The Regulatory Imperative To Improve Environmental And Sustainability Stewardship In Biopharma

By Christopher Ohms, principal, Ohms Consulting; and Joe Hess, sr. director EHS&S, Gilead Sciences

The pharmaceutical industry operates within a highly regulated and complex supply chain, requiring meticulous coordination between suppliers, manufacturers, distributors, and regulators. Simultaneously, environmental, health, and safety (EH&S) considerations play a critical role in ensuring compliance, sustainability, and the protection of human and ecological health. As the industry faces increasing pressure to align with environmental, social, and governance (ESG) standards, companies must evaluate how to integrate supply chain management with EH&S initiatives to drive sustainability, mitigate risks, and improve operational efficiency.

Pharmaceutical companies must account for the safe handling and disposal of hazardous materials, the oversight of energy-intensive manufacturing processes, and the traceability of raw materials sourced globally. Failure to manage these factors effectively can lead to regulatory penalties, product recalls, or reputational damage. Moreover, ESG-aligned supply chains are becoming essential in investor evaluations, procurement decisions, and public trust. Embracing digital tools like predictive analytics, blockchain for traceability, and real-time EH&S monitoring can offer competitive advantages while promoting transparency and resilience.

This article explores how supply chain and EH&S elements interact within the pharmaceutical industry, emphasizing how ESG principles influence both domains. By understanding this relationship, industry professionals can enhance their approach to sustainability, compliance, and resilience in a dynamic global landscape.

Pharmaceuticals In The Environment: A Growing Concern

One of the critical challenges the industry faces is pharmaceuticals in the environment (PiE). The presence of active pharmaceutical ingredients (APIs) in water sources, soil, and ecosystems has raised concerns about potential impacts on aquatic life and human health. Residual APIs can enter the environment through manufacturing discharge, improper disposal of medications, and patient excretion.

For example, a study found that residues of diclofenac, a common anti-inflammatory drug, were found in a local South Asia water source and were linked to vulture population declines in South Asia. In response, Novartis and other companies have introduced eco-friendly alternatives like biodegradable pain relievers. Additionally, the U.K.'s National Health Service (NHS) has expanded take-back programs for unused medications, reducing API contamination in wastewater.

Regulators and advocacy groups are increasing pressure on biopharmaceutical companies to implement robust wastewater treatment solutions, enhance take-back programs, and explore greener chemistry alternatives. Organizations such as the U.S. Environmental Protection Agency (EPA), the European Medicines Agency (EMA), and Health Canada have issued guidance or launched initiatives aimed at minimizing pharmaceutical residues in the environment. Advocacy groups like Healthcare Without Harm, the European Public Health Alliance (EPHA), and the Endocrine Society also have called for stronger environmental stewardship across the pharmaceutical sector. In response, the implementation of advanced oxidation processes (AOPs) at pharmaceutical manufacturing plants has shown promise in breaking down persistent drug residues before discharge.

Evolving ESG Compliance: CSRD And Materiality Assessments

ESG reporting is undergoing significant transformation with the introduction of the Corporate Sustainability Reporting Directive (CSRD) in the European Union. The CSRD mandates more comprehensive and standardized ESG disclosures, requiring companies to conduct materiality assessments to determine the most relevant sustainability impacts across their operations and value chains.

Unlike previous frameworks, the CSRD introduces a "double materiality" perspective, which evaluates both financial and environmental/social impact materiality. For instance, Roche has integrated life cycle assessments (LCAs) into its ESG reporting to quantify the environmental footprint of its drug production processes.

This shift compels biopharmaceutical companies to enhance data collection, integrate ESG risks into corporate strategy, and ensure transparency in sustainability reporting. Companies like Merck & Co. have adopted blockchain-based ESG tracking to ensure data integrity and traceability in sustainability disclosures.

The rollout of CSRD compliance is being staged based on company size, with large public-interest companies affected first, followed by other large enterprises and SMEs in subsequent years. For global pharmaceutical companies with European operations, this means creating internal cross-functional ESG task forces to coordinate reporting, aligning systems with the European Sustainability Reporting Standards (ESRS), and implementing digital platforms to manage complex multi-jurisdictional data.

