Pharma firms add nature to list of minimum requirements for suppliers

Sustainable Markets Initiative ramps up expectations in latest letter, which is signed by Novo Nordisk, GSK, AstraZeneca and more

European pharmaceutical firms have added nature-related criteria to their latest list of “minimum sustainability targets” for suppliers.  

The chief procurement officers of nine companies, including Novo Nordisk, GSK and AstraZeneca, have signed the latest letter from the Sustainable Markets Initiative (SMI), a CEO-led body launched in 2020.  

The letter is based on one sent in 2023, signed by seven CEOs. 

Six of the firms have signed the latest version, but German science and technology giant Merck Group is no longer a participant.  

A spokesperson for Merck told Real Economy Progress that SMI’s focus on pharma did not “reflect the broader diversity of our global organisation”, and that it “continue[s] to advance our comprehensive approach through initiatives like our Supplier Decarbonisation Program and broader sustainable procurement efforts”.  

The SMI letter explains that suppliers are now required to assess the “dependencies, impacts, risks, and opportunities related to pressures on nature” in their own value chains by 2028. 

By 2030, they must be taking actions to mitigate them.  

Expectations on water have also ramped up, with a call for suppliers to have set targets by the end of the decade. 

These should include absolute reduction targets for areas of high water stress or risk.  

On climate, the companies want their suppliers to publish carbon footprints or life cycle assessments for their top 10 products by 2028, to accompany broader Scope 1,2 and 3 emissions reports.  

Vendors are also encouraged to publicly disclose their near-term and long-term decarbonisation targets, across all scopes, by 2027.  

While the 2023 letter said targets should be validated by the Science Based Targets initiative, the latest version simply asks for “third-party validated science-based targets”.

Suppliers should apply the new minimum requirements to their own supply chains, too, suggests the document. 

SMI said its previous letter had been effective, with the proportion of vendors adhering to its criteria doubling over the period. 

In a sign of the times, the new letter puts more emphasis on the initiative’s compliance with competition law.

Since 2023, there have been attempts to stop companies from collaboratively pursuing sustainability objectives – with numerous challenges being mounted through the US courts, on the basis that such partnerships contravene antitrust laws. 

Earlier this month, the International Chamber of Commerce (ICC) published guidance on how to navigate corporate competition law when participating in sustainability initiatives.    

The document identifies the introduction of shared supplier requirements as warranting “[i]n-depth consideration to ensure compliance with competition law” – even in Europe and the UK, where competition authorities have encouraged sustainability collaborations.