By Günes Ergun ,
Engagement Manager, Marsh Climate & Sustainability Strategy
02/01/2024 · 3 minute read
Natural assets and resources are declining at an unprecedented rate, and this has highlighted the very present need to address nature’s resilience in the global risk landscape. It has also increased the expectation for companies to move towards more sustainable practices. For the biotechnology and pharmaceuticals industry, this transition involves the sustainable sourcing of materials; carbon neutrality; and contributing to communities and societies via accessible and affordable medicine as well as food security.
This industry heavily relies on organic and non-organic substances derived from agriculture, forestry, and marine resources, as well as extractives such as metals, mining, and fossil fuel-based commodity chemicals. However, the presence of pharmaceutical residues in the environment — resulting from unintended discharges during manufacturing, inappropriate disposal at downstream operations, and inadequate waste management of active pharmaceutical ingredients (API) — has raised concerns for both public health and the decline of nature. The high concentrations of APIs contribute to surface and groundwater pollution, soil depletion, and the spread of anti-microbial resistance (AMR). While biotechnology offers sustainable alternatives and breakthrough solutions, it also comes with trade-offs in the race towards a nature-positive economy.
Biotechnology and pharmaceutical companies must address their nature-related risks, as they interact significantly with nature throughout various stages of their value chains, including upstream, direct operations, downstream, and end-of-lifecycle phases.
The Taskforce on Nature-Related Financial Disclosures (TNFD) published their final recommendations on September 18, 2023, marking the culmination of a two-year effort to design and develop a comprehensive toolbox that enables organizations to assess and disclose their nature-related risks and opportunities.
As part of a series of additional publications, TNFD released sector-specific guidance for the biotechnology and pharmaceuticals sector during COP28 in November. This guidance is currently undergoing market consultation and aims to expedite the adoption of the framework by providing a roadmap and tools for organizations in the biotechnology and pharmaceuticals sector, as well as those connected with the types of activities along their value chain.
The TNFD additional guidance for the biotechnology and pharmaceuticals sector identifies specific requirements that companies in this sector should consider following the TNFD LEAP framework, an approach developed to ‘locate’, ‘evaluate’, ‘assess’, and ‘prepare’ nature-related risks and opportunities for risk management and disclosure purposes. The guidance includes recommendations on the prioritization of locations in relation to the sourcing of agriculture and forestry-derived materials, and the impacts generated by land conversion, deforestation, soil depletion, and freshwater use. It also highlights the typical dependencies and impacts on nature that companies should consider before identifying and assessing their risks and opportunities. These should manage effectively and action should be taken to avoid or reduce negative impacts.
Furthermore, the guidance provides additional recommendations to help companies comply with TNFD disclosure indicators and metrics. These recommendations address pollutants released into water and soil, including types of API and AMR, waste management and recycling, plastic pollution, as well as species at risk used or substituted in biotechnology and/or pharmaceutical product development.
TNFD is seeking feedback and plans to finalize the additional guidance by June 2024. This will enable biotechnology and pharmaceuticals companies to be fully prepared to report against the TNFD recommendations. TNFD supports a global effort to assess and disclose nature-related risks of businesses and provide comparable and decision-useful information for stakeholders, including insurers and investors. Many large-scale and multinational biotechnology and pharmaceutical companies have announced that they will be among the early adopters of the framework.
TNFD’s endorsement is expected to accelerate by the 2024 reporting period and be faster than its sister framework, the Taskforce on Climate-related Financial Disclosures (TCFD).
Marsh can help your organization understand, manage and disclose nature-related risks ad become more resilient. If you would like to explore more, reach out to your Marsh representative or speak to one of our Climate and Sustainability specialists at Marsh Advisory.