Understanding the Factors Promoting Sustainability in the Indian Pharmaceutical Sector Through ESG Approach

Abstract

The ESG model, which stands for Environmental, Social, and Governance, is becoming increasingly important in the pharmaceutical sector. The pharmaceutical industry is under scrutiny from various stakeholders, including customers, investors, and regulatory bodies, to improve their ESG practices. The ESG model is a framework that helps companies assess and report on their performance in these three areas. ESG approach of operation brings stakeholders’ faith in organizational affairs. Indian pharmaceutical companies are facing big challenges in several fronts in meeting ESG principles for balancing social, environmental and economic goals. The balancing of these three goals by following ESG approach of operation will bring sustainability in organizational existence. Several broad areas need serious look-over. Sourcing of raw ingredients, clinical trials and associated costs, product quality and information, product pricing, internal infrastructure robustness and security, organizational culture and disclosure and compliances are areas where pharma companies are confronting ESG principles. In the pharmaceutical sector, the Environmental aspect of the ESG model focuses on reducing the environmental impact of their operations and products, such as reducing carbon emissions, waste management, and water conservation. The Social aspect involves ensuring ethical business practices, such as fair labor practices, supply chain management, and community engagement. Finally, Governance involves ensuring transparency and accountability in decision-making processes, as well as maintaining high ethical standards and preventing corruption. Pharmaceutical companies that implement ESG practices can not only benefit from improved reputations but can also attract investors who prioritize ethical and sustainable investing. Additionally, companies that prioritize ESG practices are better positioned to adapt to changes in the regulatory landscape, such as the increasing focus on sustainability and social responsibility. Overall, the ESG model provides a comprehensive framework for pharmaceutical companies to assess their environmental, social, and governance practices and ensure they are operating ethically and sustainably, which can lead to long-term success and positive impact on society.