Setting a net zero target turned out to be the easy part.
For pharmaceutical companies, the real work – and the emissions that matter most at scale – sit inside other companies’ facilities, running through equipment they did not buy, under regulatory frameworks they do not control.
McKinsey analysis of roughly 40 pharmaceutical companies found that around 75% of value chain emissions fall into Scope 3, with half of the total coming from purchased goods and services alone
That is not a reporting problem. It is a structural one. The industry has spent years setting targets, engaging suppliers, and building disclosure infrastructure. Yet emissions continue to rise across large parts of the sector.
Some pharmaceutical companies have reduced their Scope 1 and 2 emissions while still seeing overall Scope 3 emissions increase. AstraZeneca, for example, reduced operational emissions while reporting a 24% increase in absolute Scope 3 emissions against its 2019 baseline. Eli Lilly’s reported Scope 3 emissions increased from roughly 3 million metric tons to more than 5 million metric tons within two years.
These are not companies ignoring the problem. They are companies discovering that controlling direct operations is very different from decarbonizing a global supply chain.
The gap keeps widening. And inside supplier manufacturing facilities, the problem often comes back to one thing: heat.
The thermal core of pharmaceutical manufacturing
Walk through a pharmaceutical supplier facility and heat is everywhere.
Clean steam systems support sterilization and contamination control. HVAC infrastructure maintains tightly controlled cleanroom conditions. Purified water systems, drying lines, and temperature-controlled production all depend on reliable thermal energy.
Heat is not a peripheral utility sitting outside the manufacturing process. In many pharmaceutical environments, it is embedded directly into it.
Across industrial manufacturing, heat accounts for roughly three-quarters of final energy use, according to the International Energy Agency.
In pharmaceutical supplier facilities, the concentration can be even sharper:
AstraZeneca’s research found that around 80% of facility emissions sit within Scope 1 emissions, while approximately 60% of those Scope 1 emissions come from natural gas. Fewer than 10% of suppliers currently use biofuels for direct energy.
Natural gas boilers. Steam loops. Fossil-powered HVAC systems.
This is where a large share of pharmaceutical supply chain emissions actually lives – not in sustainability reports, but in the infrastructure keeping manufacturing lines running around the clock.
Why you cannot simply swap out a boiler
In most industries, replacing a heating system is a capital project.
In pharmaceutical manufacturing, it can also become a compliance event.
Production systems must comply with Good Manufacturing Practice (GMP) requirements established by regulators including the FDA. Manufacturing processes are validated to ensure products are produced under tightly controlled conditions.
That changes the nature of decarbonization projects significantly.
Replacing a boiler steam system with an industrial heat pump, for example, may involve re-piping parts of a facility, replacing heat exchangers, and modifying control systems alongside the boiler itself.
In many manufacturing environments, that is already complex.
Inside a GMP environment running continuous production lines, where downtime can affect validation schedules and product availability, it becomes a much larger operational decision.
This is one reason pharmaceutical supplier decarbonization efforts often stall at the implementation stage. The ambition may exist. The operational pathway is less clear.
Disclosure without delivery
The pharmaceutical industry has spent years building supplier engagement programs. Suppliers are asked to disclose emissions, set science-based targets, and report climate progress through frameworks such as CDP.
Transparency has improved significantly as a result.
Implementation has not necessarily followed.
CDP data shows that Scope 3 emissions are, on average, more than 26 times higher than companies’ direct operational emissions. Yet only a relatively small proportion of reporting companies currently have supply chain emissions reduction targets in place.
Knowing where emissions sit and having a credible pathway to reduce them are very different things.
For mid-sized pharmaceutical manufacturers and specialist contract suppliers, the barriers are often substantial. Many operate energy-intensive facilities without in-house engineering teams capable of evaluating heat decarbonization technologies. Feasibility assessments, compliance implications, financing structures, and implementation planning require expertise that many suppliers do not have.
Capital intensity compounds the problem further.
Large-scale transitions involving electrification, biomass integration, or thermal system redesign frequently require investment levels that suppliers struggle to justify independently.
So the emissions remain.
And the pharmaceutical companies that committed publicly to reducing them remain accountable for progress that ultimately depends on infrastructure they do not directly own.
Where supplier decarbonization programs break down
Most suppliers already understand the problem. What often breaks down is the path from awareness to implementation.
Heat decarbonization is highly site-specific. A solution that works for one facility may be unsuitable for another operating different processes, temperatures, or production constraints. Once GMP requirements and continuous manufacturing environments enter the picture, the range of viable options narrows even further.
This is where many supplier engagement programs reach their limit. Reporting frameworks can improve visibility, but they do not give suppliers the operational capacity needed to deliver complex heat transitions.
Few suppliers can independently coordinate the engineering expertise, financing, operational planning, and implementation support required to decarbonize heat systems safely.
That is the thinking behind the Clean Heat Program, developed by Secaro in partnership with ERM and delivered with pharmaceutical companies including AstraZeneca.
The program supports suppliers at different stages of readiness – from early feasibility assessments through to implementation-ready roadmaps backed by engineering analysis and financing structures.
AstraZeneca’s analysis conducted through the initiative found that direct energy use represented one of the largest emissions drivers across participating facilities, with natural gas accounting for a significant share of supplier Scope 1 emissions.
For many pharmaceutical suppliers, reducing emissions ultimately means transforming the thermal systems embedded inside manufacturing itself.
From ambition to operation
A shift is now emerging across pharmaceutical supply chain decarbonization efforts. The focus is moving from visibility toward implementation.
Understanding a supplier’s emissions profile is no longer enough. The more difficult question is whether there is a credible operational pathway to reduce those emissions – and who is responsible for building it.
The global pharmaceutical greenhouse gas footprint grew by 77% between 1995 and 2019. The structural drivers behind that growth – outsourced manufacturing, fossil-powered facilities, and validated systems resistant to rapid change – have not been solved through disclosure frameworks alone.
They require intervention inside the supply chain itself.
For pharmaceutical companies facing increasing regulatory and investor pressure to demonstrate measurable Scope 3 progress, that reality has important implications.
Supplier reporting is a starting point. But it is not a decarbonization strategy.
The emissions that are hardest to reduce are embedded inside thermal systems running continuously within regulated manufacturing environments.
Reducing them requires something most supplier engagement programs were never designed to provide: implementation support grounded in the operational reality of pharmaceutical manufacturing.
That is the gap the industry is now beginning to close. How quickly it closes may depend on whether pharmaceutical buyers continue treating decarbonization as a procurement exercise – or start treating it as an engineering one.
