Q&A: Gilead taking holistic approach to GHGs

US pharmaceutical company Gilead Sciences has established plans to move to 100pc renewable electricity by 2025, while reducing its Scope 1 and 2 emissions by 46pc from a 2019 baseline by 2030, alongside a 15pc decrease in Scope 3 emissions. Gilead executive director of corporate sustainability Ken Wu talked to Argus about the company's efforts to curb its greenhouse gas (GHG) emissions. Edited for length and clarity.

Gilead mentioned in its 2020 year-in-review that it will continue to increase its renewable energy purchases and on-site clean generation. Could you expand on those plans?

We recognize that, in addition to bringing world class therapies to the patients we serve, we also have a philosophical responsibility to do so in a manner that is ecologically sustainable. We recognize the opportunity to look at our operations - mainly the plants that we operate, headquarter sites and things like that - and see where we could reduce our impact as we want to be a company in our sector, as well as a company in general, that abides to the Paris agreement.

To that end, we want to do a few things. First and foremost, can we optimize what we need to use from an electricity perspective? It is one thing to get all these other mechanisms in place, but if our best impact is first to never use it, let us start there. We are looking at our infrastructure throughout our portfolio of facilities and trying to optimize what infrastructure that we have and new infrastructure that we build.

For example, we have a very exciting facility coming onboard at our headquarters location in Foster City, [California] called the Wellbeing Center, and it has on-site electrical generation through solar panels. It also has a greywater system to recycle water and use consumed water to do other nice things for the facility, as well as radiant floor heating, which is a new technology that not everybody is adopting. We found that to be a very much more sustainable way to operate that facility.

On the other end, we have a facility in Europe that is looking to reduce its impact through looking at local RECs and, and they have done quite a bit there to make that a very energy-neutral facility from an electricity standpoint.

So to your question, when we started looking at all of these opportunities, we thought it would be very worthwhile to not only reduce what we consume, but if we consume, consume smartly. That became the move to using more renewable energy throughout our portfolio. We did make a public commitment to RE100 and a sourcing strategy for our journey between now and 2030.

Does Gilead have a preferred strategy when it comes to procuring renewable electricity? Power purchase agreements, renewable energy certificates (RECs), on-site generation?

The regions in which we operate may not have the same infrastructure and same approaches. While we have an overall enterprise goal, we acknowledge there are different ways in which each of our regions can contribute to that goal.

For example, we are open to local RECs, as in the case of our Kite cell therapy facility in the Netherlands. That is something that is very locally available. In certain areas in California, where we are a little bit more sunny, and solar energy is a bit more reliable, we gone with on-site generation in several of our facilities.

REC prices in the voluntary markets really spiked last year, and some buyers are concerned higher prices could be an issue. Is that something Gilead has faced?

I do not know that we can dodge it, as that is one part of a portfolio of options that are available for organizations, such as ours, trying to tackle climate change. First and foremost, I would hope we are able to really look at that consumption aspect. And I am taking a little bit more of a personal approach to the question, but do we need to leave the lights on in every place in our house? Looking at my own meter, you know, I found out that every small efficiency and wise use of electricity really does make an impact. With on-site generation and conserving energy by not just being wasteful, we are reducing our potential need to buy RECs.

As we go through this journey, we will be looking at what other ways we can be efficient and consume, and what we have to consume.

How much are policies at the national level factoring into your decision-making about energy purchases? Are potential changes like extensions to the Section 201 solar tariffs, clean energy standards or updates to federal tax incentives affecting how you approach procurements or on-site developments?

It is a great question. In the course of doing business, we have to be able to balance all factors as we make decisions as an organization. Where is the right level of investment, what could we leverage that is favorable for something like on-site generation?

That is one of the reasons why we did make the decision that, while considered to be potentially longer paybacks from any standard financial model, it was worth it to pursue the solar on-site generation with the tax incentives that we enjoyed from the federal government. But we cannot be foolhardy with regard to the stakeholders in the company. So, we do have to balance and make those decisions in a manner that is beneficial to all of our stakeholders. We do not make a single decision based solely on either factor, but we do have a consciousness about, as these things come and evolve, looking to the horizon about how we may have to shift decision making, near-term versus long-term.

The 2020 report mentioned Gilead is relying on more efficient technologies and practices for its Scope 1 emissions goals. Could you detail some of those methods? Are carbon offsets on the table?

Maybe I will answer the questions in reverse. Carbon offsets are obviously a mechanism, but it is a mechanism more toward the end of the portfolio of looking at how we build our assets and our infrastructure.

We really would like to prescribe to building high-performing buildings, which has a potential initial capital investment that may make some waver. However, if you look at the total lifecycle of the operation of the facility, it is commensurate or even better on payback. As we build new facilities or as we retrofit facilities - so, for example, while there may not be a lot of sun in Ireland, our Cork facility has found opportunities to add solar to help heat water. That may seem small. It may not seem as significant against the entire portfolio of what we consume, but it is those small incremental changes, but done on a larger scale that can add up to significant savings and significant reduction on footprint.

A number of companies report Scope 3 emissions being the most difficult to address because they're out of their direct control. How is Gilead approaching this?

I am sure colleagues in other companies and I scratch our heads in the sense of this is a tough aspect to tackle. We need to be mindful about how can we lead for ourselves or others in our industry or companies in general in working with our suppliers.

From an ESG standpoint, Gilead takes our relationships with our suppliers and the consideration of our suppliers very seriously. To that end, we are very proud to have created a very diverse bench of who we can do business with, over 800 small businesses and buyers that we can actually draw upon their expertise.

In the area of Scope 3, we will have to extend partnerships, and we are doing that as we speak. The whole idea with our Scope 3 goal is that we do need to identify our key suppliers. We are starting to have our dialogue to make sure, first and foremost, as a supplier to Gilead, we believe they will have pulled the same values and the same ideals that we strive for and, not surprisingly, they do. So it is an easier way to have that conversation.

Also, how can we work together to understand what they are doing to improve their ability to lessen their impact on the environment? Some of them may have GHG goals and emission reduction plans that we can take advantage of in the sense of, their operations that support us will be much greener and therefore help us reduce our Scope 3 emissions.

So it is not a small task, but it is something that we want to rise to the challenge of.

By Patrick Zemanek