GlaxoSmithKline & Carbon Neutrality · GlaxoSmithKline (GSK) is an international leader in the pharmaceutical industry with the mission to “improve the quality of human life by
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GlaxoSmithKline & Carbon Neutrality
GlaxoSmithKline & Carbon Neutrality Huang, Kolstad, Schaart, Schneider, Schreiber, Shah, Uche
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Table of Contents
ABSTRACT................................................................................................................................... 2
EXECUTIVE SUMMARY .......................................................................................................... 3
GLAXOSMITHKLINE................................................................................................................ 4
DEFINING CORPORATE CARBON NEUTRALITY............................................................ 5
CARBON TRUST: INDEPENDENT EXPERTS ON CARBON REDUCTION ................... 7
THE VALUE AND COST OF THE CARBON TRUST STANDARD CERTIFICATION.10
STAKEHOLDER PARTICIPATION ...................................................................................... 12
NEW STANDARDS FOR CORPORATE SUSTAINABILITY ............................................ 16
CONCLUSION…………………………………………………………………………………20
BIBLIOGRAPHY....................................................................................................................... 21
APPENDIX.................................................................................................................................. 26
APPENDIX I......................................................................................................................... 26
APPENDIX II ....................................................................................................................... 27
APPENDIX III ...................................................................................................................... 28
APPENDIX IV ...................................................................................................................... 29
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Abstract
In 2011 GlaxoSmithKline’s (GSK) announced its goal of becoming carbon neutral by
2050. This case investigates GSK’s pursuit of carbon neutrality and their engagement with the
firm Carbon Trust. Their recent attainment of the Carbon Trust Standard certification for carbon
neutrality sets an intriguing precedent for carbon management in multinational corporations. Not
only have they proved that carbon neutrality is possible for large international corporations, they
have shown that it can bring value to the corporation. After providing background information
on GSK, carbon neutrality, and the Carbon Trust, the case investigates the significance of the
Carbon Trust Standard certification as well as its values and costs. The case also examines
GSK’s commitment to stakeholder engagement. Finally, the case concludes by relating the
Carbon Trust Standard to other prominent sustainability standards such as LEED, ISO 14000,
and the Greenhouse Gas Protocol. This case study’s overall goal is to present an objective
analysis of GSK’s efforts to achieve its goal of carbon neutrality by 2050. We have found that
while GSK has realized significant energy cost savings in reducing its carbon footprint, the
primary benefit of the Carbon Trust Standard certification is reputational. We expect carbon
neutrality to gain popularity as a concept and as a standard as the effects of climate change
become more obvious and as corporations strive to remain competitive in a resource-constrained
world.
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Executive Summary
GlaxoSmithKline (GSK) is an international leader in the pharmaceutical industry with the
mission to “improve the quality of human life by enabling people to do more, feel better and live
longer”. The company’s roots can be traced back nearly three centuries. Over the years GSK has
made several breakthroughs in healthcare, perhaps most notably the discovery of amoxicillin in
treating bacterial infections. GSK’s commitment to social well-being continues today, but not
solely through its innovative healthcare products. The company recognizes the link between
social and environmental health, and on March 30th, 2011 it announced the goal of becoming
carbon neutral by 2050.
The concept of carbon neutrality has increased in popularity as corporations struggle to
address climate change. Carbon neutrality can be achieved, in very broad terms, through a two-
step process. Generally a business will first reduce its carbon footprint as much as possible. Then
it will pursues carbon-offsetting strategies, such as purchasing Renewable Energy Credits
(RECs), to reduce its net carbon emissions to zero. Now corporations also have the option of
getting their carbon emissions and reduction plans examined by a third part such as the Carbon
Trust.
The Carbon Trust is an international non-profit that partners with businesses and
governments to help address greenhouse gas emissions. They provide an independent assessment
of corporate carbon footprints through their Carbon Trust Standard service. GSK became the first
company worldwide to receive its global certification, the benefits of which are discussed in this
case.
While GSK has realized significant energy cost savings in reducing its carbon footprint,
the primary benefit of the Carbon Trust Standard certification is reputational. The certification
provides an unbiased verification of GSK’s carbon reduction efforts, thus lending credibility to
the organization’s social and environmental initiatives. The certification also gives companies an
opportunity to communicate their achievements through the Carbon Reduction Label.
GSK’s attainment of the Carbon Trust Standard certification is largely an appeal to
stakeholders, whom the company must continue to engage as it pursues carbon neutrality. GSK
has fostered constructive relationships with its employees and external partners including
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universities and regulators. The company has also created a 10-member external stakeholder
panel to address several Environmental, Health & Safety (EHS) concerns.
As carbon neutrality becomes an increasingly popular topic within corporate
sustainability, new corporate standards such as the Carbon Trust Standard’s certification will
continue to emerge. Currently there are many different standards that relate to similar aspects of
corporate sustainability. For example, the LEED rating system for buildings and the Global
Reporting Initiative (GRI) both help companies make progress towards “sustainability”.
However, as the impacts of climate change become more obvious and severe, corporations will
become increasingly concerned with managing their carbon emissions and becoming “carbon
neutral”. Thus we can also expect carbon footprint standards to increase in popularity and value.