However, the deployment brings considerable risks. These include gaps in ESG data maturity, high implementation costs, difficulties in assessing value chain emissions (Scope 3), and inconsistent global standards that may conflict with EU requirements. Noncompliance may result in reputational damage, regulatory scrutiny, or investor divestment, highlighting the need for a proactive, well-resourced transition strategy.

Industry Response: Best Practices And Benchmarking

To navigate these emerging complexities, biopharmaceutical companies are increasingly collaborating to establish best practices and benchmark their performance against industry peers.

Key strategies include:

• Enhanced Water Stewardship: This includes implementing advanced wastewater treatment technologies to mitigate PiE and adopting sustainable water management practices. Bayer, for instance, has implemented zero-liquid discharge (ZLD) systems at its production sites to minimize wastewater pollution.
• Sustainable Supply Chain Initiatives: Companies are partnering with suppliers to reduce environmental impact and ensure responsible sourcing of raw materials. AstraZeneca has committed to achieving carbon neutrality across its entire supply chain by 2030 through green chemistry and sustainable packaging.
• Integrated ESG Governance: Organizations are aligning ESG objectives with corporate governance structures to meet regulatory requirements such as CSRD. Johnson & Johnson has established a dedicated ESG board committee to oversee sustainability and compliance initiatives.

The Road Ahead

As EH&S expectations continue to evolve, biopharmaceutical companies must remain agile in addressing emerging risks while strengthening sustainability commitments. Proactive engagement in regulatory developments, industry collaborations, and technological advancements will be crucial in meeting the growing demands of stakeholders and ensuring long-term business resilience.

The regulatory landscape is shifting toward greater transparency and accountability, as seen with the rollout of the CSRD in the EU. This, coupled with global momentum toward harmonized sustainability standards, places pressure on biopharma organizations to embed ESG considerations into the fabric of corporate governance. Yet, beyond regulatory compliance lies a broader imperative: the integration of ESG into EH&S functions must go beyond check-the-box exercises and evolve into a dynamic risk-aware framework that continuously adapts to scientific, technological, and societal shifts.

Leading companies are already investing in systems that enable real-time environmental monitoring, AI-driven risk modeling, and predictive analytics to forecast the impact of EH&S scenarios across complex supply chains. Additionally, collaborative platforms are emerging to facilitate supplier engagement and third-party due diligence, recognizing that ESG performance is only as strong as its weakest link. In the biopharma sector, where ethical imperatives intersect with public health and environmental stewardship, the cost of inaction is no longer tolerable through reputational damage, supply chain disruption, or diminished access to capital.

Culturally, organizations must also shift how they view EH&S roles from compliance enforcers to strategic enablers. Empowering EH&S leaders to contribute to core business planning fosters a more integrated approach to risk management, product stewardship, and stakeholder engagement. This transformation requires strong executive sponsorship, clear metrics, and a commitment to cross-functional collaboration.

Ultimately, companies that integrate ESG considerations into their supply chain and EH&S strategies will not only mitigate risks but also gain competitive advantages in an industry increasingly driven by sustainability and transparency.

But the most profound shift may lie in how we redefine value. In a sector entrusted with human health, sustainability is no longer an external demand, it is an intrinsic measure of performance. The companies that thrive will be those that treat ESG not as a report but as a reflection of purpose. The question now is not whether the industry can adapt but whether it is ready to lead.

About The Authors:

Christopher Ohms is a consultant at Ohms Consulting and is a San Francisco Bay Area native. He has held positions at Gilead Sciences, Patheon, Stanford School of Medicine, Pain Therapeutics, and ALZA.

Joe Hess is sr. director, environmental, health, safety, and sustainability (EHS&S), at Gilead Sciences. He is a seasoned executive with over 25 years of experience leading high-impact programs in biotech, life sciences, semiconductor, and aerospace sectors. With a Master of Public Health and certifications including CSP and LEED AP, Hess has a proven track record of driving strategic initiatives aligned with ISO 14001 and 45001 standards. He cultivates safety cultures, manages complex compliance landscapes, and leads cross-functional teams through operational excellence and digital transformation. Hess is recognized for his ability to influence all organizational levels, mentor emerging EHS talent, and deliver sustainable risk management solutions across global operations.