ESG in the Biopharma Industry: Do Well By Doing Good

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The biopharma industry suffers from an image problem. Exorbitant drug prices, out-of-control healthcare costs, and the opioid crisis paint the industry as greedy and valuing profit over patients. Even the rapid development of effective vaccines against COVID-19 only provided a short-lived boost.

One way biopharma companies are working to improve public perception of the industry is to communicate their commitment to ESG (environmental, social, and governance) factors. These factors are measures of corporate responsibility or sustainability that encompass broad issues such as climate change, diversity and inclusion, and transparency:


Environmental factors measure the energy a company consumes, the waste it generates, the natural resources it uses, and the consequences for ecosystems and habitats.


Social responsibility factors measure human rights, diversity and inclusion, health and safety, and community impact.


Governance factors measure corporate structure, risk management, corruption and bribery, and ethics. Governance assesses how a company uses policies and controls to inform business decisions, comply with the law, and meet obligations to stakeholders.

ESG and Mission, Vision, and Values

ESG goals are often linked to a company’s mission, vision, and values. The best companies communicate more than just numbers showing how they performed against their goals – they share how they are having a meaningful impact on people and communities as a result of their commitment. Merck’s ESG website has a “Stories Beyond the Report” section with the tagline, “There is real world impact behind our work. Dig deeper.” One of the stories is a video/talk about the impact of climate change on health and what businesses can do about it. Amgen’s ESG website also has a stories section with an excellent audio series about people who have experienced health equity and those who are helping to effect change.

At its essence, the term “corporate sustainability” refers to an approach to conducting business that creates sustainable, long-term shareholder, employee, consumer, and societal value by pursuing responsible environmental, social, and economic (or governance) strategies.


ESG as a Measure of Value

Investors and consumers are increasingly considering ESG factors as a measure of a company’s value. In fact, research has shown that biopharma companies with stronger ESG assessments have outperformed over time.

At its heart, ESG is a tool for value creation. ESG enables firms to identify, systematically manage and transparently communicate the full set of risks and opportunities that are material to their business. If this is sounding a lot like simply doing good business—that’s because it is. In the process of doing good business, ESG confers social and environmental benefits, but the main reason firms should practice ESG is to develop and strengthen behaviors that set them up for long-term success.


There is a clear consensus within the biopharmaceutical industry that ESG factors will play an increasing role in how companies and the biopharmaceutical industry are perceived. In a follow-up survey of 50 public biotech companies, 60% were found to have publicly disclosed ESG information in 2022, which was double what was reported in 2021. As biopharmaceutical communicators, it is essential to understand the ESG landscape and what investors and consumers expect, discern what ESG factors matter most to the company, and advise on communications strategies for external and internal audiences.


NIRI Policy Statement

The Evolution of ESG Disclosure for Biotech Companies


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