CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER 2003 FORTUNE GLOBAL 500 AND FORTUNE 1000 PHARMACEUTICALS Corporate Environmental and Sustainability Reporting PACIFIC SUSTAINABILITY INDEX: SCORES J. Emil Morhardt Andrea R. Bravo Mary Beth Houlihan Sara Leverette Benjamin A. Schachter Marta E. Young Morhardt, J. E., A. R. Bravo, M. B. Houlihan, S. Leverette, B. A. Schachter, and M. E. Young (2004) Pharmaceuticals—Corporate Emnvironmental and Sustainability Reporting: Pacific Sustainability Index Scores. Claremont, CA., Roberts Environmental Center, Claremont McKenna College Price: $20.00 www.roberts.mckenna.edu 2003 Pharmaceutical Industry Report 1 CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER Contents Corporate Environmental and Sustainability Reporting . .3 Pharmaceutical Company Rankings . 3 The Pacific Sustainability Index (PSI) . 4 The PSI Scoring System . .4 Environmental vs. Social Scores . .4 Intent, Reporting, and Performance. 4 More Environmental than Social Reporting . .4 Distribution of Possible PSI Scores . 5 Overall PSI Scores . 5 Environmental Intent Scores . .6 Environmental Reporting Scores . .6 Environmental Performance Scores . .7 Combined Environmental Scores . 7 Social Intent Scores . 8 Publications from Roberts Environmental Center Social Reporting Scores . .8 Social Performance Scores . .9 Combined Social Scores . .10 The Roberts Environmental Center publishes analyses of corporate environmental and social reports—together called Analysts’ Comments . 10 sustainability reports—to the web and in special reports. Abbott Laboratories . 10 Allergan . 10 We also write books about environmental and sustainability Amgen . .10 reporting, the first of which is Clean, Green, and Read All AstraZeneca . 10 Over: Ten Rules for Corporate Environmental and Aventis . 10 Sustainability Reporting, available from ASQ Press, and Barr Laboratories . 10 publish articles in academic technical journals. Biogen Pharmaceuticals . 10 Bristol-Myers Squibb . 10 For more information please visit our web site at: Chiron Pharmaceuticals . .10 www.roberts.mckenna.edu. Eli Lilly and Company . 10 Forest Laboratories . .10 To order additional copies of this reportreport, or to obtain Genzyme Pharmaceuticals . 10 multiple-copy discount rates, please write, email, or call: GlaxoSmithKline . 10 IVAX. 11 Dr. J. Emil Morhardt, Director Johnson & Johnson . 11 Roberts Environmental Center King Pharmaceuticals . 11 Claremont McKenna College Merck & Co., Inc. .11 925 N. Mills Avenue Novartis . 11 Claremont, CA 91711-5916 Pfizer . .11 USA Pharmacia Corporation . 11 Roche . 11 909-621-8190 Schering-Plough Corporation . 11 [email protected] Watson Pharmaceuticals . .11 Wyeth . 11 The goal of corporate report analysis conducted by the Roberts Environ- mental Center is to acquaint students with environmental and social issues The Roberts Environmental Center . 12 facing the world’s industries, and the ways in which industry approaches and resolves these issues. This report is a work product of the Fall 2003 Claremont McKenna College . 12 Environment, Economics and Politics Clinic. Copyright 2004 © by J. Emil The Claremont Colleges . .12 Morhardt. All rights reserved. 2 2003 Pharmaceutical Industry Report www.roberts.mckenna.edu CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER 2003 FORTUNE GLOBAL 500 AND FORTUNE 1000 PHARMACEUTICALS Corporate Environmental and Sustainability Reporting During the past decade, large manufacturing corpora- This report covers all of the companies in the phar- tions have begun to report voluntarily on the environ- maceutical sector of the 2003 Fortune Global 500 mental issues affecting their companies and on how and Fortune 1000 lists, whether or not they produced they deal with them. The addition of social issues to formal environmental or sustainability reports. It is these reports has resulted in some firms designating based on environmental and social information them “sustainability reports”. Some firms produce available on their web sites in October 2003. The these reports yearly, others only occasionally, and quality of their environmental and social reporting some not at all. We obtain these reports and any was characterized by students in the Claremont additional information exclusively from corporate Colleges using the Roberts Environmental Center’s web sites. Pacific Sustainability Index (PSI). The overall company PSI scores rank as follows: Pharmaceutical Company PSI Rankings 1 Aventis 1 Bristol-Myers Squibb Company 1 GlaxoSmithKline 4 Novartis 5 Johnson & Johnson 6 Abbott Laboratories 7 AstraZeneca 8 Merck & Co., Inc. 9 Pharmacia Corporation 9 Wyeth 11 Allergan 12 Pfizer Inc. 12 Roche Group 14 Eli Lilly and Company 15 Chiron 15 King Pharmaceuticals 17 Amgen 17 IVAX 19 