OCTOBER 31, 2024

Sustainability & Security: Headliners in Today’s Pharma Supply Chain

At the recent LogiPharma conference in Boston, there were many important topics discussed surrounding the ever evolving pharmaceutical and healthcare supply chains.

For ThermoSafe, two topics dominated the conversations and valuable information presented during the sessions. Sustainability and Security of the US Supply Chain.

How can Pharma Better Understand It’s Carbon Footprint

Sustainability is essential but identifying where to begin and framing the issue can be challenging. Across the pharma value chain, the complexity increases as partnerships and regulations offer somewhat limited guidance.

A panel discussion at LogiPharma sought to understand pharma supply chain’s carbon footprint including trucking and shipping impact on SCOPE 3 emissions, review current data-sharing practices, and introduce the concept of carbon offsetting for sustainability goals.

Panelists included:

  • Joe McCannon, Director for Sustainability, Office of the Federal Chief Sustainability Officer, Executive Office of the President, Council on Environmental Quality
  • Alaina Passavant, Account Manager, CDP
  • Kaushik Datta, Pharmaceutical Supply Chain Expert
  • Chandan Trehan, Digital Supply Chain & Sustainability Lead, Bosch
  • Jeff Tucker, CEO, Tucker Worldwide

Alaina Passavant says “the biggest challenge we see is measuring and accessing the data from suppliers. Our advice – start identifying the right POCs at your suppliers. Engage with them to start aligning on KPIs. We have seen it take up to 3 years to achieve baseline numbers. It won’t be perfect, but you have to start somewhere”.

Jeff Tucker described how Tucker Worldwide is “collecting data on all shipments to measure carbon impacts, which we can support customer sustainability initiatives with”. He went on to describe how the hype around new technology such as electric, solar or fusion vehicles is uncertain. “My advice: don’t rely on the new truck or other new technologies – it won’t get you to the 2050 net zero goal, it’s not enough. Programs like EPA SmartWay have a solid framework for many years already, helping companies assess and track environmental impact of logistics operations, focusing on reducing greenhouse gas emissions, air pollution, and fuel consumption”.

Hear Jeff talk more about these topics in the recent Pharma Freight video interview, including stats on the EPA SmartWay program, the status of the trucking industry in the USA today, and how Tucker Worldwide is helping their customers calculate carbon impact.

Joe McCannon says “we approach the complexity of implementing sustainability in various fashions.  Key current focus is how we support our clients/customers to reduce their Scope 1 and 2, so that in turn reduces Scope 3 for us”.  The Council on Environmental Quality is launching a Supplier Accelerator Program starting by end of this year, to help leverage the tools provided by the Biden inflation reduction plan.

Government Leading by Example

Executive Order 14057, titled “Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability,” was issued by President Biden in December 2021. Its primary goal is to leverage federal procurement and operations to reduce greenhouse gas emissions, invest in clean energy industries, and support sustainability across federal agencies, including the supply chains that serve these agencies.

This order aims for the federal government to lead by example, achieving net-zero greenhouse gas emissions by 2050, 100% carbon pollution-free electricity by 2030, and a fully zero-emission vehicle fleet by 2035.

Goals of Executive Order 14057

1. Transition to Clean Energy: Federal agencies are required to source 100% of their electricity from carbon pollution-free sources by 2030, which includes investing in wind, solar, and other renewable energy technologies.

2. Zero-Emission Fleet: By 2035, the goal is for all federal vehicles to be zero-emission, including cars, trucks, and even heavy-duty vehicles where feasible.

3. Net-Zero Buildings: All new federal buildings constructed from 2030 onward must meet net-zero emissions requirements, emphasizing energy efficiency and sustainable construction practices.

4. Sustainable Procurement: Agencies are directed to prioritize purchases from suppliers who are committed to sustainability, encouraging green product choices and supporting businesses that have sustainable practices.

Why is Executive Order 14057 important to supply chains?

Joe McCannon, Director for Sustainability, Office of the Federal Chief Sustainability Officer, Executive Office of the President, Council on Environmental Quality, says “The government is a big organization too, in fact the largest purchaser of goods and services”.

Organizations supplying or partnering with federal agencies will need to fulfill these requirements. At the same time, the new Executive Order will open up opportunities for new suppliers and innovation.

  • Increased Demand for Sustainable Products: Federal procurement policies directly affect supply chains by creating demand for products that align with sustainable practices, such as renewable energy solutions, energy-efficient equipment, and low-emission vehicles.
  • Supplier Sustainability Requirements: Suppliers to federal agencies may face new requirements to disclose their carbon footprint and demonstrate steps taken to reduce emissions. This pushes private companies to adopt sustainable practices to maintain or secure federal contracts.
  • Investment in Clean Energy Infrastructure: The federal government’s push for clean energy infrastructure (e.g., electric vehicle charging stations, renewable energy facilities) spurs demand across related supply chains, creating business opportunities while reducing dependence on fossil fuels.
  • Promotes Innovation: This executive order encourages innovation within industries by setting high sustainability standards. For example, companies might invest more in R&D for carbon-free technologies and resilient, green supply chain solutions.
  • Long-Term Cost Savings: Sustainable practices can reduce energy costs and resource use in the long run. This is important for companies in federal supply chains, as those with sustainable and cost-effective practices may gain a competitive advantage.

Overall, Executive Order 14057 has significant implications for federal suppliers, influencing operational decisions and encouraging green innovations to meet sustainability goals. It acts as a driver for more resilient, sustainable, and future-proof supply chains, benefiting not only the environment but also businesses adapting to these new federal standards.