GlaxoSmithKline
GlaxoSmithKline (GSK) is a multi-national pharmaceutical corporation. Glaxo
Wellcome plc and SmithKline Beechman plc have been working together for nearly three
centuries. Their partnership began in 1715 with the Plough Court Pharmacy established in
London, England (GlaxoSmithKline). The two groups worked towards assisting the London
community with health care products from the beginning. Up until the 1950s to late 1990s they
focused their partnership on researching and developing steroids to treat skin diseases, along
with vaccines. One of the most famous breakthroughs was their discovery of amocycillin and the
development of Zantac (GlaxoSmithKline). Beginning in the late 1990s SmithKline pursued
greater social entrepreneurship by developing its manufacturing plants in third world countries
and focusing many of its efforts on assisting communities in those regions. For example the
company assisted the World Health Organization with research on lymphatic filariasis, also
known as “elephantitis” (GlaxoSmithKline). The two groups merged in the 21st century into
what is now GlaxoSmithKline (GSK). This merger strengthened the company and refocused its
mission and strategies.
The overall mission of GSK is to “improve the quality of human life by enabling people
to do more, feel better, and live longer (GlaxoSmithKline). GSK has re-worked its strategy in
response to new challenges, such as the decline in research and development productivity, and
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the increasing pressures from payers and regulators on costs and safety in the industry. In the
1960s and 1970s the pharmaceutical industry had to deal with a series of environmental issues
related to air and water pollution. It wasn’t until the 1980s that the industry in the United States
was faced with regulatory pressure under the Clean Air Act and the Clean Water Act.
Interestingly, compared to other large-scale industries the pharmaceutical industry is relatively
small, however its waste is significant and has a large impact. It was discovered that GSK needed
over 100 tons of input materials to generate less than one ton of active pharmaceutical
ingredients (Hagan). Moreover, the pharmaceutical industry in the U.S. had an even harder time
working within regulatory frameworks as the reporting requirement associated in Section 313 of
the Superfund Amendment and Reauthorization Act. Conclusively, the pharmaceutical industry
seemed to have a relatively large impact on toxic releases (Hagan).
Over the course of research and development, GSK developed a series of methods that
“built in” rather than “bolted on” solutions (Hagan). GSK thus used innovation to align their
substantial use of resources with natural cycles. They tried to find new products that didn’t use or
generate persistent, bioaccumulative, or toxic compounds, which resulted in products and by-
products that could be used beneficially (Hagan). When the merger occurred in 2001, their
strategy needed to change. It now encompasses a series of new strategic goals to create long-term
sustainable growth with a bottom-up approach, including growing a diversified global business.
Currently, the company has 97,000 employees in over 100 countries (GlaxoSmithKline).
Additionally, they seek to deliver more products while simplifying their operating model.
GSK is now a leading multinational corporation. Its operating model brings the global
consumer market a series of popular over-the-counter goods. In terms of long-term sustainability,
they now plan to reduce their environmental impact drastically by becoming carbon neutral by
2050. As GSK continues to grow in the future, we can expect them to continue incorporating
environmental concerns into their business strategy.
Defining Corporate Carbon Neutrality
Climate change is undoubtedly one of the greatest challenges facing the world today. As
businesses and governments seek to respond responsibly to this global crisis, it is only natural
that the concept of “carbon neutrality” has captured the corporate imagination. On March 30,
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2011 Britain’s largest drug maker, GlaxoSmithKline (GSK), announced its goal to be carbon
neutral by 2050. The maker of well-known brand drugs like BC Powder, Levitra, Nicorette,
Zantac and Sensodyne said the commitment applies to its own operations and those of its supply
chain (SustainableBusiness.com News).
The Department of Energy & Climate Change (DECC) published a definition of carbon
neutrality in October 2009: ‘Carbon neutral means that through a transparent process of
calculating emissions, reducing those emissions and offsetting residual emissions-net carbon
emissions equal zero’ (Guidance on carbon neutrality). Carbon neutrality also refers to the
emissions of other greenhouse gases (GHG) measured in terms of their carbon dioxide
equivalence (CO2e)—the impact a GHG has on the atmosphere expressed by the equivalent
amount of CO2 it would take to have the same impact. The basic process in becoming carbon
neutral is simple. Firms first calculate their overall carbon footprint and then reduce it as much as
possible. This is often done through measures such as energy efficiency, usage of renewable
energy, behavior change programs, or supplier engagement. Firms then offset any residual
emissions so that their net GHG emissions equal zero (Steps to Going Carbon Neutral). Carbon
offsetting involves funding projects that reduce or avoid emissions, and using the subsequent
carbon credits to offset the equivalent amount of emissions remaining from business operations.
These carbon credits can even represent savings compared to a business-as-usual
scenario. The carbon savings made must be in addition to the savings that would have happened
anyway without the funding from the sale or purchase of carbon credits. But these simple steps
mask much complexity — and a range of key management decisions. For example, companies
need to define their own boundaries, time frames and approach to neutrality (How should
business approach carbon neutrality?The solutions and benefits).
Making a decision to pursue carbon neutrality is significant. A business should first
assess the external forces within its environment. Examples of considerations include energy use,
strategic shifts in an industry, competitors, and pending or potential regulations. They must also
assess stakeholder perceptions of carbon neutrality in their markets. Awareness and stakeholder
perceptions of carbon neutrality can also vary widely across different geographies.
There are also a number of internal forces that can push firms towards carbon neutrality.
