“We are in the business of helping people become healthy. But without a healthy planet, it’s a moot point.”
Climate leadership in the pharmaceutical supply chain has come under sharp focus in recent years. From reducing plastic packaging waste to sourcing palm oil sustainably, pharma companies are being pressed to minimize their environmental footprint. The industry’s vast global supply chains – spanning raw material extraction to drug delivery – contribute significantly to plastic pollution and deforestation-linked emissions. In response, major pharmaceutical players have set ambitious sustainability targets since 2022, signaling a transformative shift.
This article explores how pharma companies are curbing plastic usage in packaging and ensuring responsible palm oil sourcing, the strategies and progress achieved in the last three years, and what lies ahead. Investor expectations and new regulations are accelerating these changes, pushing pharma to innovate for a greener, more circular economy. The result is an emerging climate leadership in pharma’s supply chain that is delivering measurable results and reshaping industry norms.
The Plastic Problem: Packaging Innovations and Reductions
Pharmaceutical packaging – from blister packs and pill bottles to syringes and vials – has traditionally relied on single-use plastics for safety and sterility. Unfortunately, much of this plastic ends up as waste, often not easily recyclable due to complex multi-layer materials (https://www.4ocean.com/blogs/pharmaceuticals/eco-friendly-packaging-reducing-plastic-in-pharmaceutical-products) . In 2022, the sustainable pharmaceutical packaging market was valued around $71.6 billion, and it is projected to more than double to $146.3 billion by 2027 (https://stampedwithlovexoxo.com/blogs/love-letters/sustainable-packaging-statistics). This rapid growth reflects a surge in eco-friendly packaging innovations and investments across the industry.
Rethinking Pharma Packaging: Bioplastics, Reusables, and Smarter Design
Leading companies are rethinking packaging design to reduce plastic use without compromising drug safety. Many firms are developing biodegradable or bio-based plastics – such as polylactic acid (PLA) and polyhydroxyalkanoates (PHA) – as alternatives to petroleum-based polymers (https://www.4ocean.com/blogs/pharmaceuticals/sustainable-pharma-innovations-in-reducing-plastic-waste). These plant-derived materials can maintain the necessary durability and barrier properties but with a smaller carbon footprint and better end-of-life options. Pharmaceutical companies are also exploring refillable and reusable containers, moving away from single-use blister packs when possible. For instance, some are piloting compostable blister packaging and pill bottles made from biodegradable materials. While ensuring drug stability remains a challenge, progress in material science is enabling these innovations in niche products. Additionally, firms are working on reducing packaging weight and material volume – an approach endorsed by the EU’s new Packaging and Packaging Waste Directive, which will require all packaging to be recyclable by 2030 (https://ispe.org/pharmaceutical-engineering/march-april-2023/sustainability-design-pharmaceutical-products). Roche, for example, has committed to redesign packaging to use 40% fewer raw materials and reduce weight, as part of its sustainable delivery goals https://xtalks.com/top-10-most-environmentally-sustainable-pharma-companies-in-2023-2024-3778). GlaxoSmithKline (GSK) similarly set a target to cut the environmental impact of its products and packaging by 25% by 2030, including using more recycled content and eliminating unnecessary plastics (https://www.gsk.com/en-gb/responsibility/environment/materials-and-waste).
Closing the Loop: Circular Solutions in Pharma Packaging
Progress is evident in industry-wide initiatives. Circular economy principles are gaining traction, with companies incorporating recycled plastics into manufacturing and designing packaging for recyclability.
The Pharmaceutical Supply Chain Initiative (PSCI), a global industry consortium, promotes sharing best practices in waste reduction and sustainable packaging.
At the logistics end, some pharma firms have introduced take-back programs for used packaging. In Australia, the Pharmacycle program exemplifies this trend: it set up over 870 drop-off points for used blister packs and, since launching in 2022, has recycled 50 million blister packs by the start of 2025, diverting tons of plastic from landfills. The collected material is repurposed into products like composite decking, closing the loop by turning medical waste into useful materials. These efforts not only shrink pharma’s plastic footprint but also raise public awareness, with consumers increasingly participating in recycling programs (https://www.packagingnews.com.au/sustainability/pharmacycle-hits-50-million-blister-packs-recycled).
Regulatory Momentum and the Rise of Eco-Friendly Pharma Packaging
Regulatory pressures reinforce these changes. The European Union’s directive on single-use plastics is pushing to phase out certain disposable plastic items common in pharma packaging. Likewise, many countries (from Japan to Canada) have introduced strict rules to cut plastic use and boost recycling in healthcare. Companies must now balance Good Manufacturing Practice (GMP) packaging standards with sustainability, prompting investment in R&D for materials that are both safe and eco-friendly. The trend toward electronic patient information leaflets, adopted by firms like AstraZeneca, also reduces paper and plastic packaging components, yielding both carbon and material savings (https://www.healthcaremea.com/pharma-companies-astrazeneca-pfizer-reiterate-focus-on-sustainability). With these innovations and policies, the pharma sector is slowly shedding its reliance on single-use plastics. The past three years have shown that climate-conscious packaging – once a niche idea – is becoming mainstream, driven by both environmental necessity and business logic.
