Due to the imminent threat of climate change and expected legal measures, companies across different sectors are increasingly driven to set and actively pursue sustainability objectives.
The pharmaceutical sector, faced with rising stakeholder expectations and tightening regulations, is accelerating efforts to reduce its environmental impact. Several major players in the industry have committed to achieving net-zero emissions as their climate sustainability target. These leading pioneers are blazing the trail by implementing policies and undertaking initiatives, including the purchase of carbon credits, to accomplish this ambitious objective.
The pharmaceutical industry’s carbon footprint
The pharmaceutical sector is a significant contributor to global emissions. If it were a country, its carbon footprint would rank 9th in the world. Energy-intensive manufacturing processes, extensive distribution networks, and greenhouse gas-emitting propellants in inhalers drive up the industry’s climate impacts. Experts urge pharmaceutical companies to act, as unmitigated warming could strain global health systems and hinder access to vital medications.
While daunting, the mission is not impossible. Industries like tech and retail are demonstrating that reaching net-zero is within grasp. Google aims to run entirely on carbon-free energy by 2030. IKEA plans to become climate positive by 2030 by reducing more greenhouse gas emissions than its value chain emits. These commitments raise the bar for pharmaceutical companies to take equally bold climate action.
Major industry players are stepping up. AstraZeneca, Novartis, and Takeda have set ambitious net-zero targets, while investing in renewable energy, green chemistry innovation, and carbon removal. Their efforts are having ripple effects as peers follow suit. With collaboration and persistence, the pharmaceutical industry can curb its emissions in line with climate science.
AstraZeneca’s U$1BN of climate commitments
With over $26 billion in annual revenue, British-Swedish firm AstraZeneca is one of the world’s largest pharmaceutical companies. It manufactures blockbuster treatments ranging from diabetes to oncology medications.
In 2020, AstraZeneca announced its Ambition Zero Carbon strategy, aiming to achieve carbon neutrality across its entire value chain by 2030. This bold pledge puts AstraZeneca at the vanguard of climate action in pharma.
To meet its goal, AstraZeneca is transitioning to 100% renewable electricity at its sites by 2025. It is also optimizing manufacturing to curb emissions, while partnering with suppliers to reduce their carbon footprints. Further, AstraZeneca plans to eliminate fossil fuel vehicles from its fleet by 2030.
Beyond its operations, AstraZeneca is developing a portfolio of over $1 billion in green investments. These include carbon removal and storage solutions expected to offset about 2.5 million tonnes of CO2 annually by 2025.
AstraZeneca’s commitment is spurring the industry to accelerate sustainability initiatives. Being the pioneer in the pharmaceutical industry to establish a bold net-zero objective that encompasses its entire value chain, AstraZeneca is setting a remarkable example that its competitors will have to strive to emulate.
Novartis to use 100% renewable energy within 2023
Headquartered in Switzerland, Novartis is a leading global medicines company with over $48 billion in 2021 revenue. Its therapeutic areas span eye care, immunology, and cardiovascular treatments.
In 2021, Novartis announced its aim to achieve carbon neutrality across Scopes 1, 2, and 3 by 2040. Scope 1 and 2 cover direct emissions from Novartis’ operations, while Scope 3 includes indirect emissions across its supply chain.
Novartis’ environmental policies are publicly available on the internet. The company has made meeting its net-zero ambition a top priority, with a strong and focused approach in four crucial areas: sourcing renewable electricity, enhancing energy efficiency, promoting innovative green chemistry, and investing in carbon removal offsets.
Already, Novartis sources 80% of its electricity from renewables. It is also optimizing production processes, deploying automation, and modifying fleet vehicles to curb emissions. The company is on track to source 100% of its power from renewables by years’ end of 2023.
Additionally, Novartis is pioneering molecular design techniques to develop medicines with lower environmental impacts. Furthermore, the company is actively investing in projects that focus on nature-based carbon removal, such as collaborating with Carbon Direct to expand the implementation of carbon forestry offsets.
By setting and working toward net-zero science-based targets, Novartis is positioning itself as a leader in green pharmaceutical manufacturing. Its multipronged approach can serve as a model for other companies.