Biogen 19 Forest Laboratories 19 Schering-Plough Corporation 22 Barr Laboratories, Inc. 22 Genzyme 22 Watson Pharmaceuticals www.roberts.mckenna.edu 2003 Pharmaceutical Industry Report 3 CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER The Pacific Sustainability Index (PSI)1 THE PSI SCORING SYSTEM OVERALL SCORE The Pacific Sustainability Index (PSI) comprises a list of The PSI has a total of 140 topics, 80 of them on 140 topics that should be addressed in corporate environ- environmental issues and 60 on social issues. The mental and sustainability reports. The topics were derived overall score is the percentage of the maximum from the ISO 14000 family of international environmental possible score on all 140 topics. standards, from reporting guidelines, including those of the Global Reporting Initiative (GRI), and from a variety ENVIRONMENTAL INTENT SCORE of other sources. The philosophy of the PSI is described in detail in our book, Clean, Green, and Read All Over, Scores from PSI topics 1-27, 54, and 55. These published by and available from the American Society for topics reflect a firm’s comittment to environmental Quality Press2. Each of the topics has a maximum score of reporting. either two or three points. The overall scores are pre- sented in the graph on page five, and are used to create the ENVIRONMENTAL REPORTING SCORE ranking on page three. The overall score is calculated as a Scores from PSI topics 28-53. These topics reflect percentage of the maximum possible score. reporting of environmental performance without ENVIRONMENTAL VS. SOCIAL SCORES reflecting the quality of that performance. In addition to the overall score, we have subsetted the PSI into its environmental and social components and ENVIRONMENTAL PERFORMANCE SCORE reported each of these independently in graphs on pages Scores from PSI topics 56-80. These scores reflect six through nine. The subsetted scores are also calculated improved environmental performance, or perfor- as percent of maximum possible score for each subset, mance better than the average of a firm’s peers, or and have been arranged in the same rank order as the both. overall scores on page five. COMBINED ENVIRONMENTAL SCORE INTENT, REPORTING, AND PERFORMANCE Scores for all 80 environmental topics in the three Both environmental and social subsets of scores reflect intent, reporting, and performance. Intent scores are categories above. derived from topics in the PSI that reflect a stated willing- ness to perform well, to monitor that performance, and to SOCIAL INTENT SCORE report it. Reporting scores reflect presentation in the Scores from PSI questions 81-108, 124, and 125. report of data on specific environmental and social topics, They reflect a firm’s committment to social report- but not on how good that performance was—they indicate ing. transparency in reporting independent of success in making improvements. Performance scores reflect better SOCIAL REPORTING SCORE performance on specific environmental and social topics since the previous reporting period, better performance Scores from PSI questions 109-123, reflecting than peer companies, or both. amount of reporting of social performance without reflecting the quality of that performance. MORE ENVIRONMENTAL THAN SOCIAL REPORTING Inspection of the subsets shows that more companies SOCIAL PERFORMANCE SCORE report environmental information than report social Scores from PSI topics 126-140. These scores reflect information—that is, more are producing purely environ- improved social performance, or performance better mental reports than are producing sustainability reports— than the average of a firm’s peers, or both. and that the scores for environmental and social perfor- mance are far lower than those for either intent or report- COMBINED SOCIAL SCORE ing. Scores for all 60 social topics in the three categories 1PSI scoring sheets are available on our web site above. 2http://www.qualitypress.asq.org/perl/catalog.cgi?item=H1145 4 2003 Pharmaceutical Industry Report www.roberts.mckenna.edu CLAREMONT MCKENNA COLLEGE ROBERTS ENVIRONMENTAL CENTER Distribution of Possible PSI Scores The pie diagram to the right shows the quantitative ENTA distribution of possible points for the 140 topics in ONM L T IR O V PI the PSI scoring system. Environmental topics make N Environmental C E S up a little more than half of the total and social Reporting topics the remainder. Environmental and social intent topics make up 41 percent, reporting topics make up 24 percent, and performance topics make up 35 Environmental Environmental Intent Performance percent of the total possible score. Two thirds of the possible performance score requires that firms Social compare their performance to that of their peers and Social Performance