Performance in Operations

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At Lilly, we are committed to measuring, reporting, and reducing our environmental impacts from operations. This section details our performance in the company’s most significant environmental areas of impact—energy use and greenhouse gas emissions, water use, and waste. It also describes our progress in green procurement, other air emissions, biodiversity, compliance. In addition to performance data in each area, we include examples that illustrate strong practices across the company.

See a summary table of health, safety, and environment (HSE) data in our 2010 Corporate Responsibility Report.

Energy Use and Greenhouse Gas Emissions

Energy use and greenhouse gas (GHG) emissions are a significant focus area for reducing our environmental impacts. Energy usage also represents a substantial operational cost for Lilly, especially as it relates to our manufacturing and distribution activities.

Solar panels at our site in Sesto, Italy.

Energy assessments are central to our approach. Since 2006, we have conducted 27 such assessments, focusing on our energy-intensive sites. As a result, we have uncovered an estimated $22.4 million in potential annual savings, nearly $7 million of which we realized by the end of 2010. These changes have reduced energy use by 1,560,000 million BTUs, avoiding more than 200,000 metric tons carbon dioxide equivalent (CO2e) of GHG emissions.

At several facilities, we use renewable energy to diversify our energy sources and decrease GHG emissions. For example, solar panels on two of the largest buildings at our Sesto manufacturing site in Italy produce 160,000 kilowatt hours (kWh) per year of electricity. As a result, the majority of the site’s energy demand is met by a combination of renewable and low-carbon energy generation technologies.

See more examples of renewable energy use, as well as information about cogeneration and optimizing our IT environment, in our 2010 Corporate Responsibility Report.

Progress Toward Goal

In 2010, Lilly’s energy use equaled 11,200,000 million BTUs, compared with 11,300,000 million BTUs in 2009 (see graph). Energy intensity improved more than 12 percent from 593 kBTUs/square foot in 2007 to 520 kBTUs/square foot in 2010, on track to meet the company’s goal of a 15 percent improvement by 2013.[1] These changes were due primarily to increased awareness of our energy goal and implementation of energy conservation measures identified through energy assessments, including improvements in boiler efficiency, chiller optimization, HVAC system enhancement, addition of laboratory fume hoods, and many others.

 

During 2010, the company’s Scope 1 and Scope 2 GHG emissions equaled 1,620,000 metric tons CO2e, compared with 1,670,000 metric tons CO2e in 2009 (see graph). This change was due primarily to reduced energy usage. Lilly’s GHG emissions intensity improved by more than 9 percent compared to that in 2007, on track to meet the company’s goal of a 15 percent improvement by 2013.[2]

Lilly also calculates Scope 3 GHG emissions, as summarized in the following table (and not included in the graph above). We are continuing to refine our approach in this area.

See Scope 3 estimated emissions from other Lilly activities in our 2010 Corporate Responsibility Report.

We do not believe that climate change poses significant risks or opportunities for Lilly, given the nature of our operations and the locations of our facilities. See our submission to the Carbon Disclosure Project for more details as well as additional discussion about Lilly’s approach to managing GHG emissions.

See case studies of energy saving initiatives and GHG reduction activities globally in our 2010 Corporate Responsibility Report.

Water Use

Water is becoming more of an important issue for Lilly, due to trends in availability, quality, and cost. We consume water in our manufacturing and production activities, and also for domestic uses in our offices (such as cafeterias, bathrooms, and landscaping). We also require exceptionally high-quality water to produce injectable products.

In 2011, we used the World Business Council for Sustainable Development (WBCSD) Water Tool and the United Nations Environment Programme (UNEP) Vital Water Tool to refine our evaluation of water-stressed areas where we operate. Each of our facilities is required to have a local business-continuity plan that addresses all sources of business interruption, including water availability. Water availability and quality are of increasing concern particularly within emerging markets (such as China, India, and Russia), and we are continuing to assess how to address these challenges.

Our manufacturing and administration groups as well as Lilly Research Laboratories have developed plans to reduce water consumption and measure progress against targets that track contributions to our overall water-use reduction goal. Facilities collaborate with Lilly’s Engineering Technical Center to find technologies that reduce water intake and with our global HSE environmental affairs group to explore financing for water-reduction projects.

Progress Toward Goal

In 2010, Lilly’s water intake[3] was 13.3 billion liters, compared with 13.2 billion liters in 2009 (see graph).

Examples of how we have reduced our water intake since 2007 include identifying and repairing leaks in water systems, improving purified water production efficiency, and treating and reusing water in cooling tower systems. See a case study in our 2010 Corporate Responsibility Report.