Takeda Pharmaceuticals shows the way for Asia
Japan’s largest pharmaceutical company, Takeda Pharmaceutical generates over $30 billion in annual revenue from medicines treating conditions from cancer to rare diseases.
In 2021, Takeda announced its commitment to achieving net-zero greenhouse gas emissions by 2040. It is working to reduce and offset its entire carbon footprint, including Scope 3 emissions from its supply chain.
Takeda is achieving its goal by increasing renewable electricity usage, improving energy efficiency at its sites, electrifying its vehicle fleet, and reducing emissions from business travel. It aims to cut Scopes 1 and 2 emissions 46% by 2030.
Takeda is also collaborating with pharmaceutical industry partners and suppliers to curb emissions across its value chain under the Pharmaceutical Supply Chain Initiative. And it plans to utilize carbon removal offsets for hard-to-abate emissions.
Takeda’s pledge to achieve net-zero marks a groundbreaking moment for the pharmaceutical industry in Asia and beyond, as they lead the charge towards comprehensive decarbonization. Its 2040 target and interim science-based milestones demonstrate meaningful leadership.
Pharma’s challenges in reaching net-zero
Despite strong commitments from sustainability front-runners, achieving net-zero emissions poses complex challenges for pharmaceutical companies. Many production processes inherently rely on fossil fuels as heat sources and for transporting materials. Companies need major capital investments to transition these operations to clean energy alternatives.
Pharmaceutical distribution and long, complex supply chains also make emissions reductions difficult. Cold chain storage and last-mile delivery result in substantial greenhouse gas outputs. Meanwhile, developing green chemistry solutions requires years of research and development, along with new manufacturing infrastructure. These costs can be prohibitive. Further, credibly offsetting all residual emissions will necessitate scaled up, verifiable carbon removal markets. Technical and economic hurdles remain for many offset types.
Overcoming Challenges
While obstacles exist, experts emphasize they can be solved through collaboration, innovation, and policy action.
Companies can join forces and share their knowledge and resources through initiatives like the Pharmaceutical Supply Chain Initiative. This collaboration enables them to not only expand their renewable energy procurement, but also boost their efficiency and make strides in green chemistry.
Governments can help by offering incentives for clean technology investments and funding research into pharmaceutical process improvements.
International cooperation can accelerate decarbonization of global supply chains. And standardized offset methodologies will ensure carbon removal credits have integrity.
Ultimately, reaching net-zero will depend on persistence, investment, and cross-industry partnership. But the health and environmental benefits make it imperative for pharmaceutical companies to see it through.
Opportunities from net-zero efforts
Pursuing net-zero also opens up opportunities for pharmaceutical companies to add business value, beyond environmental benefits. Optimizing processes for energy efficiency provides cost savings from reduced power consumption and heating needs. Streamlining supply chains also cuts costs over the long-term.
First movers on net-zero can boost their reputations with consumers and investors, who increasingly prioritize sustainability. These companies may have better talent recruitment and retention.
Developing and marketing lower carbon medicines can become a competitive advantage. Doctors and health systems are paying more attention to the climate footprint of drugs.
AstraZeneca’s partnerships have the potential to unlock opportunities for companies to venture into the burgeoning green investment markets. Through these collaborations, businesses can not only contribute to the sustainability of our planet but also reap financial benefits by investing in carbon removal and renewable energy projects.
Finally, building climate resilience helps ensure business continuity as physical impacts of climate change accelerate.
Government policy propels climate action
Governments are ramping up policies aimed at decarbonizing pharmaceutical value chains through incentives and requirements.
The Inflation Reduction Act of 2022 in the United States presents an extraordinary opportunity, providing over $60 billion in incentives dedicated to fostering energy efficiency, electrification, and groundbreaking advancements in green chemistry. This can offset costs for companies pursuing these strategies.
The EU’s pharmaceutical strategy aims to make drug manufacturing and distribution more sustainable by implementing green product design and procurement requirements. This will help reduce emissions.
India released a roadmap in 2022 pushing pharmaceutical companies to adopt renewable energy and assess Scope 3 climate impacts. It aims to help India meet its national climate targets.
Such policies encourage pharmaceutical companies to take ownership of their emissions and are likely to expand as more governments declare net-zero commitments.