While altruism can sometimes be a starting point, more fundamental business drivers need to be
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considered such as: maintaining the license to operate; managing energy risk; differentiating the
corporate brand; generating new demand; and driving innovation and cost-efficiency.
By adopting a carbon neutral strategy GSK might be trying to remove or reduce energy
risk for its business, partly due to uncertainty over the future energy costs. Saving energy is also
a high priority for their building stock. One strategy specific to GSK is setting up an internal
fund for efficiency projects. Over the past four years GSK’s fund has supported over 800
projects, which have collectively saved approximately 170,000 tons of CO2e (GSK CSR Report).
In next 40 years GSK aspires to have no net greenhouse gas emissions from its raw
material sourcing, manufacturing, distribution, product use and disposal. It will address this goal
in stages, with interim emissions reduction goals of 10% by 2015 and 25% by 2020. In GSK’s
2011 Corporate Sustainability report Andrew Witty says, “we also made progress on
implementing our environmental strategy which has been revised to set ambitious goals for our
entire value chain – from raw materials to product disposal. We need to work in ways that enable
business growth while protecting the natural resources for the future.” For example, almost 40%
of GSK’s carbon footprint is derived from propellants when patients use inhalers. Eliminating
chlorofluorocarbons (CFC) gases from the products has substantially reduced inhaler emissions –
from 24 million tons of CO2 equivalents in 1998 to less than 5,000 tons today.
A high-level analysis of the carbon footprint of GSK’s value chain revealed many
opportunities. “[T]he largest contributors to our carbon footprint are supply chain material inputs
(5.7 million tons), propellants used in some of our inhalers (5.2 million tons) and our own
operations (2.6 million tons)” (GSK CSR Report). GSK learned that 40% of its overall emissions
are found in the supply chain, while another 40% are produced by customer use of their inhalers.
Replacing CFCs with hydrofluoroalkanes (HFAs) reduced inhaler-related emissions from 24
million tons of CO2e in 1998 to 4.7 million tons in 2010 (GSK CSR Report). The company is
also experimenting with different valves that release less gas, new formulations, and HFA
alternatives with less global warming potential (GSK CSR Report).
Understanding their carbon footprint of the supply chain is difficult due to the varied and
complex composition of GSK’s products. To gain deeper insights GSK is working closely with
key suppliers and the Carbon Trust advisory consultancy to develop a product carbon footprint
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approach. This will be used to identify carbon emissions from individual products, which will
help target carbon hotspots in the company’s operations.
Carbon Trust: Independent Experts on Carbon Reduction
Since it was founded 2001, Carbon Trust has aimed to “tackle climate change by creating
a vibrant low carbon economy” (The Carbon Trust Visits Taiwan, About Us-Carbon Trust).
Carbon Trust is an international non-profit that partners with businesses to help them better
understand and manage their own carbon footprints. Some of their past clients include Coca-
Cola, General Electric, and Dyson. Their $5 million partnership with General Electric is
developing “early stage technologies” for lower carbon emissions (Client Services-Carbon Trust,
Annual Report). They have also provided initial financial support to firms such as Partnership for
Renewables, Low Carbon Workplace, InSource Energy, and Solar Press (The Carbon Trust
Visits Taiwan, About Us-Carbon Trust). Additionally, Carbon Trust has been heavily involved in
international standards for emissions reporting; they co-authored the Scope 3 Calculation
Guidance for the World Resource Institute (WRI) and the World Business Council on
Sustainable Development (WBCSD) Corporate Value Chain Standard and the PAS 2050
Standard (Carbon Footprint Measurement).
Since 2009, Carbon Trust broadened its offering of commercial services with expert
guidance on emissions reduction, carbon footprinting, and related carbon suppliers. This earned
them a profit of £10.830 M in the 2010-2011 tax year (2011 Annual Report 3). General
consultation fees for their services vary depending on annual firm expenditure. Carbon Trust has
reported a total of £4.5 B of direct cost savings and a “48% average internal rate of return” for
large business energy efficiency investments, which indicates the tremendous value in their
services (Client Services-Carbon Trust, Take Control of your Sustainability Strategy).
However, the Carbon Trust Standard’s global certification is not easy to obtain.
Substantial corporate costs, including both time and money, are inevitable in pursuing this
accolade. For small and mid-sized businesses, the firm also pioneered the lower cost “Footprint
Expert”, a carbon footprinting software that breaks down the lifecycle of a product into stages—
from raw material input to final use and disposal using the highest international standards
(Carbon Footprint Measurement). Its “Value Chain Hotspotter” software calculates projected
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risks and finds hidden opportunities within supply chains (Carbon Footprint Measurement). A
one-day basic carbon footprinting course, at £400 per person, is also available (Carbon Trust-
Training Courses). Once adequate training is completed, companies must provide carbon
footprint data from the previous two to three years of operations. However, even with relevant
training, corporations may not be fully prepared for this step in the certification process. If this is
the case, businesses could purchase the Carbon Trust Standard’s “Gap Analysis” service for
£1000 per day. This service instructs companies on how to best prepare for the certification
process. This may include investing in required technologies or creating a more robust data set,
which can incur additional costs (“Gap Analysis”). Combining services help corporations better
understand and manage their greenhouse gas emissions throughout their supply chains.