After meeting our 2013 water-intake reduction goal four years early[4] (see Commitment and Approach), we have established a new goal to reduce water intake by 5 percent in absolute terms by 2013, compared to 2010. Meeting the new goal will be challenging as we are facing production increases that will elevate water intake rates.

Waste

To increase business value and reduce the impact of our operations on the environment, Lilly uses the following hierarchy for waste treatment:

  • Eliminate or reduce the amount of waste produced,
  • Reuse materials when possible (often multiple times),
  • Recycle used materials to make new products,
  • Recover energy from waste,
  • Treat waste to reduce toxicity and volume, and
  • Send waste to landfill only when the options above are not feasible.

Progress toward Goal

In 2010, Lilly sent 15,900 metric tons of waste to landfill, up from 14,800 metric tons in 2009 and a decrease of 50 percent compared to 2007 (see graph).

 

After meeting our 2013 waste-to-landfill reduction goal four years early (see Commitment and Approach), we have established a new goal to reduce the amount of waste sent to landfills by 20 percent, with a baseline of 2010[5]. Our ultimate goal is to send zero waste to landfill[6].

See a summary of total waste generation and disposition in the Waste Generation graph and text below.

During 2010, total waste at Lilly was managed in the following ways:

  • Reused (65 percent). For example, mycelia, a solid material left after a fermentation process, is being used as a soil conditioner on farmland. Spent urea, a material used in insulin production, is used as an ingredient in fertilizer manufacturing. See page 78 of our 2010 Corporate Responsibility Report for more detail.
  • Recycled (20 percent). This includes solvent recovery in development and manufacturing processes, recycling of construction and demolition debris, and “waste-to-energy,” where steam and electricity are produced from waste to provide power to several of our facilities.
  • Treated (5 percent). This includes incineration and other waste treatment, but not wastewater treated on-site or at public facilities.
  • Landfilled (10 percent). The proportion of waste sent to landfill increased from 7 percent in 2009 to 10 percent in 2010.[7] Six sites globally reported achieving zero-landfill status, including Lilly’s U.S. distribution centers in Fresno, California; Enfield, Connecticut; and Plainfield, Indiana; our research and development center in Surrey, United Kingdom; and manufacturing sites in Suzhou, China, and Giessen, Germany.

See case studies of waste reduction and recycling in our 2010 Corporate Responsibility Report.

Green Procurement

Historically, decisions about purchasing to support Lilly’s operations did not consider the company’s sustainability initiatives. For example, in 2009 only an estimated 13 percent of the office supplies Lilly purchased by volume in the state of Indiana qualified as “green”[8], even though a substantially higher percentage of such products were available.

During 2010, Lilly worked with our main office supply vendor to assess opportunities to improve in this area. After challenging the vendor to provide more information about cost-competitive alternatives, we modified our selections in several categories, including pens, binders, memo pads/notebooks, envelopes, file folders, and laminate end tabs. This increased our green purchasing level to 33 percent across Indiana. See more detail in our 2010 Corporate Responsibility Report.

Other Air Emissions

During the last decade, Lilly has reduced emissions of volatile organic compounds (VOCs) by 53 percent, particulate matter by 67 percent, and ozone-depleting substances by 54 percent. Today, the company’s other significant air emissions include nitrogen oxides (NOx) and sulfur dioxide (SO2) resulting from the combustion of natural gas, oil, and coal. Lilly’s continued focus on improving energy efficiency and reducing GHG emissions is expected to further decrease the levels of NOx and SO2 emissions during the coming years.

Emissions decreased from 2007 to 2010 in all categories reported below except VOCs. That increase was due to increased production rates for selected products.

Biodiversity

Lilly recognizes that biodiversity is an increasingly important sustainability issue. Lilly has a long history of working collaboratively to protect habitat and minimize the impact of our operations on ecosystems. We pursue a decentralized approach, recognizing the variation in biodiversity challenges and opportunities based on location, and engage in conservation projects and habitat enhancements at many sites worldwide. We also support conservation efforts in the communities where our facilities are located.

Based on assessments such as the Kinsale Harbor study (in Ireland), we believe that Lilly operations have limited impact on biodiversity. See details in our 2010 Corporate Responsibility Report.

Preserving Ecological Habitat in Guayama, Puerto Rico

Our facility in Guayama, Puerto Rico, includes about 10 acres within its grounds as an "Ecological Habitat Conservation" area, to help preserve and restore the vibrant plant life from this country.

Walking paths in the education area of the site.

This space is divided into three areas:

  • Education—This zone, about two acres, features a system of paths that students and others use to observe and learn about the ecological services provided by native trees such as Ceiba, Dormilón, Guácima, Mamey, and Ucar.
  • Reforestation—In this 4-acre section of the property, we are restoring vegetation that previously thrived locally before being cleared for farming. This includes a mosaic of endemic and exotic native trees such as Guayacán, Higüero, and Ortegón, as well as several species of cactus.
  • Preservation—This area, also about 4 acres, has no paths or other infrastructure, and is only viewable from a distance. It is designed to be undisturbed and allow natural processes to take their course.

