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• Since the adoption of the Paris Agreement in 2015, bold initiatives have been undertaken worldwide, including in Japan, to achieve “carbon neutrality by 2050.”
• Amid this trend, businesses and financial markets around the world are being called upon to address climate change and transform their business models and strategies accordingly.
• In the pharmaceutical industry, led by the Federation of Pharmaceutical Manufacturers’ Associations of Japan (FPMAJ), companies are setting targets and implementing measures to achieve carbon neutrality.

Introduction

The Paris Agreement, adopted at the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015, marked a turning point as over 120 countries and regions worldwide set the ambitious goal of achieving “carbon neutrality by 2050.” In the midst of this trend, significant changes are underway in the business and financial markets, including the establishment of the Task Force on Climate-related Financial Disclosures (TCFD). For companies, addressing climate change has evolved from being a component of “Corporate Social Responsibility (CSR)” to becoming critical information for securing investments and loans. Climate-related measures are now recognized as either “risks” or “opportunities” integral to conducting business activities.

Japan is no exception. In October 2020, the Japanese government declared its goal of becoming carbon neutral by reducing greenhouse gas (GHG) emissions to zero by 2050. This was followed by the formulation of the “Green Growth Strategy Through Achieving Carbon Neutrality in 2050” (Ministry of Economy, Trade and Industry), and the establishment of regulatory reforms and financial systems to support the effort, requiring companies to change their business models and strategies.

Especially as climate change directly and indirectly impacts human health, it is essential for the healthcare sector, which plays a role in maintaining and promoting health, to consider the overall decarbonization and environmental impact of corporate initiatives as part of its role and responsibility.

This column focuses on products and supply chains, which account for approximately 50% of GHG emissions within the healthcare system, and highlights efforts to achieve carbon neutrality in Japan’s pharmaceutical industry, including best practices.

Efforts Toward Achieving Carbon Neutrality in Japan’s Pharmaceutical Industry

The Japan Federation of Pharmaceutical Manufacturers’ Associations (JFPMA), a federation of 15 associations and 319 companies with the aim of promoting the sound development of the pharmaceutical industry, has established an Environment Committee to share information and study policies for environmental measures in the pharmaceutical industry as a whole with its member associations. As part of its initiatives, the committee has set up a Carbon Neutral Action Plan Working Group. Since 2010, this working group has participated in “The Commitment to a Low Carbon Society” formulated by the Japan Business Federation (Keidanren), working to set goals and implement measures to achieve carbon neutrality.

The Vision of the Pharmaceutical Industry Toward Carbon Neutrality by 2050 (Basic Policies and More)

Aiming Pictures and Future Images		Achieve net-zero greenhouse gas emissions by 2050.
1. Goals for 2030 in Domestic Business Activities	Goals and Action Plan	Reduce CO2 emissions by 46% by fiscal year 2030, compared to fiscal year 2013 levels.
	Targeted Business Areas	Energy-derived CO2 emissions from factories, research facilities, offices, and company vehicles.
	Initiative Approach	Promote the adoption of renewable energy. Strive to further improve energy efficiency through the sharing and promotion of BPT (Best Practice Technologies) and BAT (Best Available Technologies).
2. Strengthening Collaboration Between Entities	Overview and Emission Reduction Contribution	Reduction of emissions during product use by eliminating CFCs in metered-dose inhalers used for treating asthma and other conditions (reduction potential: 120,000 t-CO2e compared to the baseline year). Promotion of the introduction of next-generation vehicles for company fleets. Expansion of industry association participation in the action plan to facilitate information sharing. Employee education and awareness campaigns, promoting initiatives in workplaces and households.
3. Promoting International Contributions	Overview and Emission Reduction Contribution	Metered-dose inhalers abroad primarily use CFC-based formulations. The use of HFCs in 2013 is estimated to be approximately 12 million t-CO2e. By promoting technologies like powder formulations, it is possible to reduce emissions by at least 4 million t-CO2e. Contributing to the reduction of environmental impact and CO2 emissions by providing cutting-edge technologies during the export of pharmaceuticals.
4. Development of Innovative Technologies Toward Carbon Neutrality by 2050	Overview and Emission Reduction Contribution	Development of formulation technologies that contribute to improving patient quality of life (QOL) and reducing GHG emissions throughout the product lifecycle. Development of green chemistry technologies that minimize the use of fossil resources, such as organic solvents. Development of continuous production technologies utilizing process sensors and control technologies.

*Source: Japan Business Federation (Keidanren), “Keidanren Carbon Neutrality Action Plan 2023 Follow-up Results, Industry-Specific Edition.” 2024. https://www.keidanren.or.jp/policy/2023/072_kobetsu13.pdf. (Accessed on October 16, 2024).

Examples of Initiatives in the Pharmaceutical Industry

1. Domestic Business Activities and 2030 Goals
Companies are analyzing and reporting the trends in CO2 emissions, the likelihood of achieving their goals, and their progress. One of the initiatives to reduce CO2 emissions in each company includes implementing energy-saving equipment and standards in offices and factories, introducing renewable energy, and improving manufacturing efficiency. In addition to direct emission reductions, some companies are progressing with carbon offset initiatives by utilizing environmental value certificates, such as the J-Credit Scheme, Non-Fossil Certificates, and Green Power Certificates, as an indirect method of emission reduction. For example, the J-Credit Scheme is a government-certified program where CO2 emission reductions, achieved through the introduction of energy-saving equipment or the use of renewable energy, or CO2 absorption through proper forest management, are certified as “credits.” Companies can purchase these credits to offset GHG emissions that are difficult to reduce internally. Furthermore, companies can clearly demonstrate their commitment to “environmentally friendly initiatives” to society.

