Eli Lilly and Company

Carbon per million dollars of revenue. The legacy industry-standard reference (CDP, MSCI). Useful for cross-sector context, but distorted by margin — high-margin firms appear artificially efficient. Read alongside the operational and asset intensities for the full picture.

OpEx (operating expenditure) is the running cost of the business — staff, services, energy, materials. This shows how carbon-intensive operations are per million dollars of spend. Removes the margin distortion that revenue-based ratios introduce.

EVIC (Enterprise Value Including Cash) is the firm's total capital footprint — equity + debt + cash + minority interest. The EU's standard intensity measure (SFDR PAI 3) — answers: how much carbon does each million of capital deployed in this business produce?

PP&E (Property, Plant & Equipment) plus leased real-estate assets is the firm's physical infrastructure on the balance sheet. This shows the carbon intensity of that physical footprint — uses Scope 1+2+3 for consistency with the other headline intensities. Surfaces stranded-asset risk for asset-heavy firms.

As a RE100 member targeting 100% renewable electricity by 2030, Lilly pursues three pathways. First, on-site solar PV installations already operational in France, Ireland, India, Italy, Spain and Puerto Rico (total self-generated renewable electricity 5,979 MWh in 2023), with plans to expand at existing and new manufacturing sites. Second, purchased green power from utilities in Germany, India, Ireland, Spain, Switzerland and the UK under retail supply contracts or on-site PPAs (e.g. Kinsale, Ireland facility 100% renewable under EKOenergy-labelled contract). Third, unbundled Energy Attribute Certificates (RECs/GOs) purchased in alignment with RE100 technical criteria requiring location- and vintage-matching. By end-2023 28.4% (185,770 MWh) of purchased electricity was renewable; ultimate aim is to supplement on-site solar with PPAs in primary consumption regions — USA, Europe and China — by 2030.

Lilly's priority for achieving carbon neutrality by 2030 (Scope 1 and 2) is to reduce absolute emissions as much as possible and transition purchased electricity to 100% renewable before purchasing offsets to cover remaining emissions. An internal shadow carbon price of $5-25/tCO2e is used to incentivise efficiency investments. No offsets were reported as retired in the 2022 reporting year; the offset strategy is described as a residual measure after operational reductions and renewable electricity procurement are maximised. The price of voluntary carbon offset credits informs the shadow price used in capital expenditure decisions.

• Energy efficiency investments via dedicated Energy and Waste Reduction Fund

  Since 2006 Lilly has allocated up to $4 million annually to the Energy and Waste Reduction Fund, which supports projects that reduce emissions and energy use but fall outside local capital budgets. By 2023 more than $50 million has been invested, funding over 190 projects that collectively save more than 1 trillion BTUs annually and avoid more than 132,000 tCO2e per year. In 2023 initiatives included AHU optimisation (9,669 tCO2e saving), chiller recapitalisation at one US facility (3,307 tCO2e), new 2.5 MW solar PV at Kinsale Ireland, combined heat and power optimisation, and lighting and lab air-change reductions — together estimated to save ~20,700 MWh/year at Kinsale alone. An internal shadow carbon price of $5–$100/tCO2e is applied to capital expenditure decisions to incentivise low-carbon investments.

• Business travel and employee commuting reduction

  Business travel (Cat 6) recovered strongly post-pandemic to 40,500 tCO2e in 2023, significantly above the 2021 base of 8,581 tCO2e and reflecting full return-to-travel. Employee commuting (Cat 7) is 45,100 tCO2e (up from 25,108 tCO2e base year), calculated using FTE counts, commuting distances and modal emission factors. Both categories are calculated via the average-data method. Lilly's transition plan relies partly on continued hybrid working arrangements and has established HSEDirections, an energy awareness programme for sales and marketing teams. Climate change performance (including energy efficiency and renewable electricity transition) is tied to executive incentive compensation for the CEO and President of Manufacturing.