Employees who have received training provide interpretive services at the site as a part of guided environmental tours.

Demonstrating the Affinity of Conservation and Farming in Indiana, United States

In early 2011, we introduced a project that will showcase the compatibility of conservation and farming, and protect more than 300 acres at Lilly's manufacturing facility in Clinton.

Great blue heron and egrets flying over the wetland habitat.

A conservation easement will forever protect approximately 300 acres between Lilly’s Clinton Laboratories and the Wabash River. The site will feature several wildlife habitat and buffer areas, including:

  • 46 acres of native grass plantings
  • 31 acres of restored wetlands
  • 28 acres of tree plantings
  • 4 acres of research area plantings
  • 3 miles of trails
  • 126 acres in the center of the restoration that will continue to be farmed.

The demonstration project, within the State of Indiana’s Healthy Rivers Initiative along the Wabash River, will show how wildlife habitat can be created to buffer the river and allow farming to continue on land prone to flooding.

During the next year, Lilly, the Indiana Department of Natural Resources, and other environmental partners will work with employee volunteers to plant at least 20,000 flood-tolerant trees along the banks of the river, flood and maintain the wetland areas, and plant grasses among prairies. These areas are targeted to be accessible to the public via parking areas and hiking trails in the fall of 2012.

See numerous additional examples related to biodiversity as well as information about The Indianapolis Prize, the Lilly-supported world’s leading award for animal conservation, in our 2010 Corporate Responsibility Report.

Environmental Compliance

Lilly’s policy is to comply with all HSE regulations wherever we do business. We believe compliance is foundational in maintaining our facilities’ “right-to-operate” in their local communities. If it is determined that we are out of compliance, we work to remedy the situation as quickly as possible.

We use Environmental Capability Assessments to apply statistical process control techniques to environmental processes to reduce the number of environmental events caused by permit-limit exceedances. These processes include wastewater collection and treatment, air pollution control, incineration, and steam generation at Lilly facilities.

Reportable permit-limit exceedances decreased from 43 in 2007 to 11 in 2010, a 74 percent reduction and the lowest level ever reported by the company. See more details about our approach and performance in our 2010 Corporate Responsibility Report.

[1] Following World Resource Institute (WRI) guidance, progress toward environmental goals is reported on an adjusted basis accounting for mergers, acquisitions, and divestitures as appropriate, to ensure comparability, unless stated otherwise.

[2] This goal covers Lilly’s Scope 1 and Scope 2 emissions.

[3] "Water intake" as used in evaluating our progress toward our water-reduction goal is the total amount of water coming into a facility, including water pumped from bodies of surface water and groundwater, and water provided by a utility. It includes water used in processes, utilities, and other ancillary operations, such as irrigation. The term does not include groundwater pumped solely for treatment to satisfy regulatory actions or requirements (e.g., remediation activities where the water is not used for another purpose). Values do not include the water extracted from wells solely for the purpose of lowering the groundwater table(s) to maintain the physical and structural integrity of building foundations.

[4] Following World Resource Institute (WRI) guidance, progress toward environmental goals is reported on an adjusted basis accounting for mergers, acquisitions, and divestitures as appropriate, to ensure comparability, unless stated otherwise.

[5] Our former and current waste-to-landfill goals do not include construction and demolition debris, biosolids from wastewater treatment plants, incinerator ash, coal ash if reused for mine reclamation or road base, and mycelia and urea reused for fertilizer. Following World Resource Institute (WRI) guidance, progress toward environmental goals is reported on an adjusted basis accounting for mergers, acquisitions, and divestitures as appropriate, to ensure comparability. However, unlike our energy, GHG emissions, and water intake goals, performance data used to calculate progress against our waste-to-landfill goal do not exclude data from our Tippecanoe Laboratories facility in Indiana, United States, which Lilly divested in 2009, because the data at that site did not have a significant impact on our worldwide waste-to-landfill total.

[6] “Zero landfill” refers to eliminating, reusing, or recycling waste to the point that it is no longer sent to a landfill. A site may achieve “zero landfill” status if less than 0.5 percent of the waste it generates is sent to landfill.

[7] This change was due largely to our divestiture of Tippecanoe Laboratories in 2009. Because that site sent almost no waste to landfill, removing it from our data set increased the overall proportion of waste to landfill even though it didn’t significantly impact the absolute amount.

[8] According to the definition of “environmentally preferable” at EPA Website.