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Connecting Pharma To The UN Sustainable Development Goals At Chiesi Group

Connecting Pharma To The UN Sustainable Development Goals At Chiesi Group

by ESG Business Institute -
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With a two-pronged focus on research and sustainability, a family-owned pharmaceutical company founded nearly 90 years ago in Italy is building on a future-minded business philosophy that takes a patient approach, both in its timelines and its stakeholder focus. Chiesi Group develops and markets medicines to treat respiratory conditions and rare diseases that prioritize patient health while pursuing the UN Sustainable Development Goals (SDGs) that are a global call to action on the biggest threats to Earth and its people. 

Giacomo Chiesi, Head of Global Rare Diseases at the Chiesi Group, is among the third generation of the Chiesi family to lead the company, which has seen significant growth since the 1990s thanks to acquisitions and expansions in Europe, U.S., China, Brazil, and other locations around the globe.

“We are stable, and the reason for that is we want to focus on the things that really matter. And the things that really matter for us are the patients and the Sustainable Development Goals,” he says. “We try to have a very long-term orientation because we believe that aligns our objectives very well with the objectives of society and those of the patients. So we’re very patient investors.” 

That long-term business philosophy has paid off, as the company now has nearly 7,000 employees and sales of 2.2 billion euros (about 2.7 billion USD) in 2020. And, Chiesi’s environmental commitments have spread to pledging to be carbon neutral by 2035. To prioritize new and improved products and practices, Chiesi invests 20% to 25% of its sales into research and development each year.

“We have the opportunity to continue to invest and do so for the sake of science and for the sake of the patients,” Giacomo says. “We’re very persistent as a family and, therefore, also as a company. We believe that persistence pays off. You reap the benefits of your investments and your efforts. The secret sauce of this has been that we put the interest of the patients and the Sustainable Development Goals ahead of our own personal interests.”

To reinforce its commitment to sustainable development, in 2019 Chiesi Group became a Certified B Corporation and a Benefit Corporation, adopting a legal framework that requires it to prioritize stakeholders as well as profit. In speaking with Chiesi recently as part of my research on purpose-driven companies, Giacomo shared more about how the company incorporates the SDGs into its pharmaceutical research and how it encourages suppliers and business partners to consider their social and environmental impact as well. Below are excerpts from our conversation.

Chris Marquis:
Why did Chiesi think it was important to become a B Corp? Can you share how Chiesi Group is collaborating in the pharmaceutical industry and with your other business partners to spread these important values? 

Giacomo Chiesi:
When we achieved the B Corp Certification in 2019, it was a natural continuation of the type of business we are and a continuation of our mission as a company. There are two real reasons why we felt it was important to become a B Corp. One is stakeholder capitalism; the second is how strongly oriented we are as a business toward the Sustainable Development Goals (SDGs), especially those that speak to the mission of pharmaceutical companies.   

We’ve appreciated the progressive shift from shareholder to stakeholder capitalism — to a more sustainable view of the economy and the role of the company. As a family business, we felt this had a lot of implications for everyone, and we love to be a B Corp because we love to be the change that we see. The second point is there is a close connection between pursuing the SDGs and being a pharmaceutical company. Among the 17 SDGs,
SDG 3 is good health for all at all ages. That’s precisely what we’re trying to accomplish with our business. Part of our mission is really to revolutionize patients’ lives and help them as much as we possibly can — to expedite and amplify patient access to therapies and at all ages.  

We as a company and as a B Corp believe in the value of interdependence.  Only by being inclusive can you really generate real value for society. If we want to make our business truly sustainable and ensure that it produces a real change, we are acutely aware of the fact that we need to involve our network.   

To do that, we basically do two things. The first is that we continuously communicate what our efforts are; we try to be very transparent. And we try to hold ourselves accountable and make sure that people understand that we hold ourselves accountable. We recently launched the
Action Over Words campaign to communicate our initiatives on climate change and to invite all of our stakeholders to take an active role in verifying their impact on society and the environment. We have a goal for Chiesi to become carbon neutral by 2035 and realize we can’t do it alone, so it’s important that we encourage others to do their part to ensure that as a society we make a positive impact. 

The second point is to exert as much influence as we can with the companies that we work or partner with, including our suppliers, to find innovative ways for us to extend our range of influence on them and try to hold them accountable to our standards. In 2019, we worked with 70 of our strategic suppliers to create our
Code of Interdependence with mandatory requirements and improvement actions to guide them in improving their social and environmental impact. As one example, in alignment with SDG 8, which is decent work and economic growth, we’re trying to ensure fair working conditions and working hours for employees at our company and our suppliers.  

We’re now in the process of introducing another document, which is the responsible Investment and Partnership Policy to ensure that the companies we partner with, invest in, or acquire also adhere to a set of Sustainable Development Goals.   

How does that pledge to become carbon neutral drive your product development and corporate policies?  

As a respiratory and pulmonary company, we develop and commercialize treatments for asthma, COPD, and other similar conditions including inhalers that need a propellant to operate. Propellants have an impact on the environment, but the good news is that new propellants have been developed that are much less impactful from an environmental standpoint. 

As part of the Action Over Words campaign, we want to cut the greenhouse gas emissions per unit of inhaled product sold by over 80% come 2030 and then by 90% come 2035. As emissions that come from the products that we sell, these are considered Scope 3 emissions. We’re in the process of developing our minimum carbon inhaler on that basis by essentially switching to a different propellant. It’s going to be an interesting evolution for us as a business, and we’re investing 350 million euros to fast-track the development. But it doesn’t take a week or two weeks to get a new inhaler to the market; it takes years. We hope that we'll be able to launch the first environmental-friendly inhaler by 2025.

The Scope 1 and Scope 2 emissions are also important for us to address, as they represent about 70% of our emissions. We have a number of projects in development, including continued work so that all of our sites use 100% renewable energy and shifting our car fleet to electric vehicles. That might seem simple, but we have 7,000 employees in 20 countries around the world.

Can you provide an example of how Chiesi Group combines science with societal benefit in developing products or policies? 

In our Global Rare Diseases business unit, which is a newly created organization, we are developing commercialized treatments for rare diseases, so we never forget about even the most rare diseases. Three quarters of rare diseases are genetic in nature. 

We created the organization 18 months ago, and in just 18 months we went from one person to 250 employees in more than 20 countries. We already launched a number of drugs that we partner with other companies on, so I think we can say we've been successful, even though we're very, very small still. But the issue here is that there are 7,000 rare diseases — every one of them is different, so it's a complex, convoluted problem. And it’s difficult to diagnose them because you don’t see them very often, so the time to diagnosis is very long — it takes on average more than five years. During that time, the patient’s condition degenerates quickly in many diseases and only 5% of these diseases have an approved therapy or an experiment of therapy. So it's a huge unmet medical need.

From a prevalence standpoint you’re talking about very few patients, but if you poll them there are more than 350 million patients, as an estimate, who are affected by a rare disease. Then consider the patient’s family and caregivers, and the impact is probably closer to a billion people who are impacted.

So it’s a huge societal issue: the rare disease patients are really the north star for us, and we try to do everything possible to really revolutionize their lives. And if I go back to SDG 3 — health for all at all ages — that's really what we’re talking about. So while there are many, many challenges, we’re very passionate about making a difference for all the patients who use our products, including also the respiratory patients.