Carbon Trust “Carbon Reduction Label”, which appears on over £3.8 billion of products
across 21 countries, certifies the GHG emissions of consumer goods (Carbon Footprint
Measurement, see appendix I). It can be used to differentiate and enhance a brand, as well as
streamline supply chains (Carbon Trust Footprinting). The process of certification usually takes
six to ten weeks from an accepted application and signed contract. Companies may also choose
the newer option of a “Carbon Label” which indicates work with Carbon Trust without a carbon
reduction commitment (Carbon Trust Footprinting).
Carbon Trust also independently validates corporate carbon footprints with its Carbon
Trust Standard. The Carbon Trust Standard criteria verifies the accuracy of a firm’s carbon
footprint, emission reduction, and carbon management; it is also an approved EAM (Early
Action Metrics) under the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme,
the non-voluntary carbon cap and trade system in the United Kingdom (United Kingdom-
Guidance 2). The CRC targets organizations that use more than 6,000 MWh of electricity each
year (“CRC Energy Efficiency Scheme”). The Early Action Metric is a program “designed to
reward organizations (sic) that have taken initiatives to reduce emissions before the start of, or
during [the mandatory requirements of] Phase 1 of the CRC Scheme” (United Kingdom-Early
Action Metric 1). Other approved Early Action Metrics by CRC include BSI’s Kitemark Scheme
for Energy Reduction Verification and CarbonLow Emission Ltd’s CarbonLow CLEEAR
Standard, among others (United Kingdom Equivalent Schemes, see appendix II).
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Outside the United Kingdom, Carbon Trust works with nation-specific affiliates, such as
Carbon Training International (CTI) in China and Carbon Decisions in Ireland, which can also
award the Carbon Trust Standard (International Assessment). According to general manager
Harry Morrison, the standard has been “designed as a continual improvement process” wherein
recertification becomes increasingly more difficult as years pass (Bateman). In 2010,
GlaxoSmithKline became the first multinational company to receive this certification (King).
The Carbon Trust Standard certification has been awarded to over 600 organizations, and
27,000 businesses (Client Services-Carbon Trust). Cumulatively, these businesses have achieved
a carbon emissions reduction of 5.5 Mt (“Footprint Certification”). By incentivizing companies
to reduce their carbon emissions, the Carbon Trust Standard certification is encouraging the
corporate world to be proactive in addressing climate change. Unfortunately, the cumulative
carbon emission reduction is virtually negligible when compared to net global emissions.
Compared to common sources of emissions, in 2007 the average coal-fired power plant in the
United States released over four million Mt of carbon dioxide into the atmosphere (Calculations
and References). While this is a discouraging comparison, the Carbon Trust Standard
certification is nevertheless an important step forward in a growing corporate movement to
address climate change.
The Value and Cost of the Carbon Trust Standard Certification
The value of the Carbon Trust Standard certification can be understood from several
different perspectives. Richard Pamenter, head of sustainability for GSK, revealed the extensive
benefits of achieving the certification when he said “the experience of striving for carbon
accreditation in the UK was hugely beneficial – from a financial, ethical, operational and
reputational point of view and demonstrated the value of applying for the Carbon Trust Standard
on a multi-country basis” (ClickGreen staff). From a financial perspective, GSK’s ongoing
efforts to reduce its carbon footprint resulted in the company saving £3.8M, or approximately
$6.1M (USD), in energy costs (ClickGreen staff). In addition, over the course of GSK’s three-
year assessment period, the company increased its revenue per tonne of CO2 emissions by 17%
(BusinessGreen staff). The prospect of achieving the Carbon Trust Standard certification helped
motivate GSK to reduce its carbon footprint. Thus the certification has been of financial value
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However, the financial benefits associated with the Carbon Trust Standard certification
were dwarfed by direct reputational benefits. GSK understood that achieving certification would
have a positive impact on its brand (King). While several companies received the Carbon Trust
Standard certification prior to GSK, the British multinational was the first company to receive
the global carbon certification (ClickGreen staff). By becoming globally certified, GSK revealed
the breadth of its commitment to addressing climate change through carbon reduction. Prior to
awarding this distinction to GSK, the Carbon Trust assessed the company’s carbon footprint over
a three-year period, across 65 countries and 200 corporate locations (ClickGreen staff). The
Carbon Trust found that GSK reduced its CO2 emissions by over 84,000 tonnes during this
period, corresponding to a 4% reduction in the company’s carbon footprint (BusinessGreen
staff). The comprehensive and unbiased nature of the Carbon Trust’s assessment bolstered
GSK’s carbon reduction claims and in doing so likely satisfied many corporate stakeholders. A
recent Carbon Trust survey—which revealed that 90% of consumers think all UK businesses
should reduce their carbon emissions by 3% annually—emphasized the importance of GSK’s
carbon reduction efforts to stakeholders (“Press Releases”).
The value of the Carbon Trust Standard certification can be further understood by
examining the experiences of other companies that have received the distinction. For example
when Kingspan Insulated Panels became certified in May 2012, Mark Harris, the company’s
Divisional Building Technology Director, stated, “attaining the Carbon Trust Standard is
independent proof of our achievements in our ongoing efforts to reduce our carbon and energy
footprints” (Hughes). Thus the distinction represents an unbiased validation of a company’s
success in reducing its carbon footprint. Harris also stated “the Standard will provide a platform
and catalyst for our renewed efforts to save energy in the short-term and forms part of our long-
term goal of achieving net-zero energy at all Kingspan sites” (Hughes). As a result the company
is incentivized to uphold its commitment to carbon reduction in order to retain the certification.
