, waste and plastics in our supplier contracts, and we work with suppliers to develop and refine their sustainability agendas. We updated the Novartis Third Party Code with specific requirements on environmental performance to reinforce these commitments. The revised code states that Novartis suppliers are expected to act beyond legal compliance to establish and track progress toward achieving their own environmental sustainability targets.

Managing water quality and consumption

We continued to make progress toward our 2025 targets to reduce water consumption in our operations by 50% versus 2016 levels and to ensure there are no water quality impacts from manufacturing effluents. This includes setting risk-based discharge limits for pharmaceuticals in effluent water from our own factories and those of our key suppliers.

In September, we joined PREMIER, a new six-year project with the IMI focused on evaluating and mitigating the risk of medicines in the environment. The IMI is a public-private partnership between pharmaceutical companies, the European Commission and the EFPIA. Following the success of the five-year IMI project iPiE (Intelligent Assessment of Pharmaceuticals in the Environment), which concluded in 2019, PREMIER (Prioritization and Risk Evaluation of Medicines in the Environment) was launched as a collaboration among 10 pharmaceutical companies, 10 research institutes and four small- and medium-sized enterprises. The project aims to deliver an innovative framework for characterizing the environmental risks of active pharmaceutical ingredients (APIs), which can ultimately be used to explore and promote greener drug design and manufacturing.

Reducing waste

We made significant progress toward reducing waste and increasing material efficiency in 2020. For example, by optimizing our in-house incinerators, we reduced the amount of waste sent for disposal by 300 tonnes and generated energy at the same time. We also implemented a new process called process mass intensification, which requires both Novartis associates and suppliers to report how much waste is generated during the production of APIs. We will use this information to identify and implement waste reduction opportunities.

We survey our sites quarterly to track progress toward eliminating single-use plastics in all workplaces by 2021. We were 60% toward achieving this goal before the outbreak of COVID-19. The pandemic has temporarily interrupted progress, as the use of single-use plastics has become necessary due to infection control protocols. Our efforts to eliminate polyvinyl chloride (PVC) in all secondary and tertiary packaging remain on track, with only four of our factories still using PVC. All plan to eliminate PVC before the end of 2021.

Further, we are evaluating more environmentally friendly alternatives to PVC. All our biologics development projects already use BioPET-A, a plant-derived polyethylene terephthalate made from 30% renewable raw material and 70% oil-based raw material. We also now use a fully carton-based packaging design instead of PVC for the packaging of Aimovig (a treatment to prevent migraine), and we plan to replace the PVC packaging of all our marketed biologics in 2021. Additionally, we are working to replace product leaflets with QR codes in medicine packs and have launched a pilot for Kesimpta (a treatment for relapsing forms of multiple sclerosis).

Advocating for change

Novartis signed on to multiple environmental initiatives in 2020, including the UN Global Compact’s CEO Water Mandate, which mobilizes business leaders to make progress on six elements of water sustainability, and Sustainability 30 (S30), a group of sustainability executives from 30 of the world’s leading companies working to accelerate business action on sustainability.

At the height of the pandemic, we joined more than 150 global corporations in the largest ever UN-backed, CEO-led climate advocacy effort, urging world leaders for net-zero recovery from COVID-19. Our CEO reaffirmed the Novartis science-based commitment and signed the joint statement urging governments around the world to align their COVID-19 economic aid and recovery efforts with the latest climate science, calling for policies that build resilience and help drive the climate agenda.

In October, we expressed support for the Task Force on Climate-related Financial Disclosures (TCFD), which aims to develop voluntary climate-related financial risk disclosures across industries. We believe that having a consistent set of disclosures, which can be adopted by companies to inform investors and other stakeholders about the climate risks they face, will help both companies and financial markets better evaluate and price those risks. Please see further details in our first TCFD qualitative disclosure.

Additionally, Novartis engaged with federal and state officials in the US, supporting legislative efforts related to carbon pricing, renewable portfolio standards, zero-emission vehicles, climate resilience and a just climate transition – all important components of responsible business.