Key environmental and social risks associated with this project are safe and healthy working conditions; process hygiene and product quality; storage, handling and use of hazardous chemicals; responsible handling of hazardous waste and emissions; fire protection and emergency response; potential impacts on nearby communities; and risks and impacts associated with proposed strategic acquisitions.
Social and Environmental Assessment and Management Systems
Corporate policies and management systems: Since its founding in 1978, Hikma’s core values have been a commitment to honesty, integrity and the highest possible standards of quality. Over the past three years the Company has established four integrated corporate platforms for delivering on these values: Community, People, Environment and Global Welfare & Ethics, which guide activities at all operations. Since 2007, Hikma has centralized these functions in its Corporate Responsibility unit under the Director for Human Resources (HR), under standard operating procedures established to ensure that all aspects of its business activities are carried out consistently in accordance with its values. In 2006, the Company initiated a Corporate Responsibility (CR) monitoring program, which led to the publication of its first CR report as part of Hikma’s 2007 Annual Report. The data gathering and report structure conforms to Global Reporting Initiative (GRI) standards. As part of its GRI reporting structure, Hikma recently installed new software to facilitate monitoring and reporting of environment, social, health and safety indicators.
In 2007, Hikma was one of the first companies in Jordan to become a signatory to the United Nations'' Global Compact, the world''s largest voluntary corporate responsibility initiative whose aim is to bring private companies together with the UN Development Program (UNDP), labor groups and civil society to support fundamental human rights, labor rights, anti-corruption measures and environmental protection. As part of its participation in the Global Compact, the Company is integrating the corporate social responsibility principles of the Global Compact in its corporate culture and day-to-day business operations. Two of Hikma’s facilities in Jordan have been certified as compliant with ISO 9001:2000 (Quality) and 14001:2000 (Environmental Management). Hikma’s main plant in Jordan, as well as its plants in the US, Germany and Portugal, are certified by the US FDA. A detailed Health, Safety and Environment (HSE) Management System is in force across Hikma’s operations. Hikma has initiated the process of obtaining OHSAS 18001 certification for the Jordan facilities, which it expects to achieve in 2011. Hikma. The same management systems are in place or in the process of being implemented at all Hikma facilities globally; where appropriate, ISO certification will be obtained for other facilities in due course. Hikma has confirmed that these practices will be applied at all new businesses acquired by the Company.
Organization: Hikma’s organizational structure includes a corporate level CR Director, corporate HSE, HR, and Quality Managers in Amman, and staff in each of its other operations who report directly to the General Manager with secondary reporting to the corporate HSE, HR or Quality manager. In addition, Hikma has established a network of voluntary CR champions across the Company, who are responsible for promoting the Company’s CR principles and practices in their operations. In addition, the Group has established a Board-level CR Steering Committee and CR Working committee to ensure that these issues are monitored at the senior most levels of the organization. In 2010, the Company established a shared database for its Quality network, giving employees throughout the organization access to the HSE systems through “dashboard” software that enables staff to access policies, the GSM, reporting deadlines, reports, and basic HSE monitoring statistics from their computers.
Environmental and Social Assessment: Hikma complies with all host country requirements regarding its operations, including requirements to undertake social and/or environmental impact assessments of new developments where applicable. As noted, its expansion has been achieved by acquiring existing facilities, rather than constructing new plants; as a result, impact assessments were not necessary. Hikma conducts a detailed due diligence of all proposed acquisitions to ensure that the plant design, manufacturing equipment and product quality conform generally to its standards of quality. Where upgrades are required to bring certain aspects of an acquisition into conformance with Hikma’s standards, the cost of these upgrades is included in the funding allocation for the acquisition.
Training, monitoring, and reporting: Hikma provides training for all employees related to their specific responsibilities and business units. The training requirements are explicitly documented in job descriptions and include training on the Company’s CR, HSE and governance values and commitments. CR coordinators in each of the business units report on training programs conducted and number of employees trained as part of their reports to the HSE Manager and the Corporate Safety Committee.