• Manufacturing energy decarbonisation — stationary combustion and process emissions

  Stationary combustion (123,523 tCO2e) and process emissions (2,581 tCO2e) make up the majority of Lilly's Scope 1 inventory, with mobile combustion (48,847 tCO2e) and fugitive emissions/refrigerants (6,907 tCO2e) as secondary sources. Lilly's strategy targets fuel switching and energy efficiency across its owned manufacturing sites in the US, Puerto Rico, Ireland, Italy, Spain and France. The EU ETS covers the Kinsale, Ireland facility (14.6% of Scope 1); strategy is to improve GHG efficiency to limit ETS obligations, supported by a specialist third-party trading adviser. In 2023 Scope 1 was 182,000 tCO2e, a reduction of approximately 26% from the 2019 base of 192,075 tCO2e.

• Green chemistry in R&D and manufacturing to reduce process emissions and solvent waste

  Green chemistry principles are embedded from early candidate selection through manufacturing scale-up. Lilly uses an Environmental Development Review process to evaluate potential environmental impacts during production scale-up. Recent advances include continuous flow chemistry for API synthesis (e.g. GLP-1/GIP receptor agonist), sustainable oligonucleotide manufacturing research, and minimisation of hazardous reagents and solvent waste. These process-level interventions reduce the carbon footprint of manufacturing and limit waste generated in operations (Cat 5: 31,070 tCO2e in 2022).

• Manufacturing energy efficiency: HVAC, chiller and utility system optimisation

  Energy consumption accounts for approximately 80% of Lilly's combined Scope 1 and 2 emissions. Lilly deploys a corporate Energy and Waste Reduction Fund (up to $4M/year) to fund improvement projects across its manufacturing sites. In 2022, HVAC and chiller system upgrades at sites in Spain, France, New Jersey, Ireland, Italy and Indiana are collectively expected to reduce energy consumption by an estimated 22,000 MWh/year. Continuous manufacturing processes for active pharmaceutical ingredients are also being expanded to improve energy and process efficiency. Since 2006, the fund has approved more than $50M for 190+ projects, collectively saving >1 trillion BTUs and avoiding >132,000 tCO2e annually.

• Cogeneration (combined heat and power) to reduce site-level Scope 1 and 2 emissions

  Lilly has deployed combined heat and power (CHP) systems at manufacturing sites to lower GHG emissions while reducing operating costs. A 9.4 MW CHP system became fully operational at the Puerto Rico facility in 2022, expected to reduce site emissions by 15-20% and save $5-7M annually by switching from grid electricity to on-site LNG-fuelled generation. CHP systems also operate at Kinsale (Ireland) and Sesto (Italy). A 4.4 MW trigeneration system was installed at Sesto in the reporting period, anticipated to achieve a 6% CO2e reduction as manufacturing expands.

• On-site cogeneration (CHP) to improve energy resilience and reduce GHG at Puerto Rico facility

  Lilly advanced construction of a 9 MW combined heat and power (CHP) system at its Puerto Rico manufacturing facility (mechanically complete 2021, operational 2022). Cogeneration simultaneously generates electricity and recovers usable heat, expected to deliver $5–7M in annual energy savings and 15–20% site GHG reduction. CHP systems also operate at Kinsale, Ireland and Sesto, Italy. This investment improves resilience to acute climate-related weather events (hurricanes) as well as reducing direct operating costs.

• Manufacturing energy efficiency: HVAC, chilled water and utility systems optimisation

  Lilly operates a corporate Energy and Waste Reduction Fund (up to $4M/year, $50M+ since 2006, 190+ projects) targeting HVAC and chilled water system improvements at sites including Alcobendas, Fegersheim, Indianapolis, Kinsale and Puerto Rico. In 2021, 20 implemented projects saved an estimated 18,678 tCO2e. HVAC optimisation projects alone are expected to reduce energy by ~26,500 MWh/year. These efforts support the 2030 carbon neutrality goal and are embedded in Manufacturing Standards for Operational Excellence.

• Scope 3 cold-chain and downstream distribution logistics

  Downstream transportation and distribution (Cat 9) is reported at 6,600 tCO2e for 2023, substantially lower than the 2021 base year of 173,777 tCO2e. The calculation uses sold product tonnages multiplied by DEFRA emission factors plus 'last mile' estimates from distribution warehouses to customers. While this category is smaller relative to upstream logistics, Lilly acknowledges it covers global distribution across approximately 105 countries. End-of-life treatment (Cat 12) is 83,800 tCO2e, calculated assuming all sold pharmaceutical waste undergoes hazardous incineration.

