ESG Implementation in a Pharmaceutical company for West Africa
ESG is a broad term that describes the various practices and the underlying theories that are used to reduce carbon emissions, promote sustainable development and protect the environment.
The term ESG (Environmental, Social and Governance) is becoming widely used, in part because of the growing importance of ESG factors and the growing concern about the impact of those factors on business strategies.
In this article, we will discuss how I implemented ESG strategies in a Pharmaceutical company in West Africa. The company is a large Pharmaceutical company working in the West Africa region, and it is my first time implementing ESG strategies in any company.
As this company is a large Pharmaceutical company with a presence across the globe, we have Group targets for the ESG metrics and performance which was allocated for each region. For West Africa, we have been allocated the ESG performance metrics which will be monitored on a bi-annual basis along with the guidelines for implementation. But as a region, we decided to have an elaborate approach for the implementation of ESG strategies and metrics. We will focus on the implementation of the ESG strategies in this company for West Africa region handled by me.
I. Introduction of ESG strategies
The term ESG covers many issues from the impact of businesses on the environment to the impact of economic policies and the impact of financial and political trends on the financial markets. ESG factors are those that may affect the value of a company’s shares and its ability to provide the best performance.
ESG strategies are those that may affect the value of a company’s shares and its ability to provide the best performance. These strategies are usually based on the following three elements:
1) ESG Criteria are those that may affect the value of a company’s shares and its ability to provide the best performance. These criteria are based on the following:
A. Environmental. B. Social C. Governance
2) ESG Processes are those that may affect the value of a company’s shares and its ability to provide the best performance. These processes are usually based on the following:
- ESG strategy 2. ESG plan 3. ESG policy
3) ESG measurements are those that help companies understand and manage the impacts of ESG strategies and policies. These measurements are usually based on the following:
- ESG assessment 2. ESG reporting 3. ESG communications
II. The challenges I faced while implementing ESG strategies in a Pharmaceutical company in West Africa
- The company’s size
The company we are going to implement ESG strategies in has a large number of employees and production units across the globe. The company also has a large number of employees. The company has an annual sales revenue of more than US$ 3 billion, and they are the largest pharmaceutical company in Africa. We will be focusing on the ESG implementation Plan adopted for West Africa region.
- The company’s location
We are going to implement ESG strategies in a pharmaceutical company located in the West African region. This region is quite new for this company, and this company is the first company to adopt full-fledge ESG integration in the Pharmaceutical industry. So we did not have any example which could have been used apart from the guidelines provided by the group.
III. The Implementation plan
The ESG Strategies was implemented in phases:
1). Identification of ESG Value Drivers for Pharmaceutical Industry
The first step was to identify those ESG value drivers for the Pharmaceutical industry. IIRC and SASB was used as a base for our ESG Strategies implementation. As per the guidelines for Pharmaceutical Industry with region-specific impacts, we identified below ESG value drivers under each aspect.
a) Environment
Carbon emissions
Waste management, recycling and reuse
Product safety and quality
Climate change
Sourcing practices
Community and stakeholder relations
b. Social
Access to healthcare
The legal framework and policies for employment
Human rights, gender equality, and labour practices
Indigenous rights and cultural policies
Human capital and Training Policies
Employee engagement
c. Governance
Board composition
The corporate governance system
Code of ethics and integrity
Compliance and risk management
2). Risk / Opportunity Assessment for ESG Value Drivers
This step is usually a combination of qualitative research and quantitative research. The first step was to identify ESG value drivers and assess its risk/opportunity for the company. The second step was to assess the risk/opportunity by using a business / financial analysis. This analysis helped us understand the relationship between these ESG value drivers and the financial results of the company. It also helped us understand the implications of these ESG value drivers in the financial results of the company. This analysis helps us understand the risk/opportunity of these ESG value drivers in the company.