Palm Oil in Pharma: Toward Sustainable Sourcing
Palm oil and its derivatives are ubiquitous in pharmaceuticals, serving as excipients, lubricants, coating agents, and emulsifiers in countless formulations. This versatile vegetable oil is found in capsules, tablets (as hydrogenated palm oil for coating), creams (as emulsifying agents), and more (https://whatispalmoil.com/blog/palm-oil-a-crucial-part-of-pharmaceutical-manufacturing). However, palm oil cultivation has long been associated with tropical deforestation and significant carbon emissions. As such, ensuring sustainable palm oil sourcing has become a priority for climate leadership in pharma supply chains. In the last few years, pharmaceutical companies have stepped up commitments to eliminate deforestation and unethical practices from their palm oil supply.
Pharma’s Palm Oil Pledge: Johnson & Johnson’s Role in Protecting Forests
Several leading pharma manufacturers now use only certified sustainable palm oil. Johnson & Johnson (J&J), for instance, relies on palm oil derivatives in various medications and personal care products, and it has maintained 100% RSPO certification for all the palm oil, palm kernel oil, and palm-based derivatives it purchases since 2020 (https://document.rspo.org/2021/Johnson_&_Johnson_ACOP2021.pdf). This means every ton of palm-based ingredient in J&J’s products is covered by the Roundtable on Sustainable Palm Oil (RSPO) standards, which aim to protect forests and human rights. J&J was an early mover – as far back as 2014 it pledged zero deforestation in its palm supply and started mapping its complex oleochemical supply chains to achieve full traceability (https://news.mongabay.com/2014/05/johnson-johnson-commits-to-zero-deforestation-for-palm-oil). “Although our usage is small on the global scale, we are committed to using our buying position to drive responsible palm oil practices worldwide” J&J stated in its pledge. This stance set an example that has echoed through the industry.
Sustainable by Design: BASF’s Push for Certified Palm Ingredients in Medicine
Suppliers to pharma have also facilitated this shift. Chemical giant BASF, which produces many excipients derived from palm kernel oil, announced that it became the first major supplier to offer 100% RSPO-certified lipid-based excipients for the pharmaceutical industry (https://care360.basf.com/docs/default-source/sustainable-palm-oil/6th-basf_palm-progress-report_2021.pdf?sfvrsn=f298b9c4_1/6th-BASF_Palm-Progress-Report_2021.pdf). By 2021, BASF achieved full traceability for its palm kernel oil supply, covering hundreds of mills. Its certified excipient product lines (e.g. Kolliphor, Kolliwax, etc.) enable drug makers to formulate medicines with sustainable palm-derived ingredients. This kind of upstream commitment is crucial, since the pharma sector often uses palm oil in derivative form (oleochemicals) where tracing origin is challenging. As BASF and others provide segregated or mass-balance certified palm ingredients, it lowers barriers for all pharma companies to source responsibly. Indeed, today many pharma companies are RSPO members or have policies mirroring RSPO criteria (no deforestation of high conservation value forests, no peatland conversion, fair labor, etc.), even if their total palm volumes are relatively small. The emphasis is on ensuring that every capsule shell, tablet coating, or cream base that comes from palm supports sustainable practices.
Deforestation, Disclosure, and the EU: Why Pharma Can’t Ignore Palm Oil
Investor and NGO pressure has played a role. Activist campaigns over the past decade targeted consumer-facing sectors first, but now scrutinize pharma’s palm oil use. Being a “laggard” on deforestation can tarnish a company’s reputation. Conversely, pharma firms that demonstrate ethical sourcing can score better on ESG ratings and avoid the risks of supply disruptions. The EU Deforestation Regulation (EUDR), adopted in 2023, adds regulatory teeth to these expectations. By end of 2024, companies placing products with palm oil (or soy, beef, etc.) on the EU market must prove the commodities are deforestation-free (https://www.acre.com/blog/the-eu-deforestation-regulation-the-talent-challenge-for-european-natural-resource-businesses). This law explicitly impacts healthcare: palm oil is listed as an essential component in medicine capsules, ointments, and excipients, all requiring traceability to sustainable sources. Complex global supply chains make this a challenge for pharma, but failure to comply will mean losing access to the EU market (https://www.fgvw.de/en/news/compliance-update-on-the-eu-deforestation-regulation-eudr-in-the-healthcare-sector). As a result, the next few years will likely see even tighter collaboration with initiatives like RSPO and accelerated efforts to map and clean up palm oil supply lines. The sustainability trend for palm oil in pharma, evident since 2022, has shifted from voluntary leadership by companies like J&J to an industry-wide movement driven equally by conscience and compliance.
Conclusion
These are exciting times as we are witnessing the pharmaceutical supply chain undergoing a green transformation at a global scale. What was once viewed as ancillary – reducing plastic waste, sourcing sustainable palm oil, cutting carbon – is now central to pharma’s mission of improving health in a responsible way. The climate leadership shown in the past few years by pioneering companies will become the norm as pressures and opportunities converge. But continued progress is not automatic; it requires expertise, investment, and often, collaboration with external partners. For organizations in the pharma industry looking to accelerate their sustainability journey – from designing carbon-neutral supply chains to investing in verified carbon credits – working with experienced partners is key. This is where consultancies like CarbonCreditCapital.com come in, contact us today to explore sustainability consulting, carbon credit purchases, and collaboration opportunities. Together with your stakeholders, we can ensure that the pharma supply chain of the future heals the planet as much as it heals patients.
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.