Driving ESG excellence in the pharmaceutical sector through an analytical approach: a roadmap for score improvement

Abstract

Environmental, Social, and Governance (ESG) assessment in India's active pharmaceutical manufacturing sector is gaining momentum as organizations strive to align with global sustainability benchmarks, such as EcoVadis, SEDEX, and the Dow Jones Industrial Average index. Nearly 43% of Indian pharmaceutical organizations have established dedicated ESG- or sustainability committees as of 2024. Between financial year (FY) 2021–22 and FY 2024–25, environmental factors typically received the greatest emphasis in ESG evaluations, while the social and governance dimensions were relatively underweighted, despite their critical influence on long-term corporate resilience. This imbalance highlights the need for comprehensive and integrated assessment models. The present study examines current ESG evaluation practices and identifies the crucial need for integrated frameworks, such as EcoVadis. The regulatory environment is being shaped by the rising demands of stakeholders, particularly investors, for the disclosure of this type of non-financial information, which they use as a foundation for investment decision-making. The findings of this study provide actionable insights for policymakers, rating agencies, and industry stakeholders to refine ESG reporting standards and accelerate the transition towards holistic sustainability practices across the pharmaceutical sector.