The Road Ahead
While the 2030s and 2040s may seem like distant milestones, reaching net-zero requires immediate action across pharmaceutical supply chains. Industry leaders have provided a blueprint – including renewable energy procurement, distribution optimization, green chemistry, and carbon removal.
New technologies and nature-based solutions are expanding decarbonization opportunities. With collective willpower, strategic investment, and transparent reporting, net-zero is within the pharmaceutical industry’s reach. All stakeholders must maintain pressure and hold firms accountable to their pledges for a sustainable future.
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Photo by Myriam Zilles on Unsplash
Insetting program design starts with your supplier map. The carbon claim comes much later.
Consider a coffee procurement team that funds a farm intervention before checking its sourcing data. The supplier aggregates coffee lots from several regions. The buyer lacks farm-level traceability. Another purchaser expects to report the same outcome. A more attractive project brochure solves none of these problems.
If the distinction between a value-chain intervention and a purchased credit is still open, read CCC’s Insetting vs Offsetting guide before you set the brief.
Insetting program design begins with the purchasing relationship and works outward. You need to decide 1) where an intervention belongs, 2) what business problem it addresses, 3) who pays for it, 4) how results will be measured, and 5) what the evidence will let you say about them. This five-step playbook turns that sequence into a procurement plan.
Step 1: Insetting program design starts with supplier mapping
Start with the commodities that matter most to your Scope 3 inventory and sourcing continuity. Ask finance for spend by supplier, sustainability for the emissions baseline, and category managers for origin and volume records. Then identify which suppliers can trace material to a jurisdiction, sourcing region, producer group, or individual land-management unit.
The level of traceability affects what you can account for. Under the GHG Protocol Land Sector and Removals Standard, the spatial boundary for purchased land-based products depends on the traceability associated with each volume. Farm-specific factors or removals require physical traceability through an acceptable chain-of-custody model. A contract with a tier-one trader, by itself, does not establish a link to the farms behind its deliveries.[1]
Build a first-pass table with five columns: commodity and annual volume; supplier and origin; current traceability level; land-use and production risks; and the business owner who can change the purchasing terms. Mark missing data plainly. A blank cell is cheaper to fix before a program starts than after a claim is drafted.
If your company sets an SBTi Forest, Land and Agriculture target (FLAG), keep its land-related target boundary separate from energy and industry emissions. The current FLAG guidance also requires relevant companies to assess primary deforestation-linked commodities in their value chains.[2]
Step 2: Choose a commodity and jurisdiction for a pilot
Select one supply corridor where the sourcing connection can be established and procurement has a reason to stay. A useful pilot has repeat purchases, suppliers willing to share records, an intervention matched to a diagnosed problem, and a defined plan to measure the result. Carbon potential alone is a poor selection rule if the supplier cannot deliver the crop your business needs.
Compare candidate regions on land-use risk, supplier concentration, local rights and tenure, the availability of baseline data, and exposure to drought, erosion, or forest conversion. Check the relevant legal requirements separately. A nature project does not satisfy a due-diligence obligation merely because it has a carbon method attached.
Consider a coffee buyer sourcing from two districts. In the first, producer-group records identify the farms, while recent dry seasons have increased rejected green coffee lots. In the second, deliveries pass through several intermediaries and farm origins are unknown. Pilot shade management in the first district, with local agronomic advice and quality checks built into the plan. The buyer can trace purchases there and test the intervention against a defined sourcing problem.
Use a short decision memo to record why the selected corridor beats the alternatives, what remains uncertain, and what would stop the pilot. That memo is the first control against a project drifting toward whatever happens to photograph well.
Step 3: Design the supplier engagement and commercial model
The intervention needs an owner on each side of the contract. Decide who supplies planting material or training, who maintains the practice, who bears the cost if a harvest disappoints, and how long the buyer expects to purchase from participating suppliers. Where smallholders participate, budget cash flow and technical support for practices that offer a later return.