Attaining the Carbon Trust Standard certification gives companies the potential to display
the internationally recognized Carbon Reduction Label on their products, but they must first
comply with supplementary requirements in the Footprint Expert Guide and the Code of Good
Practice in order to use the label (“Carbon Labelling”). Thus it serves as a third party “eco-label”
that has the potential to attract new customers and increase brand value. Therefore, not only does
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the Carbon Reduction Label result in reputational benefits for companies, but it can also help
companies generate revenue by increasing their market share. No evidence has been found that
GSK uses this label on its products, but the company’s new product carbon footprint approach
suggests that GSK may be eligible to use the label in the near future (GlaxoSmithKline 87).
Another attractive quality of the Carbon Trust Standard certification is that it is as an
“early action” metric in the new UK legislation (the Carbon Commitment Energy Efficiency
Scheme, formerly the Carbon Reduction Commitment (CRC)) as stated above. By receiving the
Carbon Trust Standard certification, businesses can score better in the comprehensive ranking in
the CRC Energy Efficiency Scheme (“Guidance Documents”).
Furthermore, there is value in completing the requirements needed to achieve the Carbon
Trust Standard certification. In order to obtain certification, companies must devote themselves
to reliable carbon emissions data collection. This data-driven methodology central to the
certification process is of tremendous importance. Tilde Herrera’s June 2011 article on
GreenBiz.com articulates this data-focused ideology succinctly, “you can’t manage what you
don’t measure: if your underlying data is unreliable, it makes it that much more difficult to truly
foster improvement.” Therefore, companies that receive certification also end up with valuable
data that can be used to better manage the company and its environmental impacts in the future.
All of the aforementioned corporate benefits associated with the Carbon Trust Standard
certification—financial savings, an independent carbon reduction assessment, advertising with
the Carbon Reduction Label, points towards the CRC Energy Efficiency Scheme, and valuable
carbon data—are instrumental in providing businesses with a competitive advantage. There is no
doubt that customers, investors, and other stakeholders are becoming increasingly aware of
environmental issues. In fact, a survey by the Shelton Group indicates “that 64 percent of
Americans are searching for greener (more energy efficient, natural, sustainable, etc.) products”
(Lannuzzi, 147). Globally, Andrew Winston reports that 86 percent of consumers are concerned
with climate change, and 50 percent seek “out eco-products or consider environmental and social
aspects in their purchases” (Winston 2009). Therefore, many stakeholders will respond
positively to companies that have received the Carbon Trust Standard certification because it is a
credible assessment of a business’s commitment to the environment. By achieving global
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certification, GSK is better positioned for a world of tougher environmental legislation, as well
as increased consumer awareness and investor interest.
Stakeholder Participation
In order to reach net zero carbon emissions, GlaxoSmithKline brought a broad range of
stakeholders to the table. These stakeholders included employees, external partners, universities,
governments, and regulators. A select number of examples will be discussed that best illustrate
the affect partnerships had on achieving carbon neutrality
Internal Global Involvement
In 2001, GlaxoSmithKline created an Environmental, Health and Safety (EHS) Plan for
Excellence. Originally, this 10-year plan set targets for energy and water consumption,
wastewater organic material, non-hazardous waste, and ozone depleting substances used in the
production of inhalers. It has since been extended to reach targets by 2015. The plan called for
GSK to reduce its climate change impact by reducing carbon emissions throughout the lifecycle
of its products and supply chain (GlaxoSmithKline, 2006, 12).
In 2005, GSK revisited its Environmental, Health and Safety (EHS) Plan for Excellence
by surveying its employees about their views on the progress of the EHS Plan. Employees stated
three things: one, that GSK could add value to the business by “doing the right thing”; two, they
reiterated a need for a culture where employees contribute to the success of EHS; and three, for
the Plan to be flexible to different rates of progress in various parts of the business
(GlaxoSmithKline, 2005, 75-76).
In response, the company gave training to their EHS professionals regarding vision and
strategy. GSK has also consulted extensively with key internal and external stakeholders to
ensure that relevant EHS concerns and the needs of the business would be reflected in the
extended plan. Training included integrating the EHS Milestone Aligned Process (MAP) into the
company’s product development and supply processes, including the R&D “design for
manufacture” initiative. To further increase employee buy-in, the Chief Executive Officer’s EHS
Excellence Awards recognize GSK sites for EHS Initiative and EHS innovation in Green
Chemistry/Technology (GlaxoSmithKline, 2005, 85).
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In 2005 this award was presented to the Rajahmundry, India plant. This was the first
GSK facility to receive the ISO 14001 and OHSAS 18001 accreditation for Environment and
Health & Safety. The facility received the first prize in EHS Initiative - Environment Award. It
was revealed that most of the methane generated at the Rajahmundry effluent treatment plant
was burnt through a flare stack. This problem was solved when the EHS team diverted the
methane to use as fuel in the site canteen instead of liquefied petroleum gas (GlaxoSmithKline,
2005, 79).
