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

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(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

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(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

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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

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(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

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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.