Evaluating a company's impact (the case of Eli Lilly)

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This week’s read time: 3 minutes

You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

Eli Lilly

This week we dive deep into Eli Lilly’s environmental and social impact.

Lilly is one of the largest and most influential pharmaceutical firms in the world, focusing on the discovery, development, manufacturing, and commercialization of innovative medicines.

Some interesting facts:

• Lilly was the first company to mass-produce insulin in 1923, which revolutionized diabetes care and remains one of the company’s cornerstone therapeutic areas.

• Lilly’s Prozac (fluoxetine), launched in 1987, was one of the first widely prescribed antidepressants. While revolutionary, Prozac became one of the first drugs to receive an FDA “black box warning” regarding the risk of increased suicidal thoughts in adolescents and young adults.

COMPANY’S IMPACT

Lilly’s overall impact score

Lilly has a general impact score of +0.72 (on a scale from -5 to +5). Its impact is spread across 9 UN Sustainable Development Goals (SDGs) and 7 topics, split between positive and negative analyses.

In the socio-economic sphere,

over 47 million people count on Lilly’s medicines each year in around 125 countries. The company has been around for over 150 years and has transformed diabetes care with innovative treatments. It has also made significant strides in oncology and neurology, offering breakthrough therapies that have reshaped cancer treatment and migraine care, improving the quality of life for millions of people. Lilly has also donated over 5 million insulin vials to underserved communities across several countries, reaching at least 23,000 people, thus increasing access to medicine. The company employs 43,000 people and provides salaries above the industry and country average. It has also achieved gender parity (with over 40% women inclusion as per ILO standards) at all levels, except for the executive management roles.

Conversely, the company’s antidepressants like Prozac and Cymbalta carry black box warnings for increasing suicidal thoughts, particularly in young people, and can cause side effects such as tardive dyskinesia, affecting up to 10% of Prozac users. Additionally, Lilly has faced multiple fines and settled over 18,600 lawsuits since 1999 related to adverse events from its products, including heart failure, cancer, and deaths.

Environmentally,

Lilly emits over 3.7 million tonnes of CO₂ equivalent annually (2022), equal to the emissions of over 730,000 homes’ electricity use for a year. The company also discharges 4.47 million m³ of wastewater (sometimes with minerals above the safety limit) and consumes 1.3 million m³ of water annually, 47% in high or extremely high water-stressed areas. Additionally, Lilly generates approximately 130 tonnes of packaging waste from pharmaceutical packaging every year.

_{*The impact score is current as of September 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is Lilly’s ESG rating?

For comparison, Eli Lilly has an A rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

Lilly’s impact scores by SDG

Positively (and by weight), the company scores the highest in the Good Health and Well-being SDG (+1.15), followed by Partnership for the Goals (+2.04), and Decent Work and Economic Growth (+2.82).

Negatively, the company scores the worst in the Climate Action SDG (-2.91), followed by Life below Water (-2.56), and Responsible Consumption and Production (-2.52).

*the analysis takes into account the weight of the SDGs

Lilly also positively and negatively influences one SDG (3 - Good Health and Well-being). Positively, because its products contribute significantly to improving people’s health. Negatively, because some of its products have side effects.

CONCLUSION

Materiality Map & Final Words

So, Lilly’s key social and environmental impact lies in …

its transformative role in healthcare, providing life-saving medicines and innovative treatments to over 47 million people across 125 countries. The company’s social responsibility is demonstrated through its donation of products to underserved communities and its above-average salaries for its employees. Additionally, Lilly has made progress in gender parity, though this is yet to be fully achieved at the executive level.

However, some of the company’s products carry black box warnings and have been linked to serious side effects, raising patient safety concerns. The company has also been involved in numerous lawsuits and settlements due to adverse events from its products. Environmentally, Lilly contributes to considerable GHG emissions, wastewater discharge, and packaging waste, with a considerable portion of its water use occurring in stressed areas.

The company’s overall impact score of +0.72 reflects a balance between its critical contributions to global healthcare and the challenges it faces in ensuring patient safety and reducing its environmental footprint.

If you’d like to delve deeper into Eli Lilly’s impact, you can explore it here.

Next week, we will analyze the impact of the company that owns Facebook, Instagram, Threads, and WhatsApp, Meta Platforms. 📱

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]