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CSR Assignment

Corporate social responsibility
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0% found this document useful (0 votes)
33 views7 pages

CSR Assignment

Corporate social responsibility
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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INTRODUCTION

ESG stands for environmental, social, and governance. These are called pillars in ESG frameworks and
represent the 3 main topic areas companies are expected to report. ESG aims to capture all the non-
financial risks and opportunities inherent to a company's day-to-day activities. [1]

Pharmaceutical industry is highly regulated as it relates to human life such as medical waste management,
radiation protection rules, patient security rule, ethics, etc. which are related to environment, social and
governance.

Meanwhile, healthcare may negatively impact environment and social from waste water, hazardous waste
(infectious and sharp), emission of greenhouse gas (Raggi & Paglicci, 2015). For example, unwell
managed waste disposal may cause risk to children for exposure to blood born viruses

The pharmaceutical industry, a major contributor to global greenhouse gas emissions due to its
R&D and supply chain operations, is under scrutiny for its environmental, social, and
governance (ESG) practices. [3]

The role of ESG in pharma

E is for environmental commitments


An alarming statistic from the University of Bath shows that for every kilogram of
pharmaceutical drugs produced, approximately 100 kilograms of waste is generated,
highlighting the need for improved efficiency in the industry. Furthermore, billions of usable
medicines are destroyed worldwide each year, contributing to significant social and
environmental consequences (University of Bath).

For instance, Norwegian policymakers have set an ambitious target to reduce 40% of carbon
dioxide emissions from healthcare services by 2030. In response, one of the Norwegian
healthcare procurement organizations has recently declared its intention to curtail the usage of
asthma inhalers that do not adhere to environmental regulations. This strategic move underscores
the organization’s commitment to prioritize innovative proposals that effectively mitigate
greenhouse gas emissions.

S is for social obligations


In terms of social impact, the pharmaceutical industry’s commitment to ESG can underscore its
push for health equity. This commitment to reducing health disparities not only supports societal
well-being but also aligns with the industry’s broader goals. However, despite having a
substantial portfolio of ESG-related initiatives, the pharmaceutical sector has often fallen short in
effectively communicating its efforts to the broader public. [4]

G is for governance strategies

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Governance is also about how a pharmaceutical company presents its ESG efforts to their
employees, external stakeholders, and the public. Credibility and transparency are the
cornerstone of successful ESG engagement. Companies must deliver on their promises and not
merely engage in performative marketing. There is a growing intolerance for companies that
overpromise and underdeliver on ESG commitments, as watchdog groups and NGOs closely
scrutinise corporate actions. [4]

Crisis Management at Johnson & Johnson: The 1982 Tylenol Poisoning [6]

Crisis: Johnson & Johnson's Tylenol Poisoning, 1982

 Background: Tylenol, Johnson & Johnson's leading over-the-counter painkiller, held a


37% market share and contributed significantly to the company’s profits. It was one of
the most successful products in the U.S. before the crisis.
 The Incident: In 1982, cyanide-laced Tylenol Extra-Strength capsules were placed on
store shelves in the Chicago area. Seven people died after consuming these poisoned
capsules, which caused a nationwide panic.[6]

Crisis Management Steps

1. Initial Response:
o Johnson & Johnson immediately warned the public through media channels not to
consume Tylenol.
o They halted Tylenol production and advertising.
o Johnson & Johnson's chairman, James Burke, responded to the negative media coverage
by assembling a seven-member strategy team. Burke's main directives were: "How do we
protect the public?" and "How do we save the product?" The company's first move was to
issue a nationwide alert, warning consumers through the media not to use any Tylenol
products until the full extent of the tampering was known
2. Product Recall:
o In addition to halting Tylenol production and advertising, Johnson & Johnson pulled all
Tylenol capsules from store shelves in Chicago and nearby areas. After discovering two
more contaminated bottles, the company recognized the product's vulnerability and
decided to implement a nationwide recall of all Tylenol capsules.

