Chapter 4: Building a Greener Future for Logistics

Summary

In an era of increasing environmental consciousness, the pharmaceutical industry is making significant strides towards sustainable logistics. This chapter explores the sector's commitment to reducing its carbon footprint and the strategies being employed to achieve this goal.

Sustainability has become a core consideration in logistics decision-making, with 62% of respondents deeming it somewhat important and 38% extremely important. Notably, no respondents dismissed its significance, underscoring the industry-wide recognition of environmental responsibility.

The management of CO2 compensation budgets primarily falls under sustainability departments (53%), with finance (18%) and supply chain (13%) also playing roles.

Most companies (57%) allocate between 5-10% of this budget for compensating Scope 3 emissions, indicating a growing focus on addressing indirect emissions.

To reduce CO2 emissions, companies are prioritising eco-friendly transportation modes (70%), sustainable circular transportation packaging (62%), and optimising logistics routes for fuel efficiency (62%). Inventory management (85%), digitalisation (81%), and packaging (78%) are seen as areas offering the most potential for emissions reduction.

Long-term goals are ambitious, with 74% aiming to reduce CO2 emissions by 50% within the next 5-10 years, and 16% targeting carbon neutrality within 5 years. Only 2% are still developing their reduction strategy, reflecting the industry's proactive approach to sustainability.

The pharmaceutical sector is clearly committed to building a greener future for logistics, with comprehensive strategies targeting various aspects of the supply chain.

This holistic approach to sustainability not only addresses environmental concerns but also aligns with broader industry goals of efficiency and innovation.

Of respondents are aiming to half CO2 emissions in the next 5-10 years

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Question 1: How important is sustainability in your logistics decision-making process?

Question 2: Which department is managing your CO2 compensation budget?

Question 3: What percentage of your budget is allocated to compensating scope 3 emissions

Question 4: What steps has your organisation taken to reduce CO2 emissions in logistics?

Question 5: Which logistics area offers the most potential for CO2 emissions right now?

Question 6: What is your long-term goal for reducing CO2 emissions?

Question 1: How important is sustainability in your logistics decision-making process?

Somewhat important

Extremely important

Not very important

Not important at all

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Question 2: Which department is managing your CO2 compensation budget?

Sustainability

Finance

Supply chain

Procurement

Transport

Question 2: Which department is managing your CO2 compensation budget?

Sustainability

Finance

Supply chain

Procurement

Transport

Question 3: What percentage of your budget is allocated to compensating scope 3 emissions (including warehousing, packaging, transportation and distribution)

Less than 5%

5-10%

10-20%

More than 30%

Not sure

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Question 4: What steps has your organisation taken to reduce CO2 emissions in logistics? (Respondents were asked to select all that apply)

Using eco-friendly transportation modes (e.g., electric vehicles, rail)

Using sustainable circular transportation packaging (reused and not landfilled)

Optimising logistics routes for fuel efficiency

Using renewable energy

Collaborating with partners on CO2 reduction (e.g. purchasing SAF)

Carbon offsetting

Using more efficient packaging (better volumetric weight)

Optimising our warehouses

Question 4 (continued): Of those that you selected, which one has the biggest impact in achieving your CO2 emission reduction goals?

Using eco-friendly transportation modes

Using sustainable circular transportation packaging

Optimising logistics routes for fuel efficiency

Using renewable energy

Collaborating with partners on CO2 reduction

Carbon offsetting

Using more efficient packaging

Optimising our warehousing

Question 5: Which logistics area offers the most potential for CO2 emissions reduction right now? (Respondents were asked to select five options)

"There isn't one solution to reduce CO2e emissions immediately because supply chains are complex, and products vary. To be effective, we need combined solutions because they rely on each other. Right now, we should reduce CO2e by using alternative fuels where available. At the same time, for both economic and environmental benefits, we should cut unnecessary transportation through inventory optimization and digitalization and reduce carbon intensity with alternative transport methods and propulsion technologies."

Jon Chapman, Vice President Healthcare Services, Kuehne + Nagel

"From my perspective, being responsible for a non-producing entity, I would prioritize packaging and transportation. This combination allows for a significant reduction in CO2 emissions, especially through the shift to circular packaging, which helps reduce waste. For transportation, switching from air to ocean or using lower-emission vehicles will contribute to significant reductions. The ultimate opportunity for emissions reduction lies in combining both packaging and transportation changes with digitalization – creating end-to-end visibility in an agile supply chain to ensure we only ship products in the right condition, thereby eliminating the shipping of faulty products and reducing the need for resending.For these reasons, I would rank supply chain disruptions above regulatory changes."

Eric ten Kate, Global Sector Leader – Healthcare, Ceva Logistics

Question 5: Which logistics area offers the most potential for CO2 emissions reduction right now? (Respondents were asked to select five options)

Inventory management(e.g. reducing stockpiles or optimising storage)	85%
Digitalisation	81%
Packaging (e.g., using circular products, no single use)	78%
Transportation (e.g., switching to lower-emission vehicles)	75%
Warehousing (e.g., optimising energy use, switching to renewable energy)	68%
Supply chain collaboration	65%
Employee engagement	48%
We have never explored this topic	0%

Question 6: What is your organisation’s long-term goal for reducing CO2 emissions in your logistic operations?

Reduce CO2 emissions by 50% within the next 5–10 years

Achieve carbon neutrality within the next 5 years

Reduce emissions, but no formal target has been set yet

We are still developing our CO2 reduction strategy

Despite efforts to shift large-scale pharmaceutical logistics from air to ocean freight, progress has been limited. We asled respondnets what the key challenges were that are hindering the transition

Here is what they told us

Chapter 4: Building a Greener Future for Logistics

Summary

Of respondents are aiming to half CO2 emissions in the next 5-10 years

Question 1: How important is sustainability in your logistics decision-making process?

Question 2: Which department is managing your CO2 compensation budget?

Question 3: What percentage of your budget is allocated to compensating scope 3 emissions

Question 4: What steps has your organisation taken to reduce CO2 emissions in logistics?

Question 5: Which logistics area offers the most potential for CO2 emissions right now?

Question 6: What is your long-term goal for reducing CO2 emissions?

Question 1: How important is sustainability in your logistics decision-making process?

Question 2: Which department is managing your CO2 compensation budget?

Question 2: Which department is managing your CO2 compensation budget?

Question 3: What percentage of your budget is allocated to compensating scope 3 emissions (including warehousing, packaging, transportation and distribution)

Question 4: What steps has your organisation taken to reduce CO2 emissions in logistics? (Respondents were asked to select all that apply)

Question 4 (continued): Of those that you selected, which one has the biggest impact in achieving your CO2 emission reduction goals?

Question 4 (continued): Of those that you selected, which one has the biggest impact in achieving your CO2 emission reduction goals?

Question 5: Which logistics area offers the most potential for CO2 emissions reduction right now? (Respondents were asked to select five options)

Question 5: Which logistics area offers the most potential for CO2 emissions reduction right now? (Respondents were asked to select five options)

Question 6: What is your organisation’s long-term goal for reducing CO2 emissions in your logistic operations?

Despite efforts to shift large-scale pharmaceutical logistics from air to ocean freight, progress has been limited. We asled respondnets what the key challenges were that are hindering the transition

Chapter 3

Conclusion