Global Environmental Issues and the Pharmaceutical Industry

1
Global Environmental Issues and the
Pharmaceutical Industry

• A Presentation to
• Colin Isaacs C.Chem.
• 30 April 2007

119 Concession 6 Road, Fisherville, Ontario N0A
1G0 Phone Toronto [phone] Fax (416) 362
5231Email info_at_cialgroup.com Web
www.cialgroup.com
2
The Environmental World is Changing

• Public Expectations
• Emerging Issues
• Integrated Approaches
• Investors and investment
• New tools

3
What does green mean?

• Green has become the all-encompassing descriptor
  for all non-economic aspects of production and
  product.
• Green includes
• Entire lifecycle of the product cradle to grave
• All health, safety, environment, and social
  responsibility aspects of production and product
  (but not pharma product efficacy)

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Key Global Green Issues

• Air Pollution
• Animal Welfare
• Chemical Substances
• Climate Change
• Community
• Consumer Information
• Corporate Responsibility
• Fish Aquatic Species
• Food Safety
• Genetically Modified

• Governance
• Green Product Claims
• Healthy Food and Nutrition
• Labour
• Packaging Waste Mgmt
• Pesticides
• Procurement
• Producer/Brandowner Responsibility
• Transportation

Source CIAL Group Global Green Issues Survey,
Fall 2006
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Animal Welfare

• Major UK issue
• Visible in some western European countries and to
  limited extent in US
• Very low profile in Canada but PETA tries hard
  and issue could boom suddenly
• Affects PPCP sector in
• - R D
• - product testing
• - products for animal use

Source CIAL Group Global Green Issues Survey,
Fall 2006
6
Climate Change

• Emissions of carbon dioxide and other greenhouse
  gases are increasing average global temperature
• Mostly associated with energy use in sourcing,
  production and transportation
• Primarily fossil energy related
• Solutions
• Energy efficiency
• Local production to reduce transportation
• Renewable energy and fuels
• Carbon offsets
• Technologies not yet commercialized

7
Community

• Scope of License to Operate is of growing
  interest concern to communities
• Communities want to see local economic benefit
• Less tolerance of company impacts on community
• Solutions
• More reporting to communities, open houses, etc.
• Factory outlet stores
• Community liaison activities committees
• Involvement of community in company eg.
  permitting, and of company incommunity, eg.
  donations.

8
Consumer Information

• Consumers are demanding product process
  information
• Right to know has growing resonance,
  particularly where individual and off-site
  impacts are involved
• People believe community right to know trumps
  corporate interests

Source CIAL Group Global Green Issues Survey,
Fall 2006
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Corporate Responsibility

• Corporate due diligence is no longer voluntary
• Legal liability for harm, with severe penalties
  including jail, is extending to individuals at
  all levels
• Solutions
• Environment and HS management systems
• Documented policies and procedures
• Cross-checking of key actions

10
GMOs

• One of the two top environmental issues in
  Europe, as measured by media coverage
• Open field planting of GMO varieties for pharma
  production is raising further concern
• Forthcoming evidence of GMO issues is likely to
  raise even more concern
• More regulation is likely
• Solutions
• Accept regulatory initiatives as cost of doing
  business
• Carefully differentiate pharma GMOsfrom
  pesticide and food GMOs

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Governance

• Public is increasingly cynical about governance
  of large corporations
• Environmental responsibility following fiduciary
  responsibility as a growing issue
• Solutions
• Independent directors on HSE committee
• Independent environmental audits and advice
• Honest reporting addressing all majoraspects of
  HSE impacts

12
Green Claims

• Green claims can increase market visibility and
  sales
• Green claims are subject to much greater scrutiny
  than conventional product claims
• Solutions
• Independent third party verification
• Life Cycle Analysis, Ecobalance, other similar
  tools

13
Labour issues

• A wide range of labour issues are now considered
  part of green (sustainable development) issues.
  These include
• Labour standards, esp. in developing countries
  (esp. child labour)
• Occupational health and safety
• Working conditions and benefits
• Solutions
• Address any issues
• Accurate public reporting
• Independent third party verification

14
Procurement

• Retail brand owner or supplier to consumers is
  responsible for every component of the supply
  chain
• Brand owners and suppliers to end users are
  expected to impose their own standards on all of
  their suppliers
• Solutions
• Green certification systems
• Independent verification ofentire supply chain

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Producer / Brandowner Responsibility

• Human rights and property rights are becoming a
  dominant issue with societal decisions often
  over-riding informed consent
• Governments are slowly moving away from approvals
• Access to litigation is replacing government
  approvals
• Solutions
• Forceful codes of corporate ethics
• Independent audits of socialresponsibility
• Corporate ombudspersons

16
Transportation

• Emerging as a proxy for a number of issues,
  including
• Climate change
• Concern over free trade
• Local economic development
• Product quality and safety
• Solution
• Dialogue with stakeholders
• Understand and address concerns
• Full disclosure with companyexplanations

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How can a company manage all this?

• Design/choose and implement integrated Health,
  Safety, Environment, and Social Responsibility
  Management Systems
• At a minimum, for each facility corporate
• regularly update HSE SR policies
• undertake regular gap analyses
• address key gaps through HSE SR program
• document all remedial actions
• publish annual progress reports

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Investors Investment

• Even conventional investors are getting a green
  tinge DJSI, FTSE4Good, Business in the Community
  CR Index, Carbon Disclosure Index, etc.
• Institutional investors have growing awareness of
  environmental risks
• Shareholder activism is on the rise
• Insurers are major drivers for improved
  environmental performance

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New Tools

• Management approaches more than technology
  solutions
• Eco-efficiency, eco-industrial networks,
  stewardship, etc.
• Renewable energy bio-based materials
• IT-based monitoring, control communication
  systems
• Value added substituting as analternative growth
  strategyfor higher production

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Managing for Sustainability Program

• 1) Overall statement of goals.
• 2) Gap analysis.
• 3) Action Plan set priorities according to
  goals
• 4) Budget for implementation of the Action
  Plan.
• 5) Responsibility assignment
• 6) Staff training at all levels
• 7) Communications plan, including public
  reporting
• 8) Progress monitoring
• 9) Continuous improvement program
• 10) Stakeholder dialogues

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One example Glaxo Smith Kline

• Provides access to medicines for poor people
• Ethical culture transparency across whole
  company
• Breach of sales and marketing codes has led to 49
  dismissals
• Strong 5 year targets for EHS performance
• 3.9 of pre-tax profits donated in 2006
• EHS audits of critical suppliers
• Annual Corporate ResponsibilityReport

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Canada Public Opinion PollIPSOS-REID and
Presidents Choice, April 2007National results

• Male Female
• Personally very responsible for 41 46protecti
  ng the environment
• Personally somewhat or very 89 95responsible
  for protecting the environment
• Likely to buy greener products 92 97
• Likely to recycle 99 99
• Likely to reduce electricity consumption 97 99
  in the home
• Likely to take public transit 47
  51