Consumer healthcare companies are increasingly being required to identify across their whole supply chain any adverse impact on the environment and human rights.
Companies operating within the European Union, for example – even if not based in the region – will be fined up to 5% of worldwide net sales if they fail to adequately report these impacts under the Corporate Sustainability Due Diligence Directive (CSDDD).
Firms like Perrigo, which sells its own OTC brands such as NiQuitin, Compeed and EllaOne across Europe and also supplies retailers with white label products, must therefore be particularly mindful of their “Scope 3” emissions footprint.
“Retailers are increasingly scrutinizing suppliers if solid performance isn’t proven in this area,” Perrigo’s UK ethical compliance lead, Isobel Gay, tells HBW Insight this exclusive interview.
In the UK, science-based targets on the part of retailers have profoundly influenced Perrigo’s own net zero ambitions, Gay explains, which aim to reduce the firm’s absolute carbon emissions by 42% by 2030 and be “net zero” across the entire supply chain by 2040.
Like other companies, Perrigo points to packaging – blister packs in particular – as a net zero transition pain-point, and to cross-sectoral partnerships, including with packaging and recycling firms, and collaboration within industry as ways to address it.
“Sustainability is a shared responsibility, and meaningful change requires collective action,” Gay emphasizes.
Being brave is also necessary, she notes. “We all have to start somewhere… and you shouldn’t assume that ‘sustainable’ will cost more for the business, and if it does, don’t assume your leadership will say no.”
Sustainability is an evolving target. What are Perrigo’s sustainability targets currently?
Sustainable healthcare doesn’t just focus on packaging, climate and responsible sourcing. Instead, sustainable healthcare involves understanding the link between the health of people and the planet, and the impact the two have on each other.
We have set ambitious targets that we rigorously measure to ensure our sustainability efforts make meaningful progress. Likewise, we’re committed to ensuring our activity engages a 360-degree audience – resonating with suppliers, customers and consumers to do, and be, better.
On a larger scale, Perrigo’s global mission by 2026 is to contribute to a more circular economy and increase fuel efficiency by operating with 100% renewable energy. We’ve been measuring progress on this, and the UK is leading the way. Perrigo’s UK manufacturing and office sites, for example, delivered against this ambition in 2023, with solar panels at the Braunton manufacturing facility alone saving 494 tons of CO2 for our planet.
These achievements contribute to Perrigo’s wider goal of reducing absolute carbon emissions from its operations by 42% by 2030 vs. 2020 and be “net zero” across the entire supply chain by 2040, 10 years ahead of the EU Green Deal. Our bigger picture footprint reduction is also underway through Scope 3 activity for both our supply chain and the role we play as Scope 3 contributors for our customers.
In terms of innovation, packaging is key for us. Our efforts are focused on finding the best way of eliminating plastic – a mission that is being furthered via two global partnerships that help with the development and introduction of recycle-ready blister packaging.
Could you elaborate on how retailers’ Scope 3 science-based targets are reshaping expectations for companies like Perrigo? Are there specific standards or demands that have been especially challenging?
Collectively as the consumer health industry, we need to ensure that our operations work to support our customers’ Scope 3 objectives, as retailers are increasingly scrutinizing suppliers if solid performance isn’t proven in this area. There needs to be a big push to get supply chains on board, and retailers are providing that push, especially those that are collaborating. For instance, in the UK, Tesco’s science-based targets inspired us to adopt our own net zero ambition and set science-based targets, reflecting the mutual influence between retailers and suppliers in advancing sustainability goals.
With increased scrutiny on supply chains, how has Perrigo adjusted its own operational standards to align with these expectations?
Any Scope 3 activity starts by having critical and candid conversations, internally and with our suppliers, which should lead to understanding capabilities, measuring progress and setting goals. We’re rigorously measuring Perrigo’s sustainability efforts, and the same applies to our supply chain. To track progress of emission reduction projects and provide visibility of Scope 3 emissions across the entire supply chain, Perrigo has invested in a partnership with M2030 - a partnership that Perrigo is leading from a store brand perspective.
Additionally, to ensure our efforts are making meaningful impact on the planet and we’re meeting operational standards across the entire supply chain, we have implemented supplier audits and detailed reporting on environmental and social practices. This is as well as adopting digital tools for supply chain mapping to track and measure Scope 3 emissions effectively.