3). Design the ESG Strategies for ESG Value Drivers
This step is usually a combination of qualitative research and quantitative research. This step usually involves the following:
a) Strategy Design and Decision Making
b) Budgeting and Financial Analysis
c) Strategy Implementation
4). Measurement Criteria
This step is usually a combination of qualitative research and quantitative research. The first step was to identify the criteria for ESG measurement for the company. The second step was to determine the impact of the company’s ESG value drivers on the ESG measurement criteria. The third step was to develop the criteria for ESG measurement. The fourth step was to determine the impact of the company’s ESG value drivers on the criteria for ESG measurement. This step helps us understand the relationship between ESG value drivers and the criteria for ESG measurement.
Examples of a few KPIs under each ESG factor for the Pharmaceutical industry identified for our company was as below.
A) Environmental
a. Carbon emissions
KPIs:
CO2 emission
Energy consumption
Total energy consumption
b. Waste management, recycling and reuse
KPIs:
Waste generation
Waste disposal
Waste recycling and reuse
Waste reduction
c. Product safety and quality
KPIs:
Product quality
Product safety
Product recalls and recalls
d. Climate change
KPIs:
Greenhouse gas emissions
Energy
Water
Short and Long tern Climate change implication assessment and measures.
e. Sourcing practices
KPIs:
Sourcing practices
Supplier policies
Supplier performance
Supplier development
B) Social
a. Access to healthcare
KPIs:
Access to healthcare in West Africa region
Health insurance coverage
Coverage of family planning and other diseases
b. The legal framework and policies for employment
KPIs:
Legal framework and policies for employment
Labour practices
Gender equality and labour practices
c. Human rights, gender equality, and labour practices
KPIs:
Human rights
Gender equality
Labour practices
d. Indigenous rights and cultural policies
KPIs:
Indigenous rights
Indigenous policies
e.) Human capital and Training Policies
KPIs:
Human capital policies
Training and Education
f) Employee engagement
KPIs:
Employee engagement
Employee training
Employee engagement policies
C) Governance
KPIs:
The Board composition
The corporate governance system
Code of ethics and integrity
Committees Composition
Remuneration and ESG integration.
4). Data Collection
We were required to collect all the data which were required for the implementation of ESG strategies in the company. Assessment of the robustness of the current data was also required to enable us to understand the additional data that needs to be collected for ESG implementation and reporting. SAP ESG module has been adopted for the implementation of ESG in this company.
5). ESG Communication and Reporting
As per the Group ESG Targets, the same was allocated for the West African region. The objective of this step was to ensure that all the ESG strategies implemented in the company are reported. ESG measurement criteria and KPIs are usually reported. Also, ESG strategy, ESG process and ESG policy are usually reported. This step helped us communicate the objectives and results of the ESG strategies in the company. This is a huge responsibility for the company and management. Each division has a critical role to play in the successful ESG implementation and reporting. As this was not part of the business operations the division heads were made responsible for the performance of KPIs related to their divisions. The performance of the KPIs is usually reported on a monthly basis.
6). Implementation
The implementation of the ESG strategies is a combination of the strategies adopted from IIRC and SASB. The first step was to understand the current state of affairs in the company, which was done in the previous steps. This was critical because the company is based on a specific business model. Under this final phase, the focus was to consolidate the learnings from the previous stages and implement them in each division aligning the same with the SAP and its operation for each division. The Objective was to make sure that ESG reporting has very low or no impact on business operations with minimal cost implications to generate positive business impact in the long term building a competitive advantage for the company in the region.
This stage includes the SAP consultant to make the changes in the SAP enabling complete ESG implementation for Regional and Group reporting.
Final Thoughts
The implementation of ESG strategies in the Pharmaceutical industry is a combination of the strategies adopted from IIRC and SASB. This implementation is driven by the objectives of the company to build a competitive advantage through sustainability in the long term. This implementation should be aligned with the business model of the company.
ESG strategies should not be seen as an addition but should be embedded in the business model of the company.
We were able to achieve the above with the help of SAP, IIRC and SASB.
Have tried to cover as much as possible under this article by keeping it short as well as informative enough to cover the key aspects.
Can be reached via email – 01prashanth@gmail.com or a private message on LinkedIn if you would like to discuss this topic further.