AstraZeneca K.K.
Since April 2022, AstraZeneca has introduced and started operating solar power generation equipment at Maibara Plant in Shiga prefecture. Approximately 20% of the plant’s electricity consumption is supplied through self-generated power, contributing to the reduction of energy-origin CO2 emissions. Additionally, the remaining 80% of electricity is sourced from renewable energy that is not under the Feed-in Tariff (FIT) system, effectively switching to the use of renewable electricity, which is expected to reduce CO2 emissions by approximately 2,800 tons annually. By utilizing the J-Credit system, the company has achieved 100% renewable energy use at its facilities in Japan.

Fuji Pharma Co., Ltd.
In 2021, the company constructed an additional formulation building to improve production efficiency, which is expected to increase carbon productivity by approximately 10%. From 2023, the company has been considering options for carbon offsets, including direct procurement of renewable energy, utilization of J-Credit Scheme, or purchasing Non-Fossil Certificates. With this, the company plans to reduce carbon emissions by 10t-CO2 through the purchase of J-Credits. These measures are anticipated to achieve a 10% improvement in carbon productivity at the facility level.

2. Enhancing Inter-Entity Collaboration
To reduce GHG emissions in society as a whole, it is necessary to go beyond reducing emissions from one’s own business activities, but also to work together with various stakeholders, including consumers, business customers, local residents, governments, municipalities, and educational institutions. In the pharmaceutical industry, efforts such as developing low-carbon products and implementing efficient pharmaceutical transportation methods like joint deliveries contribute to reducing GHG emissions throughout the product lifecycle. Additionally, by introducing fuel-efficient vehicles for company fleets and promoting the use of public transportation in urban areas, companies not only commit to reducing their own CO2 emissions but also work to raise employees’ awareness and knowledge of climate change issues through initiatives and education.

3. Promoting International Contribution
To address the global challenge of climate change, it is essential to work on reducing emissions with an awareness of the globally connected value chain by leveraging Japan’s advanced technologies, products, and services. Some pharmaceutical companies, such as Takeda Pharmaceutical Company Limited, Daiichi Sankyo Company, Limited, and Astellas Pharma Inc., have adopted Science Based Targets (SBT), which are GHG emission reduction targets based on scientific evidence and consistent with the standards required by the Paris Agreement. Certification of SBTs as an international standard requires companies to make a commitment to GHG emission reductions in unison with the rest of the world.

4. Development of Innovative Technologies for Achieving Carbon Neutrality by 2050
Industries across various sectors are not only advancing traditional initiatives but also embarking on the creation of entirely new innovations to accelerate CO2 reduction efforts. In the pharmaceutical industry, for example, in 2005 the ACS Green Chemistry Institute in the United States formed the ACS GCI Pharmaceutical Roundtable to promote the integration of green chemistry (environmentally and human-friendly chemistry) and engineering in the sector. The Roundtable includes companies such as AstraZeneca, Bayer, Eli Lilly, GlaxoSmithKline, Merck, Novartis, Pfizer, and Novo Nordisk. These organizations work on designing chemical synthesis processes that generate minimal waste and developing safer chemical substances. Additionally, the pharmaceutical industry is making strides in improving production processes by shifting from traditional batch production (individual production) to continuous production (producing multiple types within a single manufacturing process). This change not only enhances productivity but also contributes to CO2 reduction during transportation and logistics stages. Moreover, efforts such as the development of long-acting formulations are helping reduce the burden on the human body while supporting sustainability goals.

Conclusion

The examples above highlight efforts to achieve carbon neutrality in the pharmaceutical industry. The specific measures and progress of each company vary depending on on the size of the company and the type of industry. While it is clear that reforms in business and financial markets hold the key to advancing companies’ efforts toward carbon neutrality, the healthcare sector, in particular, must recognize its role as an integral part of the health and medical system. This awareness and sense of responsibility are essential to fulfilling its duties and obligations. It is hoped that more companies will embrace this sense of responsibility and actively engage in vigorous efforts to contribute to these goals.

 

References
1. Ministry of Economy, Trade and Industry. 2050年カーボンニュートラルに伴うグリーン成長戦略 [Green Growth Strategy Through Achieving Carbon Neutrality in 2050]. https://www.meti.go.jp/policy/energy_environment/global_warming/ggs/index.html. (Accessed October 15, 2024)
2. Ministry of Economy, Trade and Industry. 企業の環境活動を金融を通じてうながす新たな取組み「TCFD」とは？ [What is TCFD? A New Initiative Encouraging Corporate Environmental Activities Through Finance.]. https://www.enecho.meti.go.jp/about/special/johoteikyo/tcfd.html. (Accessed October 15, 2024)
3. Japan Business Federation (Keidanren). Keidanren’s Commitment to a Low Carbon Society (Phase II) [2030年に向けた経団連低炭素社会実行計画（フェーズⅡ）]. https://www.keidanren.or.jp/policy/2015/031.html. (Accessed October 15, 2024)
4. Japan Business Federation (Keidanren). Keidanren Carbon Neutrality Action Plan 2023 Follow-up Results, Industry-Specific Edition [経団連カーボンニュートラル行動計画 2023年度フォローアップ結果 個別業種編]. 2024. https://www.keidanren.or.jp/policy/2023/072_kobetsu13.pdf. (Accessed October 15, 2024)

 

Authors
Kozue Matsumoto (Program Specialist, Health and Global Policy Institute)
Akira Shimabukuro (Adjunct Fellow, Health and Global Policy Institute)
Eri Cahill (Program Specialist, Health and Global Policy Institute)
Joji Sugawara (Vice President, Health and Global Policy Institute)