The second place prize went to Rixensart and Wavre, Belgium for their management of
green spaces. Both of these sites have developed a number of short and medium term projects to
protect the natural environment, and improved the biodiversity in and around the facilities. Third
place prize was awarded to Thane, India for their water conservation efforts. The facility carried
out a water conservation project that included raising employee awareness. They also
implemented a number of interesting initiatives, including harvesting rainwater for reuse,
introducing water saving and recovery measures in the site’s heating and cooling systems, and
recycling treated effluent water for gardening. These awards encourage employees worldwide to
be more engaged in the EHS initiatives. They also incentivize green, cost-saving innovation and
raise awareness around best practices (GlaxoSmithKline, 2005, 79).
In order to address its supply chain, GlaxoSmithKline carried out life cycle assessments
of several of its products, technologies, and packaging in 2008. Part of their goal was to integrate
sustainability into the manufacturing process and measure supplier performance across the entire
value chain. In this same year, GSK set a goal for factories to achieve tangible benefits from
investment in ‘green chemistry.’ With the goal for the Jurong factory in Singapore to be the
“factory of the future,” GSK set targets for the factory on the environmental performance of
energy, water, and chemical oxygen in wastewater, amongst other initiatives (Manufacturing).
Performing product LCA’s and setting targets for factory performance are additional examples of
techniques to simultaneously improve performance and raise employee awareness around EHS
issues. Engaging employees through awards and targets can be a powerful mechanism for
integrating sustainability into a company.
External Global Partners
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The company has engaged with various agencies and organizations to discuss key EHS
concerns and expectations in the pharmaceutical industry. GlaxoSmithKline created a panel of
external stakeholders facilitated by The Environment Council. This 10-member panel included
representatives from GSK’s customer-base, environmental organizations, suppliers, regulators,
and socially responsible investors. The panel drafted an opinion on pharmaceuticals and the
environment, policy on chemical use, and climate change (GlaxoSmithKline, 2005, 76-78).
In order to address biodiversity more effectively in the company, GSK partnered with
Earthwatch Institute (Europe) and Green Alliance to conduct a study concerning ways to achieve
better environmental regulation, as a means of targeting climate and thus carbon related issues
throughout GSK’s audit programs (GlaxoSmithKline, 2005, 77).
Higher Education Institutions
In 2012, GSK formalized its partnership with the University of Nottingham as a means of
constructing a carbon neutral sustainable chemistry laboratory to addresses sustainable chemistry
in the pharmaceutical industry. In order to embed sustainable chemistry principles in the next
generation of scientists, GSK supported the construction of the GlaxoSmithKline Carbon Neutral
Laboratory for Sustainable Chemistry building with a £12m grant to the university. This is both a
good public relations move for GSK as well as a legitimate investment in the future of the
industry. Furthermore, investing in green chemistry research and development has the potential
to drastically reduce the environmental impacts of pharmaceuticals in the future. The facility will
deliver advanced undergraduate teaching to students by utilizing sustainable chemistry principles
in the university curriculum (Utton).
The GSK Medicinal Chemistry module is designed as an option for chemistry students in
the third year of their 4-year Master of Science courses. The 12 students selected by the
university will then pursue an active research program in the laboratory on a molecular target
that the pharmaceutical company is developing. This is an innovative example of external
engagement because it simultaneously trains new scientists while helping advance current
research and development.
Regulation
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In 2005 GSK collaborated with government entities in both the U.S. and in Europe
concerning environmental risk assessments of pharmaceuticals and the impact of
pharmaceuticals in the environment. In Europe, GSK has lobbied for the environmental impacts
of pharmaceuticals to be regulated by the European Agency for the Evaluation of Medical
Products. The company is an active member of the Association of British Pharmaceutical
Industries’ working group on pharmaceuticals in the environment. The Association actively
engages with the UK Environment Agency (GlaxoSmithKline, 86). In Sweden, the company
participated with LIF, a Swedish-based pharmaceutical research company, on the classification
of pharmaceuticals according to their effects on the environment. By working with the European
Federation of Pharmaceutical Industries and Associations (EFPIA), GSK contributed to the
development of guidelines for environmental risk assessment of pharmaceuticals by the
European Medicines Evaluation Agency (EMEA). GSK lobbying efforts have also extended to
the U.S. government through PhRMA, the Pharmaceutical Research and Manufacturers of
America. In the U.S., the company has engaged with governmental task forces on
pharmaceuticals in the environment (GlaxoSmithKline, 2005, 86).
In 2010 GSK extended its corporate engagement with the country of Singapore.
GlaxoSmithKline has incorporated a long-term commitment with Singapore, which includes a
Green and Sustainable Manufacture Program. Additionally, GSK has committed S$50 million
(£24 million) to the Singapore Economic Development Board to fund research in green and
sustainable manufacturing. GSK’s actions have shown a willingness to cooperate externally and
help others through mutually beneficial projects.
New Standards for Corporate Sustainability
GlaxoSmithKline, a leader in the pharmaceutical industry, has set the goal of reaching
carbon neutrality by 2050 with 10% and 25% reduction by 2015 and 2020, respectively
("GlaxoSmithKline (GSK) - global healthcare company. Do more, feel better, live longer ").
Currently, various standards exist as guidelines to help corporations become more sustainable.
While the Carbon Trust Standard helps corporations become carbon neutral, there are other
standards that target different aspects of sustainability, including corporate sustainability,
sustainability of facilities, and sustainability of the manufacturing process.