Scope 3 Emissions Need Work

CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

Alaina Passavant, Account Manager at CDP spoke at LogiPharma about how Scope 3 emissions are greatly underrepresented and under calculated in most companies. In fact:

  • Compared to Scope 3, corporations are 2x more likely to measure Scopes 1 and 2 emissions
  • Yet supply chain emissions are 26x higher than operational (Scope 1 or 2) emissions!
  • In fact, only 15% of suppliers disclosing through CDP have set upstream Scope 3 targets

CDP’s process is to work with supply chain members to identify and request key suppliers to disclose and report qualitative and quantitative data. This data is then used to measure supplier environmental impacts which in turn build Scope 3 calculations for the CDP supply chain member. With baselines established, progress can be tracked.

Alaina said, “start by asking questions of your suppliers. Consider the KPIs that suppliers must share to understand your environmental data in supply chain. Next, collaborate with investors and stakeholders. Suppliers are more likely to act when requested by multiple customers”. 

Next steps are to set public targets for the supply chain, giving buyers an supplier clarity on goals and a clear shared pathway towards achieving them. Take that recipe and establish a regular cadence with suppliers to engage them.

In 2023, disclosures to the CDP from Biotech, Healthcare and Pharma suppliers resulted in 52% of responding suppliers reporting active climate targets, however only 14% setting Science-Based Targets.

It’s clear there is a long way to go to establish baselines for Scope 3.

Sonoco ThermoSafe is actively seeking Life Cycle Analysis (LCA) projects with customers to help them define their Scope 3. Read about ThermoSafe’s commitments and sustainability approaches here.

Securing the U.S. Supply Chain

In today’s dynamic threat landscape, safeguarding the U.S. pharmaceutical supply chain has become a high-stakes priority, with public and private sector partnerships playing a critical role. As highlighted at LogiPharma, an essential theme across the program was the call for greater collaboration among key stakeholders to address threats that risk the integrity, availability, and resilience of the nation’s drug supply. Experts from the FDA, the Office of the Director of National Intelligence (ODNI), and the Department of Defense (DoD) discussed key strategies for protecting the supply chain against both physical and cyber risks, emphasizing the learnings drawn from the COVID-19 pandemic.

The panel included:

  • Brendan Ryan, CI Risk Chief, Supply Chain and Cyber Directorate, Office of the Director of National Intelligence
  • Peter Battaglia, Deputy Director, Mission Assurance Division, Department of Defense Logistics Agency
  • Dr. Leigh Verbois, Director, Office of Drug Security, Integrity and Response, Food and Drug Administration (FDA)
  • Jeanette McMillian, Assistant Director, National Counterintelligence and Security Center’s Supply Chain and Cyber Directorate, Office of the Director of National Intelligence

Physical Threats Across Transit Routes

Supply chain operations in the U.S. and globally continue to face physical risks, especially along critical transit routes. These vulnerabilities are magnified as the complexity of transporting high-value, sensitive materials, such as pharmaceuticals requiring cold storage, demands constant vigilance.

Rising Cyber Threats to Digital and Physical Assets

The cyber threat landscape is rapidly evolving, with pharmaceutical companies, healthcare organizations, and government entities often targeted by nation-state actors. Panelist Jeanette McMillian from the ODNI highlighted the “CIA triad”—Confidentiality, Integrity, and Availability—as the core focus of managing these risks, noting that cyber defense remains both a major challenge and part of the solution for resilient supply chains. Cybersecurity measures now extend beyond the digital realm to encompass essential supply chain infrastructure, a critical lesson reinforced during the development and distribution of COVID-19 vaccines. They were busy narrowing down threats in every node of the supply chains, including cold storage and technologies. The scrutinizing activities were critical during the pandemic to ensure vaccine availability and supply chain resiliency.

Dr. Leigh Verbois from the FDA explained how the agency works with partners to update regulations, raise cybersecurity awareness, and ensure that the public remains informed. Enhanced information-sharing initiatives and real-time collaboration with industry stakeholders have become essential components of the FDA’s approach to tackling these threats.

Lessons from Operation Warp Speed: Enhancing Collaboration and Resilience

One of the most transformative experiences in U.S. supply chain history, Operation Warp Speed underscored the value of collaboration between government and industry. Dr. Verbois noted that cross-sector communication improved significantly, allowing stakeholders to make faster, well-informed decisions crucial to public health and safety. Operation Warp Speed showcased how organizations could adopt a holistic view, treating supply chain issues not as isolated challenges but as collective, enterprise-wide concerns.

Emphasizing Information Sharing and Cybersecurity Preparedness

In line with Executive Order 14017 and the recent National Counterintelligence Strategy, panelists stressed the importance of knowing every aspect of the supply chain—from the origin of raw materials to the vendors and suppliers involved at each stage. The DoD’s Peter Battaglia echoed the necessity of information sharing, underscoring the need for pharmaceutical organizations to understand the origins of all supply components. This awareness, he argued, mitigates the risks posed by external adversaries and strengthens U.S. preparedness against disruptions.

Ultimately, the U.S. pharmaceutical supply chain must integrate physical security, cybersecurity, and real-time information sharing to ensure a resilient, responsive infrastructure that can withstand future challenges. Lessons from recent years show that a united approach—spanning private and public entities—is essential for maintaining drug integrity and protecting public health.

Next year’s LogiPharma conference information can be found online here