The logistics of sustainability

We aim to bring a mentality of sustainability across all of our operations,” says Steffen Lang, Global Head Technical Operations, who is overseeing the company’s sprawling production network. “That includes not only our own production, but also every step between sourcing our starting materials and when a patient uses one of our medicines – and all of our supply chain partners along the way as well.” 

In 2018, Novartis committed to making its internal operations carbon-neutral by 2025, as well as reducing plastic waste and eliminating any water quality impacts from manufacturing effluents. With an eye on both local and global operations, Novartis, among others, has recently joined the Environmental League of Massachusetts Corporate Council as well as urging the US government, along with other companies, to back the Paris Agreement.    

The 2030 targets are even more ambitious – becoming plastic- and water-neutral, and reducing the carbon footprint of the entire supply chain. Beyond how Novartis powers its own facilities, the 2030 targets seek to reduce the footprint of all business-related travel, supply shipments and also how the supply chain partners source their own energy. This requires working together with a very wide range of suppliers around the world – each in countries with different regulations, requirements and infrastructure.   

Besides NTO’s massive efforts and due to the sheer complexity of the endeavor, many other parts of the organization are involved in the process too, including Health, Safety and Environment (HSE), which is directly liaising with suppliers to educate them about their energy-saving possibilities.   

“What we’re trying to achieve next is that our partners think about our targets and the opportunities we can help them materialize – and to turn this into a success for them as well,” says Daniela Kessle, who heads the HSE efforts in this respect as Head of Supplier Assurance and Risk.

One of the first and most developed sustainability efforts in NTO has been reducing the significant carbon footprint associated with logistics. During the production of medicines, starting materials – such as active pharmaceutical ingredients – are often manufactured in one location and then shipped to another location for formulation, and then yet another for packaging. A typical medicine may have traveled to several different countries before it is even ready to be shipped to a pharmacy.

Thanks to its speed, air freight has been the usual mode of transportation. But the carbon footprint of air freight is nearly 30 times greater than sea freight. With this in mind, the logistics teams have been shifting away from air freight as much as possible. They are now using more sea freight and planning to scale up the use of other less carbon-intensive alternatives such as electric trucks and combinations of truck and rail.   

To help them visualize and optimize all of their shipments, the logistics teams have spent the last several years developing a unique and comprehensive visualization tool called QlikSense. This software shows all Novartis supply flows around the world, the carbon footprint of each shipping route and an overview of the most sustainable alternatives. In 2019 alone, this has led to an overall carbon reduction of about 7000 tons – the equivalent of planting 40 000 trees.  

“This platform has been a real eye opener as far as where and how we can optimize our supply flows,” says Davy De Block, Head of Network Strategy and the Logistics Sustainability Lead. “It has helped us see how we can plan routes and shipments more efficiently so that there are fewer trucks on the road and only minimal air freight.”  

The team has also been developing strategies for reducing shipping waste, such as reusing pallets and shipping boxes, rather than disposing of these containers after a single use. Their award-winning EcoLogistics program in Brazil has piloted using paper air pillows and reusable pallet covers, leading to a seven-ton reduction in plastic packaging waste. Through refrigerated shipping trucks, the program has also eliminated the use of nine tons of polystyrene boxes and 22 tons of ice packs.  

“These solutions can have a huge impact and our regional team is rolling out the EcoLogistics program across Latin America,” says De Block. “Our tools now make it clear what we need to do and where we can have the largest impact and we’ll be continuously improving around the world in the future.”

Beyond shipping to and from suppliers, the next challenge is to work together with supply partners to adopt the ambitious sustainability targets across their operations as well. Novartis relies heavily on suppliers for active pharmaceutical ingredients, dose formulation and packaging – each of which involves significant energy demands. While some providers are already advanced in their own sustainability practices, the 2030 goal to cut carbon emissions by 50 percent represents a significant leap for many others.   

To better understand how to best collaborate with and support suppliers, Novartis asked their key suppliers to share insights on their sustainability performance in 2018 and 2019. The survey, conducted by HSE, revealed where partners’ efforts stand at the moment and showed opportunities for joint projects to reach the 2030 target.  

“The survey results showed that while a few suppliers have bold targets, there is a very large field in the middle and a lot of suppliers with no sustainability targets in place,” says Kareen Saunier, Head of Sustainability in the HSE Supplier Assurance and Risk team, who led the survey. “For many suppliers sustainability is not yet a business objective and we’ll need to help them see the value of these targets.”

Sharing solutions

To raise awareness of sustainable business practices, the HSE team partnered with the World Business Council on Sustainable Development – a leading consortium of businesses working together for sustainable practices – to organize a workshop in June of 2019 at the Novartis Knowledge Center in Hyderabad, India. The event brought together about a dozen of the most critical suppliers in India, along with internal strategy, energy and procurement teams.   

“We’re trying to make our suppliers aware of choices that they have in the market in order to adopt greener solutions,” says Bhushan Patil, the team’s local representative who coordinated the Supplier Energy workshop. “As of now, these targets are not part of our suppliers’ contracts, but we can offer them solutions that are commercially attractive as well as environmentally sustainable.”   

The workshop presented a range of sustainable alternatives including on- or off-site solar photovoltaic panels, solar concentrators and electric vehicles. Another technology, trigeneration, can reduce the carbon footprint of operations by up to 50 percent by capturing heat energy from natural gas combustion to simultaneously provide cooling, heating and electricity. In addition, the consulting company Accenture presented an overview of energy-efficient devices (motors, lighting and utilities) and a best-in-class case study for making air conditioning more energy-efficient.   

Beyond technological solutions, another key message of the workshop was that both the Indian government and Novartis are offering business models to make sustainable strategies more affordable. For example, the Indian government has created incentives that strongly encourage adoption of energy-efficient choices such as trigeneration and solar panels.  

“Awareness about available greener and affordable solutions is the key,” says Patil. “Many suppliers are unaware that these choices can lead to cost savings too – that was a major message of the workshop as well.”

These first steps are just the beginning of the colossal effort that will be needed to reach the 2030 target, but the teams, especially those from NTO who bear the brunt of the work on the ground, have already learned a lot along the way. “As we learn more about which solutions have been successful in which settings, we’re creating a toolbox of green economy solutions that we can apply in similar circumstances elsewhere,” says Steffen Lang. “With the help of feedback from our suppliers with more advanced sustainability programs, we’re driving forward new standards across the industry.”   

Such solutions include innovative virtual power purchase agreements (VPPAs), through which Novartis and its suppliers can commit to purchasing energy from a renewable energy company for a number of years and thus enable the construction of new facilities, such as the Texas wind farm. 

“Novartis is enabling our key suppliers to purchase green energy at prices that they wouldn’t be able to achieve on their own by providing knowledge and helping to remove barriers to entry like lack of experience,” says James Goudreau, Novartis Head of Climate. “This is really all about the difference we can make when we combine our efforts and we all work together towards sustainability – we see our role as being a catalyst for positive change.”