Carbon emissions arising from the global supply chains of the European pharmaceutical industry are about ten times as high as its emissions from direct operations. A similar picture is observed for water consumption (about three times as high) or air pollution (twenty times as high). Besides opportunities to effectively reduce total environmental impact, this poses considerable financial risks: Carbon prices are expected to rise or to be introduced to provide incentives for significant emissions reductions and suppliers may pass on such costs. As the vast majority of emissions occur along the supply chain, it is thus important to go beyond own operations when assessing the full carbon-pricing risk exposure. The same applies to water risk, as water is increasingly becoming a scarce resource. Overconsumption and pollution put many regions at risk, presumably leading to raw material shortages and higher costs.
This case study describes how Novartis analyzed the total environmental impact of its business activities along the upstream global supply chain with respect to environmental indicators. The objective was to obtain a comprehensive picture of the upstream environmental impacts triggered by Novartis in order to effectively monitor environmental risks and opportunities in different geographical and operational areas by comparing impacts and dependencies.