• Supplier engagement on Scope 3 Category 1 purchased goods and services

  Category 1 purchased goods and services is Lilly's dominant Scope 3 source at 3,098,800 tCO2e in 2023 (up from 2,434,210 tCO2e base year 2021), reflecting a hybrid method: where supplier Scope 1+2+3 data are available they are used to develop emission factors attributed proportionally to Lilly's spend; otherwise spend-based EEIO factors are applied. Only 5% of emissions are calculated from supplier-provided data, indicating significant data-quality improvement potential. Lilly prioritises suppliers by procurement spend and strategic importance, engages via CDP supply chain platform and has communicated climate expectations, but these are not yet contractual requirements. Category 4 upstream transport also large at 957,400 tCO2e, up sharply from 141,255 tCO2e base year, reflecting expanded scope to include spend-based logistics.

• Supply chain engagement and Air-to-Ocean logistics shift to reduce upstream/downstream transport emissions

  Lilly's 'Air-to-Ocean' project, launched in 2015, has transitioned over 50 global shipping lanes from air freight to sea freight, saving approximately $50M over the project lifetime (~$10M annualised) and reducing emissions from those lanes by 50%. Lilly continues to engage with its largest global logistics providers on green logistics, reducing packaging volumes and improving fleet efficiency. The emissions associated with upstream (Cat 4: 784,900 tCO2e in 2022) and downstream (Cat 9: 4,010 tCO2e) transport are tracked and managed through its Green Logistics Program and cross-functional Green Team.

• Pharmaceutical supply chain (purchased goods/API) decarbonisation via supplier engagement

  Purchased goods and services (Cat 1, including Cat 2) represent Lilly's largest Scope 3 category at 2,087,950 tCO2e in 2022, more than 80% of total value-chain emissions. Lilly has developed a three-phase Supplier Engagement Program: Phase 1 (evaluating tools and processes), Phase 2 (active supplier engagement including CDP supply chain), Phase 3 (value chain emission reduction targets). Supplier emissions data currently replace EEIO spend-based estimates where adequate; 1% of emissions are calculated from supplier-reported data. Environmental capability-building is underway in China and India. Lifecycle analysis was completed for the Trulicity device in 2022 per ISO 14040, identifying materials, secondary packaging, transport and manufacturing as priority reduction areas.

• Supply chain Scope 3 measurement and supplier engagement on emissions

  In 2021, Lilly engaged a third-party consultant to calculate full Scope 3 value-chain emissions for the first time, covering all 15 categories. Category 1 (purchased goods and services, including capital goods) dominates at 2,434,210 tCO2e. Lilly collects climate and carbon data from ~1% of suppliers (representing ~10% of procurement spend and ~15% of supplier-related Scope 3). Where supplier-specific data is unavailable, spend-based estimation is used. Lilly plans to introduce formal climate-related supplier requirements within two years.

• Air-to-Ocean logistics shift to cut upstream and downstream transport emissions

  Since 2015, Lilly's 'Air-to-Ocean' programme has transitioned over 50 global shipping lanes from air to sea freight, reducing transportation GHG emissions by 50% on converted lanes and saving approximately $50M over the project life (~$10M/year). A cross-functional Green Logistics Green Team developed 25 smart goals across global transportation, warehousing and distribution. In 2021, COVID-19 supply chain pressures forced some reversion to air freight, but ocean shipping remains the priority as supply chains stabilise. This lever directly addresses Scope 3 Category 4 (upstream) and Category 9 (downstream) transportation emissions.

• Sustainable packaging redesign to reduce materials and transport emissions

  Lilly engages suppliers to redesign product packaging for lower environmental impact and to progress toward a circular economy. A case study is the Taltz autoinjector packaging redesign which eliminated Velcro materials, enabled automated assembly (removing manual supplier assembly step), reduced shipping space requirements, and lowered the number of truck loads required. The new design saves approximately $19M/year and reduces packaging material use, contributing to Scope 3 Category 1 and Category 4/9 emission reductions. Lilly has also set a 2030 goal of zero waste to landfill with a focus on plastic waste reduction and recycling.