Indian pharmaceutical companies lag behind global peers in ESG practices, facing regulatory, awareness, and resource challenges. Strengthening ESG performance can attract investments and promote sustainable development in the sector
Despite the Indian pharmaceutical industry's notable achievements on the global stage, it lags behind its international counterparts in adopting robust ESG practices.
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Environmental, Social, and Governance (ESG) standards cannot be overstated in an era where sustainability and corporate responsibility are paramount. As global investors increasingly prioritise ethical practices, the pharmaceutical sector stands at a crossroads, particularly in India, where significant opportunities for growth and innovation exist. Despite the Indian pharmaceutical industry's notable achievements on the global stage, it lags behind its international counterparts in adopting robust ESG practices.
A literature review has highlighted critical gaps in governance structures, transparency, and sustainability initiatives, revealing a pressing need for Indian companies to elevate their ESG performance. Challenges such as regulatory hurdles, limited awareness, and resource constraints further complicate this landscape, hindering progress toward sustainable practices.
However, the path forward is illuminated by the best practices of global leaders who have successfully integrated ESG into their core strategies. By establishing dedicated ESG committees, setting measurable milestones, and aligning with international reporting standards, Indian pharmaceutical companies can enhance their attractiveness to global partnerships and contribute positively to society and the environment. As we explore the current state of ESG in Indian pharmaceuticals, it becomes clear that the time for action is now.
For instance, most Indian pharma companies have seen limited progress or failed to meet their targets in reducing emissions and energy consumption. In contrast, a Japanese subsidiary of a global pharma company that ranks as the best in ESG performance globally achieved a 55 percent reduction in Scope 1 and 2 CO2 emissions from its 2019 baseline, far surpassing its targets, while increasing reliance on renewable energy to over 97 percent. The company has also set an ambitious goal to achieve zero carbon emissions by 2050 in an era when companies are targeting net carbon neutrality.Â
[This article has been reproduced with permission from the Indian School of Business, India]