Insights
24 November 2022

Why is the pharmaceutical industry so vulnerable to water-related climate risks?

Cervest

By Cervest

Why is the pharmaceutical industry so vulnerable to water-related climate risks?

According to McMaster University, the pharmaceutical industry emits more greenhouse gases than the automotive industry. This makes them vulnerable to transition risk, but what about physical risk, and specifically why is the pharmaceutical sector so exposed to water-related climate risks, such as flooding, extreme precipitation and drought? The simple answer: the pharmaceutical industry relies heavily on water.

The pharma industry’s reliance on water

On the pharma production line – throughout daily operations and during distribution – there is a solid reliance on water. According to Water Footprint in the Pharmaceutical Technology Europe Journal, industry (including big pharma production), makes up a staggering 23% of global water usage.

This makes the pharma industry incredibly vulnerable to water-related climate risks, as a decrease in water availability because of climate change results in delays in the production of pharmaceuticals – leading to catastrophic effects around the world. Recently, pharmacists warned about medicine shortages during a poll of 1,562 UK pharmacists.

Extreme weather events disrupt production and distribution can also lead to backlogs, among numerous other issues. From obtaining raw materials for medicines, to production flow and speed, to safe storage of pharmaceuticals, to international shipping – major climate events can be disastrous for the sector.

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What’s the financial cost of water-related climate risk?

In the 2020 CDP Global Water Report, biotech, healthcare, and pharmaceutical companies reported the maximum financial impacts of water risks at USD529 billion – 38% higher than the cost of addressing them (USD3,81 billion). Climate change means that industry leads must act now to prepare for turbulent water-related climate hazards across multiple climate scenarios, or the total social and economic loss will be devastating. This is where granular insights and climate intelligence is crucial, helping pharmaceutical leaders to act now, adapt, and put the best measures in place – across their portfolio of assets including supply chains.

Building resilience to climate change

Cervest's climate intelligence product, EarthScan™, fuses advanced climate science with the latest machine learning techniques and enables organizations in the pharmaceutical industry to screen all its assets, including those in its supply chain, for climate risk. These science-backed insights can be used to confidently inform climate strategies, adaptation – and implementation. Its easy-to-use dashboard allows users to discover its asset-level risk across multiple climate scenarios, time-steps and climate hazards — including flooding, precipitation and drought — simultaneously and on-demand.

Download our ebook, Climate intelligent pharma: Establishing resilience to changing climate risk, for more insight into exactly how ESG pharmaceutical decision-makers should plan for climate risk now and in 2023.mate strategies, adaptation – and implementation. Its easy-to-use dashboard allows users to discover its asset-level risk across multiple climate scenarios, time-steps and climate hazards — including flooding, precipitation and drought — simultaneously and on-demand.

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