No hazardous chemicals are stored at the company’s facilities in quantities that would pose a risk to surrounding communities.  Facilities are generally located in industrial areas, do not generate significant traffic and are situated within secure areas with private unarmed security guards in use.  As such, PS:4 Community Health and Safety is not considered applicable to the project. As Hikma’s expansion model is to purchase existing operational plants, PS: 5 Land Acquisition and Involuntary Resettlement is also not applicable to this investment.  The existing developments and those that may be acquired in the future are typically located in peri-urban areas in industrial zones and thus potential impacts associated with PS6: Biodiversity Conservation and Sustainable Management of Living Resources, PS:7 Indigenous Peoples and PS:8 Cultural Heritage are equally not considered to be applicable.

This proposed investment is considered an environmental and social category B project according to IFC’s Policy on Environmental and Social Sustainability as the company’s activities have limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through standard and recognized mitigation measures.  Moreover, Hikma utilizes similar corporate responsibility, human resources and quality management systems and procedures at all its facilities and these are considered to generally comply with IFC requirements and good industry practice.

Environmental and Social Assessment and Management System

The company’s facilities are generally located in industrial zones and where applicable as in the case of expansions, have undertaken the necessary environmental impact assessments. All the plants have the requisite environmental licenses from the local authorities and report on compliance with the host country’s relevant legislations if required.

The Corporate Acquisitions Department coordinates environmental and social due diligence of potential acquisitions. This includes a review of compliance against regulatory requirements and the company’s EHS standards so as to define a gap analysis. This is then used as basis to bring the acquisitions into alignment with the company’s requirements.

All the Group facilities are certified under Good Manufacturing Practice (GMP), a system for ensuring that products are consistently produced and controlled according to a set of quality standards related to their intended use and as required by the product specification. In addition, Hikma’s facilities in 5 countries (Jordan, US, Portugal, Germany and KSA) are approved by the US FDA.  All other facilities operate in accordance with requirements of the relevant national food and drug authorities.

All facilities have a documented EHS management system and this consists of an EHS policy and site level standard operating procedures for the identification and management of environmental, social and occupational health and safety risks and impacts; emergency preparedness and response; and monitoring and reporting of EHS performance. These procedures are derived from a regularly updated risk assessment of general tasks associated with each plant department/operative unit and include the identification and mitigation of risks.  The EHS philosophy and values which are defined via the EHS policy and related procedures are transferred to facilities the Group acquires. An example of this is the Egypt plant (EPCI) acquired by Hikma in 2013 and which has recently acquired various management system certifications including ISO 14001 (environmental management) and OHSAS 18001(occupational health and safety). Hikma Jordan and the operations in Saudi Arabia are also certified against ISO 14001 and OHSAS 18001, with the facility in Jordan also being certified against ISO 50001 (energy management). The policies developed under these management systems are communicated in the relevant language to all employees within the respective departments. Hikma is committed to continuous improvements in environmental and occupational health and safety (OHS) management and is continually working towards certification of other plants against ISO 14001 and OHSAS 18001when relevant. Going forward the company will apply similar EHS systems to facilities acquired and obtain the necessary environmental authorizations / licenses accordingly.      

The Corporate Responsibility (CR) Department is responsible for target setting and data collection for some environmental and social issues such GHG emissions, energy consumption, community engagement etc. and facilities report environmental and social performance to the Corporate Communications (CC) Department and to IFC as per the AMRs.   

The approach defined above to EHS management applies at the facility level whereby each has its own E&S management system with varying levels of alignment with Performance Standards and Good International Industry Practice e.g., that defined via ISO 14001, OHSAS 18001 and the WBG EHS Guidelines.  However, the extent to which there is oversight and monitoring of environmental and social performance varies, as does reporting on such information.   Thus this is an opportunity for the company to establish an overarching corporate environmental and social management system which will include enhancing the existing EHS policy, and provide for a consistent and systematic approach to managing environmental and social performance at the facility level, allow the company to benchmark operations and, in doing so, identify and disseminate best practices between the various operations. This requirement is defined in the ESAP.

Management Programs  

The Hikma Jordan and Egyptian plants have implemented procedures for the regular identification of impacts and risks developed in the context of their EHS management systems and in accordance with their ISO 14001 and OHSAS 18001 requirements.  Such an approach similarly applies to all facilities regardless of whether they are certified or not and this is aligned with the requirements of the Performance Standard and applicable WBG General and sector-specific EHS Guidelines.

The company is currently implementing a software program i.e., Credit 360, to standardize information reporting by facilities and this includes that related to EHS.  This program can be enhanced to include additional EHS indicators such as those related to OHS incidents and environmental / workplace monitoring data.  Doing so will support benchmarking between operations as referenced above and thereby support facilities in defining improvement measures and thus bring the various Group facilities EHS performance into alignment with each other, and good practice.    

Organizational Capacity and Competency

As noted above the CR department sets some Group wide targets and collects related information whereas the CC department is responsible for reporting such information.

Each Hikma facility employs EHS engineers/coordinators who are responsible for implementation of EHS systems. There is a human resources (HR) department at each facility the head of which reports to the Corporate HR Vice President. The EHS representatives at the site level report to the HR head. A similar approach will apply to future operations.

There are Quality Assurance supervisors at the facility level that report to the facility manager allied to the Corporate Quality Department.

Hikma’s corporate responsibility activities are overseen by the Compliance, Responsibility and Ethics Committee, a board-level committee which focuses on formalizing the company’s ethical commitment to business integrity. For purposes of the corporate ESMS, Hikma will ensure there is sufficient organizational capacity for this function.

