Eli Lilly & Co. - Climate Change 2022
C0. Introduction
C0.1
(C0.1) Give a general description and introduction to your organization.
Eli Lilly and Company (Lilly) is a global healthcare company committed, since our founding in 1876, to creating high-quality medicines that meet real needs. Our purpose is to unite caring with discovery to create medicines that make life better for people around the world. We discover, develop, manufacture, and market products and related services for human pharmaceuticals.
We are headquartered in Indianapolis, Indiana, USA, and at the end of 2021, employed approximately 35,000 people worldwide. We manufacture and distribute our products through facilities in eight countries. Approximately 8,100 employees are engaged in research and development. We have research and development facilities located in eight countries and conduct clinical research in more than 55 countries. Our products are marketed in approximately 120 countries.
While Lilly's primary contribution to society is the discovery and development of innovative medicines to make life better for people around the world, our ESG strategy, efforts and goals extend to how we operate our business, care for the environment and strengthen communities. We believe our core values of integrity, excellence and respect for people are key to promoting the long-term interests of our shareholders and other company stakeholders. Evidence of our values in action include (i) being named one of the "World's Most Ethical Companies" in 2021 by the Ethisphere Institute, a global leader company in defining and advancing ethical business standards, for the sixth year in a row, (ii) hosting Lilly's 14th annual Global Day of Service in 2021, which had participation by more than 7,500 Lilly employees in 30 countries, and (iii) achieving our 2020 goal of greater than 20% reduction in GHG emissions intensity.
As a global company committed to making life better for people, we acknowledge that climate change is an ever-present reality that is contributing to a reduction in human and environmental health. We recognize our role to seek to reduce our carbon footprint and manage climate-related risks and opportunities to support the transition to a low- carbon economy. We continue to evaluate how to improve our energy resiliency and expand our use of renewable electricity consistent with our goal to diversify our energy sources and decrease our GHG emissions over time.
Caution: The information contained in this Climate Change Questionnaire contains forward-looking statements that are based on management's beliefs and expectations at the time the statements were made, including statements regarding our climate and sustainability targets, goals, commitments and programs and other business plans, initiatives, aspirations and objectives. There is no assurance that any such expectations or beliefs will occur or be achieved or that such targets, goals or commitments will be binding on our business decisions and/or management. Forward-looking statements include statements that do not relate solely to historical or current facts, and generally use words such as "aim", "hope", "plan", "estimate", "goal", "intend", "expect", "believe", "target", "anticipate", "will", "may" or similar expressions. Actual results may differ materially due to various risks and uncertainties, including the following factors: the impact of the evolving COVID-19 pandemic (or any other public health threat) and the global response thereto; the significant costs and uncertainties in the pharmaceutical research and development process, including with respect to the timing and process of obtaining regulatory approvals; competitive developments affecting current products and the company's pipeline; regulatory actions regarding currently marketed products; litigation, investigations, or other similar proceedings or the expiration of intellectual property protection involving past, current, or future products or commercial activities; the impact and outcome of business development transactions and related integration costs; the impact of global macroeconomic conditions, inflation, trade disruptions, disputes, unrest, war or costs or uncertainties related to doing business in foreign jurisdictions; issues with product supply and regulatory approvals stemming from manufacturing difficulties, disruptions or shortages, including as a resulting of demand, labor shortages, third-party performance or regulatory actions relating to our facilities; and changes or developments in laws and regulations, including health care reform. Except as required by law, we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. You should carefully read the factors described under "Risk Factors" and in cautionary statements in our Form 10-K for the year ended 12/31/2021 and other filings with the Securities and Exchange Commission for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.
C0.2
(C0.2) State the start and end date of the year for which you are reporting data.
Start date | End date | Indicate if you are providing emissions data for past reporting | Select the number of past reporting years you will be providing emissions data | |
years | for | |||
Reporting | January 1 | December 31 | No | |
year | 2021 | 2021 | ||
C0.3
CDP | Page | 1 | of 58 |
(C0.3) Select the countries/areas in which you operate.
Australia
Brazil
Canada
China
France
Germany
India
Ireland
Italy
Japan
Mexico
Puerto Rico
Spain
Switzerland
United Kingdom of Great Britain and Northern Ireland
United States of America
C0.4
(C0.4) Select the currency used for all financial information disclosed throughout your response.
USD
C0.5
(C0.5) Select the option that describes the reporting boundary for which climate-related impacts on your business are being reported. Note that this option should align with your chosen approach for consolidating your GHG inventory.
Operational control
C0.8
(C0.8) Does your organization have an ISIN code or another unique identifier (e.g., Ticker, CUSIP, etc.)?
Indicate whether you are able to provide a unique identifier for your organization | Provide your unique identifier |
Yes, an ISIN code | US5324571083 |
Yes, a CUSIP number | 532457108 |
Yes, a Ticker symbol | LLY |
C1. Governance
C1.1
(C1.1) Is there board-level oversight of climate-related issues within your organization?
Yes
C1.1a
(C1.1a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for climate-related issues.