Put these terms in a supplier agreement or pilot addendum. It should cover eligible farms and volumes, consent to data collection, access for monitoring, any land or carbon rights that matter, benefit sharing, and what happens if the purchasing relationship ends. Ask local counsel and producer representatives to review the arrangement. The Accountability Framework is a useful reference for supply-chain work involving forests, ecosystems, and human rights.[3]
Avoid assigning an automatic carbon benefit to the buyer. The contract should say which party has the right to report each outcome, how overlapping claims will be checked, and how any issued credits will be handled. A reduction reported in a buyer’s inventory cannot simply be sold for someone else’s offset claim without an accounting review. SBTi FLAG guidance excludes purchased credits used as offsets from near-term FLAG target achievement.[2]
Set commercial measures beside environmental ones: delivered volume, rejection rate, supplier retention, and procurement cost. They tell you whether the program works as a supply-chain investment, even if carbon accounting takes longer to resolve.
Step 4: Build monitoring, reporting, and verification before rollout
Agree on the baseline and data flow before paying for a full rollout. Identify the land units or sourcing regions in scope, the practices that change, the records suppliers already keep, and the additional measurements the program requires. Decide which data can come from field visits, transaction records, or remote sensing, and who checks each source.
For carbon, separate three questions. Did the practice happen? Did emissions or removals change under an applicable method? Can the buyer attribute a defensible share to its purchased goods without double counting? The GHG Protocol’s 2026 guidance includes dedicated chapters on spatial boundaries, data and methods, evaluating actions, credited outcomes, and assurance.[1] These are distinct jobs. A photograph of a planted tree answers only part of the first.
CCC’s MRV and Additionality article explains the separate evidence questions a project reviewer will ask.
Create an evidence file for every reporting period: dated supplier and farm records, purchase volumes, methods and emission factors, uncertainty, quality checks, and changes from the baseline. Specify who can challenge the data and how corrections are recorded. If a project also seeks credit certification, keep project accounting and corporate inventory accounting separate. The GHG Protocol says its land standard focuses on entity-level inventories and does not set the rules for credit certification.[4]
Start with the minimum viable measurement design that can survive review. Add complexity when the pilot tells you which data actually changes a decision.
Step 5: Decide what can be reported and claimed
Insetting program design needs reporting rules before the marketing copy. Procurement, sustainability, finance, and legal should agree on four distinct outputs: operational performance; observed land or nature outcomes; inventory effects, if the accounting criteria are met; and any separately issued credits. One dashboard can display them, but they should not share a single unqualified headline.
SBTi FLAG guidance allows certain land-based removals within a company’s operations or supply chain to contribute to FLAG pathways, subject to criteria including permanence, traceability, data quality, and allocation. It does not allow purchased offsets to meet near-term FLAG targets.[2] Eligibility therefore depends on evidence and the applicable target rules, not on calling an activity “insetting.”
Draft a claims register. For each proposed sentence, record the period, boundary, data owner, calculation method, reviewer, and whether the result is measured, estimated, or still a goal. If the evidence supports only “we funded a pilot with 200 farms,” say that. Do not turn a funding fact into a verified emissions reduction.
What good looks like by year three
Treat year three as a review point, not a promised payback date. A mature pilot should have mapped participating supply volumes, a stable supplier agreement, a repeatable data collection process, and a comparison of commercial and environmental results against the baseline. It should also have a documented answer for outcomes that cannot be included in the buyer’s inventory.
Scale only where the pilot improves a sourcing decision and the evidence can follow the product. If neither condition holds, redesign the intervention or change the corridor. A disciplined program can conclude that a site is unsuitable. That is useful procurement intelligence.
Discuss your insetting program with CCC
Carbon Credit Capital designs nature-based supply chain investments around sourcing needs and measurable sustainability outcomes. Schedule a consultation with our carbon and sustainability experts to map your tier-one supplier network, FLAG exposure, and first pilot decision.
Sources
[1] GHG Protocol, Land Sector and Removals Standard, version 1.1, and companion Guidance, June 2026: https://ghgprotocol.org/land-sector-and-removals-standard ; https://ghgprotocol.org/land-sector-and-removals-guidance
[2] Science Based Targets initiative, Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, especially pp. 16–17, 37, and 41: https://sciencebasedtargets.org/resources/files/SBTiFLAGGuidance.pdf
[3] Accountability Framework initiative, Accountability Framework and guidance for companies: https://accountability-framework.org/
[4] GHG Protocol, Frequently Asked Questions: Land Sector and Removals Standard, questions 10 and 18: https://ghgprotocol.org/blog/frequently-asked-questions-land-sector-and-removals-lsr-standard
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