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ISO 14000 series
The International Organization for Standardization (ISO), the world’s largest developer
of voluntary international standards, has published more than 19,000 international standards in
various fields ranging from technology to business ("About ISO."). The ISO 14000 series covers
environmental management with various standards to help corporations minimize the effects of
their operations on the environment (Johnson). The 14000 series was adapted by ISO in 1996
and has since been used by at least 230,000 organizations around the world including GSK
(Johnson). One unique aspect of ISO 14000 series is its voluntary approach (Goetsch). Instead of
a standard where specific approaches are listed for corporations to follow, ISO 14000 provides a
set of generic lists that corporations can implement in its management.
The core of ISO 14000 series is ISO 14001:2004. Like all other ISO14000 series, ISO
14001:2004 provides a framework that a corporation can follow to setup its environmental
management systems. The standard is based on a four step process: Plan, Do, Check, and Act
(PDCA). The “plan” is to establish the objective and processes that the corporation deemed
necessary in compliance with its own policies. “Do” refers to implementing the plan. “Check” is
to monitor and measure the process against target goals and “act” refers to responding to
“Check” and adjusting the “Plan” accordingly. The ISO14000 series is often used in conjunction
with the ISO 9000 series. ISO 9000 is the standard of quality management (Jackson). Both
standards are similar in that each can act as internal managements through PDCA while at the
same time they are used as a marketing tool to the customers and clients (Boiral 127-146). The
ISO 14000 series has a myriad of benefits. In various industries, ISO 14000 has become a
customer requirement (Goetsch). It is beneficial for corporations to remain in compliance with
ISO 14000 to remain competitive. Besides external benefits, corporations can experience internal
benefits. For example, methods to identify areas of waste, reducing energy and resource
consumption, maintaining consistency within the manufacturing process, preventing pollution
cost, identifying the corporation as “green”, and reducing environmental risks.
Even with the benefits of ISO 14000, it does not cover all of the components of corporate
sustainability. Even if a corporation is certified for ISO 14000, it does not mean that the
corporation is in compliance with all regulations. As mentioned above, the ISO 14000 standards
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are simply frameworks that a corporation can use to achieve corporate sustainability (Corbett and
Kirsch).
GHG Protocol
Greenhouse Gas (GHG) Protocol is an accounting tool that corporations can use to
understand, quantify, and manage greenhouse gas emissions. The GHG Protocol started in 1998
through a partnership with the World Resources Institute (WRI) and the World Business Council
for Sustainable Development (WBCSD) ("About the GHG Protocol."). In 2001, the first edition
GHG Protocol, The Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard, was published. GHG Protocol’s main goal is to help corporations create a GHG
inventory that truly represents overall emissions, and provide information that can helps
corporations build a strategy to manage and reduce these emissions. The Protocol’s tool for
calculating GHG emissions is also consistent with that of the Intergovernmental Panel on
Climate Change (IPCC) ("About the GHG Protocol.").
WRI and WBCSD joined with ISO in creating the ISO 14064 standard in 2006 ("ISO,
WRI, and WBCSD Announce Cooperation on Greenhouse Gas Accounting and Verification.").
ISO 14064 details requirements that are recognized internationally for defining, examining,
monitoring, and reducing GHGs. This is a good example of how these various standards can
work together to improve corporate sustainability.
GRI
The Global Reporting Initiative (GRI) is a non-profit organization with the mission to
make sustainability reporting standard practice in corporations by providing guidance and
support ("About GRI."). The vision of GRI is a sustainable global economy where corporations
can manage their economic, environmental, social, and governance performance equally and
transparently. GRI guidelines include core metrics that all corporations can adapt , with specific
sectors for specific enterprises. The key structure of GRI is its multi-stakeholder approaches that
help ensure credibility and trust ("About GRI."). The benefits of GRI’s third generation (G3) are
different than those from the ISO 14000 certifications and GRI’s first two iterations. G3 can be
used to evaluate a corporation’s sustainability in terms of laws and regulations. By addressing
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19
the three areas of corporate needs in economic, environmental, and social aspects, GRI
guidelines can lead to growth through evaluating cost, customer interaction, community
interaction, and environmental impacts.
Some argue that GRI guidelines, though strong for setting a starting point in corporate
sustainability, are not enough considering that different industries face different sustainability
challenges (Dienel). Furthermore, some also believe that a GRI based report with a long list of
mandated performances is not a direct indicator of sustainability and that it is the principles and
actions that are repeated daily that should be standardized.
LEED
Leadership in Energy and Environmental Design (LEED) is a rating system for the
design, construction, and operation of facilities. Developed by the United States Green Building
Council (USGBC) in 1995, LEED has since grown into a definition of sustainable building
("About USGBC."). Like GRI, LEED is an open and transparent rating system, which can be
adjusted according to the wisdom of experts in the field. LEED’s rating system allocates points
into various categories based on the potential environmental impacts and human benefits. LEED
points are distributed across 5 major categories: Sustainable Sites, Water Efficiency, Energy and
Atmosphere, Materials and Resources, and Indoor Environmental Quality (Winkler). To
determine whether a building meets the requirements setup through the point system, LEED uses
reference buildings and data collecting to determine the impact of the building in each of the
categories. Different LEED rating systems place different emphasis on building qualities, but in
general energy use is given high priority.
However, because of the strict point system critics often argue that it can be inflexible.