Position of | Please explain |
individual(s) | |
Board-level | The Directors and Corporate Governance Committee (DCGC) of the Board of Directors is responsible for identifying and bringing to the attention of the Board as appropriate current and emerging |
committee | social, environmental, political and governance trends and public policy issues that may affect the business operations, performance or reputation of the company. The full Board is engaged in |
strategic environmental, social and governance (ESG) oversight, receiving regular updates on ESG matters at Board meetings, reviewing and approving the company's long-term environmental goals | |
and weighing in on significant strategic investments. When appropriate, the Board reviews and approves strategic climate-related decisions. Examples include the following: 1) the company's climate- | |
related sustainability goals (approval of Lilly's new 2030 Climate goals which were launched in 2021), and 2) approval of capital expenditures above a certain financial threshold. | |
C1.1b
CDP | Page | 2 | of 58 |
(C1.1b) Provide further details on the board's oversight of climate-related issues.
Frequency | Governance | Scope of | Please explain |
with | mechanisms | board- | |
which | into which | level | |
climate- | climate- | oversight | |
related | related issues | ||
issues are | are integrated | ||
a | |||
scheduled | |||
agenda | |||
item | |||
Scheduled | Reviewing and | <> | Board Oversight: The Directors and Corporate Governance Committee (DCGC) of the Board is responsible for identifying and bringing to the attention of the Board as |
- some | guiding | Applicabl | appropriate current and emerging social, environmental, political and governance trends and public policy issues that may affect the business operations, performance or |
meetings | strategy | e> | reputation of the company. The full Board is engaged in strategic ESG oversight, receiving regular updates (at least annually) on ESG matters at Board meetings, reviewing |
Reviewing and | and approving the company's long-term environmental goals and weighing in on significant strategic investments. When appropriate, the Board reviews and approves | ||
guiding major | strategic climate-related decisions. Additionally, key enterprise level risks are overseen by the full Board and our enterprise risk management process is overseen by the | ||
plans of action | Audit Committee of the Board. Company management is charged with managing risk through robust internal processes and controls. The enterprise level risks are reviewed | ||
Reviewing and | annually at a full Board meeting, and relevant enterprise risks are also addressed in periodic business function reviews and at the annual Board and senior management | ||
guiding risk | strategy session. ESG Governance Committee: Central to our ESG oversight is our ESG Governance Committee, chaired by our Associate VP-Environmental, Social and | ||
management | Governance and composed of senior leaders from Health, Safety and the Environment (HSE), Human Resources, Ethics and Compliance, Legal, Treasury, Procurement | ||
policies | and Investor Relations. This committee reports to our senior leadership Executive Committee and has a broad ESG mandate that includes leading the coordination of Lilly | ||
Monitoring | ESG strategy, evaluating Lilly ESG approach compared to peers and broader environment, leading formal, periodic ESG strategy updates, institutionalizing ESG topics | ||
implementation | throughout the company, and facilitating execution of ESG reporting activities. | ||
and | |||
performance of | |||
objectives | |||
Overseeing | |||
major capital | |||
expenditures, | |||
acquisitions | |||
and | |||
divestitures | |||
Monitoring and | |||
overseeing | |||
progress | |||
against goals | |||
and targets for | |||
addressing | |||
climate-related | |||
issues | |||
C1.1d
(C1.1d) Does your organization have at least one board member with competence on climate-related issues?
Board | Criteria used to assess competence of board member(s) on climate-related issues | Primary reason | Explain why your organization does not have | |
member(s) | for no board-level | at least one board member with competence on | ||
have | competence on | climate-related issues and any plans to | ||
competence on | climate-related | address board-level competence in the future | ||
climate-related | issues | |||
issues | ||||
Row | Yes | Board members are assessed and nominated to achieve a highly skilled group of individuals with various qualities, | ||
1 | attributes, experiences, perspectives and professional experiences. Competency in a particular area or subject | |||
matter may be determined from a variety of factors, including, without limitation, structured or unstructured learning | ||||
environments, certifications, relevant work experience, and off-the-job training or experience. | ||||
C1.2
(C1.2) Provide the highest management-level position(s) or committee(s) with responsibility for climate-related issues.
Name of the position(s) and/or committee(s) | Reporting | Responsibility | Coverage of | Frequency of reporting to the board on |
line | responsibility | climate-related issues | ||
Other C-Suite Officer, please specify (Senior Vice President and President of | <> | Both assessing and managing climate-related | Quarterly | |
Manufacturing Operations) | Applicable> | risks and opportunities | ||
C1.2a
(C1.2a) Describe where in the organizational structure this/these position(s) and/or committees lie, what their associated responsibilities are, and how climate- related issues are monitored (do not include the names of individuals).
The Senior Vice President and President of Manufacturing Operations, who is a member of the company's Executive Committee and reports directly to the CEO, is responsible for assessing and managing climate-related risks and opportunities. The President of Manufacturing chairs our Global Health, Safety and Environment Committee which meets quarterly and oversees performance related to compliance with environmental regulations, policies, procedures and standards globally, as well as assessing and managing climate-related risks and opportunities, assessing performance against our climate-related goals and driving improvement on environmental performance throughout the organization. The Global Health, Safety and Environmental Committee membership also includes executives and senior leadership from business functions across the company to drive cross-functional alignment and action.