Some of our changes aren’t huge, but they have a vast impact. By removing plastic trays from the outer packaging of our products, we’ve cut out 17.5 tons of plastic annually, and once this is complete across all products, we will have removed 28.5 tons. And globally, through this initiative, we’ve reduced 450 tons this year to date.
However, we understand that it’s the people across our supply chain that are the ones helping us make this difference. That’s why it’s important to us that each individual and department understands the role they play in Perrigo’s sustainability vision, and the impact our efforts are having on the health of people around us.
There’s a perception that sustainability often involves trade-offs, especially in packaging. How does Perrigo navigate these trade-offs between sustainable and product functionality?
I don’t entirely agree with the perception that sustainability always involves trade-offs. For packaging, our priority – aligned with consumer expectations – is to ensure it safeguards the product, prevents contamination, and protects children. These critical requirements make it particularly challenging for pharmaceutical businesses to adapt packaging without compromising patient safety. The rigorous testing required to ensure sustainable designs meet the same standards as traditional packaging can extend development timelines.
At Perrigo, 61% of our packaging is currently recyclable. However, blister packaging, which constitutes 37% of our non-recyclable materials, remains a significant challenge. To address this, we’ve partnered with material scientists, packaging experts, and suppliers to co-create innovative solutions aimed at overcoming this hurdle.
Collaboration across the healthcare and pharmaceutical sectors is essential, particularly in areas like advancing blister packaging. By sharing best practices, we can collectively drive progress. In many cases, it can lead to more efficient, cost-effective solutions that maintain functionality. For instance, shrink wrap and recycled cartons were among the first areas we tackled, as they were relatively straightforward improvements that aligned sustainability with practicality.
Sustainability targets require a level of agility in product development and manufacturing. How does Perrigo stay nimble in such a highly regulated space, especially with products that consumers depend on daily?
Sustainability starts with reduction. Simplifying processes – like removing optional packaging components – often streamline operations, making production more efficient while lowering our environmental footprint.
We also take an incremental approach, testing and piloting innovations alongside existing processes. This ensures a smooth transition and minimizes disruption, treating sustainability initiatives as we would any product innovation.
While consumer health regulations add complexity, they also highlight our leadership. If Perrigo can achieve meaningful sustainability in a highly regulated space, we believe it sets a strong example for others to follow.
Scope 3 emissions present a unique challenge due to the number of external suppliers involved. How is Perrigo working with its supply chain to meet these emissions targets, and what kind of collaborations or innovations are proving most effective?
Sustainability is a shared responsibility, and meaningful change requires collective action across the supply chain. Perrigo has already launched a range of projects and initiatives to address Scope 3 emissions, from sustainably sourcing packaging materials to reducing waste and lowering the carbon footprint at our manufacturing and distribution sites.
A major challenge is accurately calculating the impact of our global supply chain on climate change. We recognize that strong relationships with our suppliers are key to overcoming this challenge. As a first step, we’ve been actively collaborating with suppliers across our value chain to better understand their contributions to our overall carbon footprint. This work is critical to tracking and managing Perrigo’s environmental impact more effectively.
This is just the beginning. We’re planning to introduce a supplier engagement platform to enhance collaboration and drive greater transparency around sustainability efforts. By encouraging suppliers to align with Perrigo’s sustainability priorities, we aim to foster deeper partnerships and shared accountability.
Our ultimate goal is to work with suppliers and even industry competitors who share our values and commitment to responsible practices. Through these collaborations, we hope to inspire innovation, achieve our emissions targets, and make a lasting positive impact on the entire value chain.
What advice would you give to other companies in the consumer healthcare sector trying to meet consumer demands for sustainable products?
We all have to start somewhere, and having a conversation on how you can work to meet consumer demand for sustainable products is a starting point in itself. Despite the challenges the sector faces finding functional sustainable products, don’t let it stop you before you begin.
Likewise, you shouldn’t assume that ‘sustainable’ will cost more for the business, and if it does, don’t assume your leadership will say no. Instead, present them the idea and the contribution this will have to the business’s sustainability goals, and global sustainability targets.
To do this, you need to ensure sustainability is a priority for the business and integrated throughout each individual and department. Like I mentioned previously, everyone should be aware of their role in the business’s sustainability journey, and the impact they’re having on the planet.
