Founder and CEO, Livinovea

Making ESG Operational in the Life Sciences Industry

Environmental, social, and governance (ESG) considerations are influencing how organizations allocate capital, develop business strategies, manage supply chains, and evaluate long-term performance.

Although definitions and reporting frameworks continue to evolve, ESG has become a discussion topic across the life sciences industry. The balance between value creation and regulatory compliance is not always clear, and standards continue to develop.

Unlike many industries, pharmaceutical manufacturing operates under stringent regulatory requirements, where changes to products or processes require scientific evidence, validation, and regulatory oversight, making ESG implementation fundamentally different from other sectors.

For life sciences, the challenge is less about reporting than about translating ESG commitments into day-to-day decision making. This requires cross-functional coordination, supply chain transparency, and decisions made throughout product development and manufacturing, often years before they appear in a sustainability report.

The question is therefore how ESG can be meaningfully integrated into drug development and manufacturing operations.

Cross-functional reality

Meaningful ESG progress requires coordination across functions with different objectives, metrics, and decision frameworks. Management sets strategic targets, finance oversees disclosures, procurement engages suppliers, chemistry, manufacturing, and controls (CMC) teams develop manufacturing process, quality assurance (QA) ensures compliance, and regulatory affairs manages interactions with health authorities.

Each function optimizes its own key performance indicators (KPIs), yet ESG performance emerges from the interaction between these functions and not any function alone.

In practice, ESG is often driven by a small central sustainability team operating separately from line functions like technical development, manufacturing, and supply chain, where relevant decisions are made.

ESG related metrics have not yet been fully embedded into existing organizational decision frameworks. Supply chain teams optimize cost and lead time; CMC teams focus on yield and cycle time. For ESG to create value, relevant metrics need to become a part of existing decision frameworks and not a separate reporting layer.

Unlike traditional KPIs that optimize a single objective, ESG brings together multiple considerations. The challenge lies in balancing them alongside quality, patient safety, supply continuity, cost and regulatory requirements.

Many manufacturing and supply chain improvements contribute simultaneously to multiple objectives, though their benefits are measured differently. Process intensification that reduces solvent consumption and improves yield also lowers environmental impact and cost of goods. Initiatives that improve on-time-in-full (OTIF) performance frequently reduce waste and associated emissions.

Many challenges across the pharmaceutical value chain are at the interfaces between functions. The same applies to ESG, where scientific, business and operational considerations need to be aligned early in development. Cross-functional governance becomes essential to manage trade-offs and support consistent decision-making across the product lifecycle.

Solvents and process efficiency

Solvent use is consistently identified in life cycle analyses as one of the primary drivers of energy demand in manufacturing.

Data generated by the American Chemical Society Green Chemistry Institute Pharmaceutical Roundtable (ACS-GCIPR) estimate that manufacturing one kilogram of active pharmaceutical ingredients (APIs) generates approximately 182 kg of waste on average, with solvents accounting for 80− 90% of process mass intensity (PMI) for small molecules drugs.

Although significant reductions have been achieved for many small molecules over the past decade, increasing molecular complexity and the growing presence of newer therapeutic modalities such as peptides and oligonucleotides, continue to increase overall solvent demand.

Process mass intensity (PMI) is a widely used benchmark for manufacturing efficiency. For small molecules is typically between 100 and 200, while for oligonucleotides manufactured via SPOS is above 4,000. Many decisions that determine PMI are made long before manufacturing begins. Molecule design influences a substantial proportion of commercial cost of goods, and consequently, a comparable share of the environmental footprint. PMI therefore serves not only as a manufacturing efficiency metric but also as a practical indicator linking process design with environmental performance.

Manufacturing efficiency, however, represents only one part of the overall environmental footprint. Once a drug candidate enters development and manufacturing, suppliers, contract development and manufacturing organisations (CDMOs), and other partners become equally important contributors across the product lifecycle.

A complex network of partners and suppliers

No pharma company operates alone. A typical drug product relies on an extensive network of raw material suppliers, CDMOs, analytical laboratories, and logistics partners, across multiple tiers and geographies. Raw materials, intermediates, and critical reagents regularly cross continents before entering a manufacturing suite. Drug substance may be manufactured in one country, formulated in another, and distributed globally.

Increasing use of multiple therapeutic modalities, more complex chemistries, conjugates and new delivery routes makes these supply networks even more complex.

This network is where most Scope 3 emissions are, and where data quality degrades beyond Tier 1 suppliers. Extending ESG expectation to Tier 2 and Tier 3 is resource intensive, as it requires mapping supply chains that are often not fully visible, conducting risk assessments, and following up with suppliers that may lack the budget, systems, or expertise to run formal ESG programmes. Smaller intermediates and API providers frequently encounter ESG as a reactive compliance request from large customers. This can destabilize supply continuity or squeeze smaller suppliers out.

Global logistics adds further complexity. Shifting to lower-carbon transport can raise costs or extend lead times. Nearshoring may reduce transport emissions while increasing manufacturing costs or limiting supplier flexibility. These trade-offs illustrate why ESG implementation requires structured decision-making frameworks capable of balancing quality, safety, supply security, cost, regulatory requirements, and sustainability simultaneously.

Conversely, some organizations are using ESG performance as a differentiator, positioning themselves as lower-carbon manufacturing partners or sustainable CDMOs. As expectations continue to evolve, competitive advantage may depend as much on supply network transparency and resilience as on technical expertise.

Regulatory reality

Even when ESG improvement opportunities are clearly identified, acting on them is not always straightforward. A solvent change in a GMP process requires validation, updated stability data, and a regulatory filing. A CDMO transition triggers technology transfer, requalification, and extensive documentation. A packaging redesign for a cold-chain injectable may require comparability studies. These reflect the legitimate requirements of operating in a regulated environment where product quality and patient safety are non-negotiable.

There is currently no unified global standard for measuring or comparing ESG performance across supply networks. EcoVadis, carbon disclosure project (CDP), corporate sustainability reporting directive (CSRD), international sustainability standards board (ISSB), and sector-specific frameworks coexist with different scopes, definitions, and metrics. This fragmentation creates additional reporting burden without always creating clarity.

The European Union's CSRD is currently the primary regulatory driver, requiring large and listed companies to publish audited sustainability reports. Voluntary frameworks and rating platforms such as EcoVadis, MSCI ESG, and sustainability indices also influence reputation and procurement decisions. Divergence between global standards complicates comparability and increases compliance burden.

Integrating relevant ESG considerations into existing standard operating procedures (SOPs), change control processes, quality systems, and business continuity planning may prove more effective than addressing them reactively under regulatory or investor pressure.

Conclusion

In many organizations, ESG implementation still begins with reporting requirements. In the life sciences, successful implementation extends beyond reporting. It is a long-term, cross-functional challenge embedded in the same technical, operational, and regulatory complexity that governs drug development.

Organizations that integrate ESG into existing cross-functional governance and decision making may be better positioned to connect sustainability objectives with day-to-day execution. Those that treat it primarily as a reporting exercise may find themselves managing a growing gap between what they disclose and what they can actually demonstrate.

Ultimately, the outcome depends less on creating new reporting systems and more on integrating sustainability into technical, operational and business decisions that shape how medicines are developed, manufactured, and supplied.