CDP | Page | 3 | of 58 |
C1.3
(C1.3) Do you provide incentives for the management of climate-related issues, including the attainment of targets?
Provide incentives | Comment | |
for the management | ||
of climate-related | ||
issues | ||
Row | Yes | Improvement in certain environmental performance areas, including climate-related issues (e.g., reducing greenhouse gas emissions and improving energy efficiency) are included in |
1 | the performance expectations for the company's Chairman, President, and CEO, and relevant members of the executive team such as the Senior Vice President and President of | |
Manufacturing. Performance against these goals and expectations is included amongst other factors when evaluating overall executive performance and future compensation awards. | ||
C1.3a
(C1.3a) Provide further details on the incentives provided for the management of climate-related issues (do not include the names of individuals).
Entitled | Type of | Activity | Comment |
to | incentive | incentivized | |
incentive | |||
Corporate | Monetary | Emissions | Improvement in certain environmental performance areas, including climate-related issues (e.g., reducing greenhouse gas emissions and improving energy efficiency) are |
executive | reward | reduction | included in the performance expectations for the company's Chairman, President, and CEO, and relevant members of the executive team such as the Senior Vice President |
team | target | and President of Manufacturing. Performance against these goals and expectations is included amongst other factors when evaluating overall executive performance and future | |
compensation awards. | |||
C2. Risks and opportunities
C2.1
(C2.1) Does your organization have a process for identifying, assessing, and responding to climate-related risks and opportunities?
Yes
C2.1a
(C2.1a) How does your organization define short-, medium- and long-term time horizons?
From | To | Comment | |
(years) | (years) | ||
Short- | 0 | 1 | We address short-term material issues in our annual business plan. This includes climate change issues, such as our GHG emissions, energy, and product stewardship. In the short-term, |
term | we address business objectives to improve business outcomes and performance including energy efficiency, GHG emissions, and waste reduction. | ||
Medium- | 1 | 5 | We track mid-term milestones related to corporate environmental and climate-related goals, including major project milestones and progress toward goals such as percentage of |
term | renewable electricity, GHG emissions, and progress toward capital expenditure targets for efficiency projects. | ||
Long- | 5 | 10 | Our long-term strategy focuses on transitioning the energy sources used for our operations to renewable energy and implementing new technologies to support our transition to a low |
term | carbon economy. Our long-term goals include securing 100% of purchased electricity from renewable sources, to achieve Carbon Neutrality (scope 1 and scope 2 emissions) by 2030, | ||
and to enhance our tracking and reporting of full value-chain emissions (Scope 3). | |||
C2.1b
CDP | Page | 4 | of 58 |
(C2.1b) How does your organization define substantive financial or strategic impact on your business?
Our organization defines substantive financial or strategic impact as an event that impacts our ability to achieve Lilly's business objectives / pipeline, results in significant financial impact, or disrupts enterprise-wide customer service or operations reliability or impacts brand long term, using a low/medium/high ratings for both "impact" and "likelihood." This results in risks identified on a 3x3 matrix that is used to identify the highest risks to the enterprise. Risk management and monitoring is performed and managed by the Ethics and Compliance Team, as well as the Enterprise Risk Management Team with input from subject matter experts within the business. The enterprise risk management evaluation is performed by the Enterprise Risk Management Team annually. The definitions below are applied across a broad range of enterprise risks such as direct and indirect supply chain business continuity, direct operations, and product supply.
"Impact" is defined in the following manner:
Low: Limited impacts on our ability to achieve Lilly's business objectives/pipeline, OR results in a single year financial impact greater than $250MM and less than 500MM with little ongoing impact, OR limited disruption of enterprise-wide customer service or operations reliability with no impact on brand.
Medium: Moderately impacts our ability to achieve Lilly's business objectives/pipeline, OR results in a single year financial impact greater than $500MM and less than $750MM, with some ongoing impact, OR moderate impact on enterprise-wide customer service or operations reliability or it impacts brand for a limited time.
High: Significantly impacts our ability to achieve Lilly's business objectives/pipeline, OR results in a single year financial impact greater than $750MM, with ongoing impact, OR significant disruption to enterprise-wide customer service or operations reliability with impacts on brand long term.
"Likelihood" is evaluated in the following manner:
Low: Less than 10% likely to occur; not likely to occur in the time period associated with the company's strategic plans.
Medium: 10-50% likely to occur; event has occurred in the distant past or is moderately likely to occur in the time period associated with the company's strategic plans.
High: Greater than 50% likely to occur; event has occurred in the last 24 months or likely to occur in the time period associated with the company's strategic plans.
C2.2
CDP | Page | 5 | of 58 |
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Eli Lilly and Company published this content on 02 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 September 2022 19:29:01 UTC.