Labor and Working Conditions
Human Resources Policy and Management: The Company’s total labor force currently numbers approximately 5000, including the corporate headquarters in Amman, employees of manufacturing plants in MENA, Europe and the US, and global sales and marketing staff. The minimum age for employees is 18 years. The Company has three units that handle issues related to labor and working conditions: Quality for safety/health issues, CR for environmental and community issues, and HR for recruitment, training, and performance management. Hikma’s HR policies and practices were developed in consultation with the Hay Group and include explicit commitment to non-discrimination and non-harassment, a corporate Code of Conduct and a grievance mechanism, consistent with all key ILO conventions, IFC’s PS, and best international practice. These policies are documented in the Company’s HR manual, copies of which are provided to all employees, and cover employment and working conditions, including procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, layoffs and firing, leave and vacation, and retiring. Training on HR practices is part of the induction program for all new employees.
Organization: HR management is centralized in the Group’s corporate offices in Amman, supported by a total of approximately 30 dedicated HR staff across the Company’s global operations. The Company recently hired a new HR Director who is reviewing and updating all HR policies and procedures to ensure compliance with all national labor laws in the countries in which it operates as well as current international good practice. The Hay Group reviews salary scales periodically to ensure that Hikma remains competitive (75 percentile benchmark) with comparable employers in each of the markets in which the Company operates. The Board of Directors has both Remuneration and Corporate Governance committees to ensure transparent monitoring of HR issues to senior management.
Benefit programs meet or exceed the national requirements in the relevant country of operation. In Jordan, for example, the benefit package includes include 13th and 14th month annual increments for all employees, medical insurance for employees and their families that includes coverage of cancer treatments, annual leave that exceeds national law, and transport and meal allowances. Hikma has a scholarship program to enable qualified children of its employees to attend secondary school and university. Benefits for working mothers include 70 days of maternity leave and a child care allowance for all employees’ children until they are able to attend day care. Hikma has a strong policy of promoting internally and encouraging staff mobility across the countries in which it has operations. HR officers provide career path counseling and all open positions are posted in all plants, along with a complete job description.
Worker’s Organization: In accordance with ILO core standards, Hikma is committed to freedom of association, and labor unions are present in many of its operations globally, including Egypt, Italy, and the US. The Company maintains strong and effective working relations with the unions active in its plants, and has had no strikes or other labor actions at any of its plants in recent years.
Non-Discrimination and Equal Opportunity: The Company has an explicit written commitment to non-discrimination and equal opportunity. Its recruitment policy establishes a fair and consistent procedure to recruit and select candidates, and applies the principles of merit and equal opportunity to all hiring decisions. At each of its operations, Hikma has adopted a unified pay scale for all employees, irrespective of nationality or other personal characteristics. Hikma monitors and reports annually to its Board of Directors on the percentage of women in its employ, as well as the nationalities of its employees.
Retrenchment: Hikma’s policy is to retain the employees of the companies it acquires, and to systematically modify the HR policies and practices in place at these companies to conform to its corporate systems and procedures. No retrenchment is therefore expected with the acquisitions to be financed under this investment. Hikma’s HR policy is to retrain existing employees, wherever possible, and to take up any new positions that result. The Company has had approximately a 5% turnover rate across its operations for the last several years.
Protecting the Work Force: Hikma does not hire workers below the age of 18, and complies fully with all national labor laws in the countries where is operates. All of its operations are free of any forms of forced and compulsory labor. Hikma has a corporate level Supply Chain screening mechanism to ensure acceptable labor and human rights practices on the part of its major suppliers.
Health and safety: Hikma has detailed HSE policies and procedure in place to ensure a safe and secure workplace for all employees that are consistent with international current Good Manufacturing Practice cGMP). All of these statistics are monitored on a daily basis, via the Company’s HSE dashboard, and key metrics are reported to the VP for CR, plant safety committees, and the heads of each business unit. Hikma monitors both lost time injuries (LTIs) and near misses; statistics for 2009 are consistent with good industry practice. The Company has never had an employee fatality or a significant injury in any of its plants. The HSE unit has instituted demanding targets for reducing workplace injuries, as a result of an ongoing awareness raising campaign. The HSE Manager works with business unit heads to set improvements targets for each of these metrics for each financial year, and these targets become a KPI for the business unit’s management team. All of Hikma’s operations are regularly audited, both internally by HSE officers and by third parties, to ensure that workplace conditions meet host country regulations and good industry practice.