3. Communication Strategy:
o The company established a consumer hotline (1-800) and a toll-free line for news
organizations to provide updates.
o They held press conferences and live satellite feeds to ensure transparency and open
communication.
4. Leadership Visibility:
o Johnson & Johnson’s chairman, James Burke, appeared on national television shows like
60 Minutes and The Donahue Show to reassure the public.
5. Reintroduction of Product:
o Johnson & Johnson communicated their new triple safety seal packaging- a glued box, a
plastic sear over the neck of the bottle, and a foil seal over the mouth of the bottle, with a
press conference at the manufacturer's headquarters. Tylenol became the first product in

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the industry to use the new tamper resistant packaging just 6 months after the crisis
occurred (Berge, 1990).

Outcome

 Johnson & Johnson’s crisis response was widely praised for prioritizing consumer safety and
transparency. Despite the initial damage, the company successfully restored public trust in
Tylenol.

Present environmental crisis in the pharmaceutical industry


Pharmaceutical manufacturing contributes to carbon emissions at multiple stages of a product's life cycle.
Here are key factors contributing to these emissions:

 High Energy Consumption: Pharmaceutical manufacturing facilities typically require large


amounts of energy, contributing significantly to emissions.
 Raw Material Extraction and Processing: The use of chemicals and solvents in extracting and
processing raw materials can lead to environmental impacts, including biodiversity loss.
 Formulation Processes: Converting active ingredients into finished medicinal products generates
substantial greenhouse gases and hazardous waste.
 Packaging Waste: Packaging, particularly the use of single-use plastics such as tubing, is a major
issue, with plastic waste projected to reach 112,000 tonnes globally by 2025.
 Supply Chain Impact: Distribution and retail processes also leave a significant carbon footprint
throughout the supply chain.

Sanofi Planet Care Strategy: Concrete Actions Towards Net Zero Emissions
Sanofi faces the critical challenge of reducing its greenhouse gas (GHG) emissions, particularly as the
pharmaceutical industry has a high carbon footprint across production, supply chain, and distribution. To
address this, the company has launched its Planet Care strategy, targeting net zero emissions by 2045,
with key milestones along the way.

How Sanofi Manages the Crisis

1. Progress in Emission Reductions:


o Achieved a 43% reduction in scope 1 and 2 emissions, targeting 55% by 2030, and a 10%
reduction in scope 3 emissions with a goal of 30% by 2030.
2. Decarbonization Strategies for Scopes 1 & 2:
o Energy Decarbonization: Increasing renewable electricity from 11% (2019) to 85% by
mid-2024, using solar panels, power purchase agreements (PPAs), and biomass. PPAs
have been signed in France and Mexico, with plans for expansion.
o Energy Efficiency: Targeting a 15% reduction in energy use at existing facilities by
2025.
o Eco-Fleet: Converting 80% of the car fleet to biofuel, hybrid, or electric vehicles by
2030.
o Refrigerants: Replacing high global warming potential gases with eco-friendly
alternatives.

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3. Scope 3 Decarbonization Efforts:


o Eco-Design: Incorporating environmental criteria in product design.
o Sustainable Sourcing: Reducing reliance on carbon-intensive suppliers, shifting raw
material sourcing from China (down from 50% in 2019 to 5% in 2024) to European
suppliers.
o Transport & Travel: Reducing emissions from business travel and commuting by
encouraging remote work and low-carbon travel options, and shifting product transport
from air to sea freight.

Sanofi's comprehensive measures aim to mitigate its environmental impact while meeting
ambitious decarbonization targets.

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1) https://www.deloitte.com/ce/en/services/consulting/perspectives/esg-explained-1-what-is-
esg.html
2) https://digital.car.chula.ac.th/cgi/viewcontent.cgi?article=8678&context=chulaetd
3) https://link.springer.com/article/10.1007/s11219-024-09666-4
4) https://www.pontoonsolutions.com/en/insights/all/esg-in-the-pharmaceutical-industry/
5) https://www.sanofi.com/en/investors/environment-social-governance/latest-news
6) https://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson%20&%20Johnson.htm
7)

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