Because of this, LEED has improved the development of its rating system. Currently LEED is in
its fourth version with nine rating systems for various design and facility (Winkler).
Which Standard to Use?
With so many standards including those mentioned above, which standard should a
corporation use and what are the differences between these standards? How do these standards
compare to those of the Carbon Trust? Please refer to Appendix IV to view a list of standards in
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corporate sustainability. With all the different standards, each with its own guidelines and
system, it is often difficult to determine which standard a corporation should follow. The current
standards for carbon neutrality are still not firmly established. There is no set guideline to follow
and it is up to the corporation to determine which standard to use based on the goals that the
corporation wants to achieve. GSK’s goal for carbon neutrality fit into the Carbon Trust
Standard, while its desire for better facilities translated at various times into LEED, the Carbon
Trust Standard, and ISO certifications. However, no matter the differences between them, all of
these standards seek to help corporations achieve sustainability.
The Future of Corporate Sustainability Standards
A systemic view of the standards mentioned above and others shows that they are
complementary, instead of adversarial (Proposing a Unifying Framework for Sustainable
Development). The future of standards in carbon neutrality will include using all the tools,
concepts, standards, and programs available bring clarity, enable action, and monitor process.
Ultimately, it is up to the individuals within the corporation to determine which standard to use
for each goal. In all likelihood, achieving corporate sustainability will require the use of many
standards.
Conclusion
GlaxoSmithKline’s recent attainment of the Carbon Trust Standard certification for
carbon neutrality sets an intriguing precedent for carbon management in multinational
corporations. Not only have they proved that carbon neutrality is possible for large international
corporations, they have shown that it can bring value to the corporation. While GSK has realized
significant energy cost savings in reducing its carbon footprint, the primary benefit of the Carbon
Trust Standard certification is reputational.
Carbon neutrality is an increasingly popular term in the corporate sustainability world.
More importantly, it is an increasingly popular goal among companies. Becoming carbon neutral
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is not a simple process, however. It takes a deep understanding of a company’s operations and
supply chain to even begin considering carbon neutrality. Thankfully, firms like Carbon Trust
exist to help companies interested in becoming carbon neutral navigate the process. As we have
discussed in this case, there is tremendous real and potential value in becoming a certified carbon
neutral company. Not only does it please consumers, it has the potential to increase market share,
attract investors, and strengthen a firm’s public image. These advantages are largely dependent
on the use of a credible third party for verification. Carbon Trust offers clients a variety of
services, including training, software, and certification, and even an eco-label for products.
These services can help firms attract new customers, better understand their own operations,
weed out risk in the supply chain, and make efficiency gains. As carbon neutrality becomes an
increasingly popular topic within corporate sustainability, new corporate standards such as the
Carbon Trust Standard’s certification will continue to emerge.
While the Carbon Trust’s Carbon Trust Standard certification is available, it is by no
means the only standard of corporate sustainability. Others such as LEED, GRI, the GHG
Protocol, and ISO 14000 also help corporations in their pursuit of sustainability. We have
concluded that these standards are more complementary than adversarial. While the future is
uncertain, climate change may force more companies to consider “carbon neutrality” as part of
their overall corporate sustainability agenda as they strive to remain competitive in a resource-
constrained world.
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APPENDIX
Appendix I
Carbon Trust Standard Logo
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Appendix II
Price List for Carbon Trust Standard’s Certification Fee
Organization’s Annual
Energy Expenditure*
Certification
only
Assisted
Certification
Online
Certification
Less than £50k £1,000 £1,700 £500
£50k-£500k £2,000 £3,500 n/a
£500k-£1.5m £5,000 £8,000 n/a
£1.5m-£5m £6,000 £10,000 n/a
£5m-£10m £8,000 £12,000 n/a
More than £10m £10,000 £15,000 n/a
(Carbon Trust)
http://www.carbontruststandard.com/pages/Price-list.
Description of Price List for Carbon Trust Standard’s Certification Fee:
Certification only: For organizations that are able to complete the assessment
form and spreadsheet themselves.
Assisted certification: For organizations that would like support in collating evidence
and completing the assessment form and spreadsheet.
Online certification: For organizations that are able to guide themselves through the
assessment process; currently only available for small organizations (less than £50k energy
spend).
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Appendix III
Carbon Trust Equivalent Schemes
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Appendix IV
List of Standards in Corporate Sustainability
Name ISO
14000
GHG ISO 14064 GRI LEED CTS
Origin ISO WBCSD and
WRI
ISO CERES USGBC Carbon Trust
Type of
standard
Non-
specific
Specific Specific Non-
Specific
Specific Specific
Type of
Specificity
N/A Greenhouse
Gas
Emissions
Greenhouse
Gas
Emissions
N/A Facilities Carbon
Emission
Certified/
Verified by
Third
party
certified
agencies
Government
Certified
agencies
Government
certified
agencies
Self-
reporting
with
reviews
Third party
certified
agencies
Third party
certified
agencies
Geographic
Specificity
Global Global Global Global Global Global
Key
Methodology
Plan, Do,
Check
and Act
(PDCA)
Prepare,
Simplify,
Reduce,
Consistency
Plan, Do,
Check and
Act (PDCA)
Principles,
Reporting,
Strategy,
Approach,
and
Indicator
Potential
Environment
al Impacts
and Human
Benefits
Footprint
measurement,
Reduction,
and Carbon
Management
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