All of Hikma’s plants were designed to meet industry good practice in terms of equipment safety. Equipment is largely automated and fitted with guard rails, emergency shut off controls, and shields for moving parts. Standard operating procedures for all activities are set out in the health and safety plan, which is detailed and comprehensive. Hikma has a detailed SOP that specifies requisite personal protective equipment (PPE) depending on the type of work being performed, including safety shoes, safety glasses, masks or respirators and hearing protection. The Company carries out annual physical examinations for all employees. Tests include standard blood and urine profiles, chest x rays, vision audiometry. Hikma also sponsors health screenings annually for conditions including breast cancer, diabetes, and hypertension. Doctors visit Hikma’s plants regularly, and are on call at all times. Hikma has a standard training program that covers workplace health and safety, fire prevention and response, and emergency response. All plants have a fire protection system consisting of pumps, hydrants, fire alarms and fire detection equipment.
Pollution Prevention and Abatement
Environmental compliances: Hikma complies fully with all host country environmental requirements as well as a number of international conventions. The Company has maintained a strong record of reporting on, and compliance with, IFC’s environmental requirements over the life of IFC’s investments.
Air emissions: Hikma utilizes grid power at all of its plants, although back up diesel generators are in place in some locations in the event of power disruptions. Where underground fuel storage tanks are in place, these are monitored daily for leaks. Manufacturing plants are equipped with 2-4 boilers, half of which are for standby purposes. Hikma monitors key air emissions parameters (particulates [PM10], SO2, NOx, and CO2) at its operating facilities continuously, as part of host country monitoring and reporting requirements. In addition, host country authorities conduct independent verification monitoring twice a year. All processing equipment is equipped with dust extraction hoods. Extracted material is collected and disposed of in accordance with host country laws which in most cases requires disposal in Government-operated hazardous waste landfills. Over the life of IFC’s investments in the Group, it has maintained a strong compliance record in meeting both host country limits and IFC emissions guidelines.
As part of a Group-wide program to reduce greenhouse gas (GHG) emissions Hikma recently contracted Portuguese company to audit energy use in plants in Jordan, Egypt, Saudi Arabia, Algeria, Tunisia and Portugal; the results are expected in October 2010 and will be provided to IFC for review. As part of its long term relationship with the Company, IFC is discussing establishing a Memorandum of Understanding to support energy efficiency and water conservation efforts (see below) through its Clean Production initiative.
Water and wastewater: Hikma obtains water for all of its operations in MENA, Europe and the US from municipal and/or groundwater sources. In the case of the latter, water abstraction is done in full compliance with permits issued by the relevant water authorities. Hikma’s plants were designed to minimize water consumption and maximize water recycling. Hikma monitors and reports on water use at all of its facilities, and is in discussions with IFC regarding undertaking water audits at is main manufacturing plants to benchmark usage and identify additional water conservations opportunities.
Hikma has wastewater treatment plants at all of its facilities that treat water to meet both host country requirements and IFC guidelines. AMRs submitted by Hikma as required under earlier IFC investments confirm that treatment plants regularly meet required standards. Hikma has a wastewater treatment plant that treats process wastewater prior to onsite discharge for irrigation of gardens. Treated waste water is tested monthly by relevant Ministries of Environment; in Jordan it is also tested biannually by The Jordanian Royal Scientific Society. The Company has confirmed that that treated waste water complies with local regulations and IFC guidelines.
Wastes: Consistent with ISO 9001 and 14001, all business units have ongoing programs to reduce wastes in all aspects of its business. Solid wastes of all types are monitored annually, and reduction targets are set for each business unit. Office waste is collected by municipal authorities and sent to a managed solid waste landfill. Hazardous materials are kept in a locked storeroom located away from the manufacturing plants in accordance with good industry practice. Other than dust extracted from processing equipment, the only other hazardous wastes produced are used oils and lubricants, which are disposed of with licensed collection agents. Scrap steel and other metal wastes are stored on site until a sufficient volume is accumulated, and then sold to, and collected by, scrap dealers.
Community Health, Safety and Security
All of Hikma’s plants are located in light industrial areas. Hikma has a detailed emergency response plan (ERP) in place including SOPs that meet good management practice. The ERP covers life and fire safety, explosions, terrorist attack, and accidental spills or releases. Facilities are equipped with all requisite emergency equipment (smoke, fire and leak detection systems; emergency response devices, alarms and public address systems) in accordance with local requirements and cGMP. Life and fire safety prevention, detection and response systems are designed to meet host country requirements and are inspected and serviced annually. Fire drills are conducted at least twice a year.
Hikma contracts with professional third party providers of security services at all of its premises, and regularly monitors the performance of these firms. The Company has never had a significant incident involving security personnel at any of its plants.