In-depth EHS training is undertaken as part of induction and there is ongoing general and job specific training which forms part of the broader EHS management systems. In addition, regular training on GMP and quality is undertaken.  Results of the effectiveness of such trainings are assessed at some facilities such as Jordan where the employees undergo tests.  In 2015 a total of 4,998 employees were placed in 765 different training programs tailored to enhance know-how and career progression.

During induction and aside from EHS, the training program includes the Group history, values and companywide policies and procedures, employee benefits and rights, confidentiality, conflict of interest, competencies, career paths and organizational structures.  So as to ensure a systematic approach to the EHS training the Company will develop and implement an overarching training methodology across the various facilities in the MENA region and the World Bank countries of operation, including a means to assess the effectiveness of such training, as part of the corporate ESMS.

Emergency Preparedness and Response

Emergency preparedness and response plans have been developed for all facilities and are implemented accordingly. These plans include responsibilities in the event of emergencies, the provision of firefighting equipment and instructions on its proper use by the emergency team and relevant employees and evacuation plans and instructions. Annual drills are generally conducted, including various scenarios and with lessons learnt taken into account.  Firefighting systems (e.g., smoke detectors, automatic sprinklers, and extinguishers), were present at the operating plants visited and all plants are constructed in accordance with national requirements.  Fire detection and suppression systems are checked monthly and inspection of the fire extinguishers is conducted semiannually.   

To ensure the approach described above is consistently applied to all operations the Company will develop and implement procedures to ensure all facilities in the MENA region and the World Bank countries of operation  have emergency preparedness and response plans, these are compliant with national requirements, the minimum number of drills per annum are undertaken and the scope thereof addresses potential scenarios that could arise, and there is sufficient capacity within the respective operations to address these. As defined in the ESAP this will form part of the corporate ESMS.

Monitoring and Review

All facilities have a monitoring program in accordance with local regulatory requirements, GMP standards and the site-specific EHS management systems.  The program covers regulated emissions, production areas parameters (e.g., temperature, humidity, differential pressure, noise at workstations, etc.), waste parameters and review of performance against environmental objectives and targets. External audits are also undertaken periodically by third party certification bodies and regulatory authorities as part of required certification/compliance protocols.  As per the corporate ESMS the minimum parameters to be monitored and reported upon by the various operations will be further refined.   

Reporting

Internal reporting of EHS performance is undertaken at the plant level and similar to senior management at the corporate level, whereas external reporting is performed in accordance with the national regulatory requirements.  The company also submits annual monitoring reports to IFC.  Given the growth of the Group and the developing maturity of its environmental, social and occupational health and safety management, IFC and the Company are developing a simplified reporting structure that will facilitate intra-group comparisons and identification and dissemination of best practices, including in any future acquisitions.

In addition, the company reports annually on implementing the principles of the United Nations Global Compact and publishes an annual sustainability report which is available on the company website. This report provides information on Hikma’s approach to sustainability, meeting healthcare needs, promoting good business ethics, support to communities, investments in human resources and the general approach to EHS management.   

Human Resources Policies and Procedures

Hikma has an overarching Code of Conduct that sets out principles and standards on quality, stakeholder relationships, employee rights, privacy and confidentiality, integrity, professional development and corporate citizenship. This Code is disclosed on the company website and supported by relevant procedures and policies and applies to all Hikma employees as well as the third party contractors working across all Group operations.  Other than those providing security, there are no other permanent contractors associated with operations.  

The Code of Conduct includes a section on safeguarding employee rights (Employment Standards) and defines human resources policies which are consistent with national employment laws and the requirements of this Performance Standard. These policies and procedures are communicated to all employees.

The actual terms of employment are referenced in the individual employee contracts and are covered in the Employee Handbook. These include the policy and procedures governing employee rights and responsibilities such as attendance, annual leave, performance appraisal, work procedure, penalties system, complaints system, health and safety measures to be followed, compensation, overtime, social security, medical insurance and other benefits.

The Group employs approximately 8,400 workers including administrative, technical (processing plants) staff of which 32% are female and the company is targeting 50% for female employment.  So as to support the latter Hikma has initiated motivational and empowerment sessions for women across its businesses starting with the operations in Jordan. This is in line with the 2015 objectives set for the “Advancement of Women across the Hikma Group”. The aim of these sessions is support women at Hikma so as to achieve both their personal and professional goals and provide guidance for career advancement.

Upon acquisition of a plant by Hikma all employees receive induction into the approach to HR as applied by the company and the policies and procedures as defined in this section are then applied to the new operations.

Communication with employees is undertaken via a quarterly newsletter, e-mails, intranet and notice boards situated throughout the plants.

Non-Discrimination and Equal Opportunity

Via the Hikma Code of Conduct and an Equal Treatment Policy there are provisions relating to equal opportunity and prohibition of any form of discrimination, bullying or harassment. Through application of the company Recruitment and Employee Selection Policy Hikma ensure that the recruitment and promotion process is transparent and undertaken in accordance with the HR policies and on the basis of qualification and merit.

Workers Organization

As stipulated in the Code of Conduct, Hikma ensures employee rights to free association and collective bargaining is recognized and respected at all facilities.

Grievance Mechanism

The Code of Conduct sets out elements of a grievance mechanism for promoting effective communication between employees and management for addressing employee suggestions, requests and complaints. The relevant Employee Grievance and Appeals Policy incorporates verbal reporting channels to submit grievances, as well as the internal procedure for management thereof.  Further, Hikma ensures that all employees are made aware of the existence of this grievance mechanisms.

Review of the grievance mechanisms applied at the individual facilities indicates it could be enhanced so as to be consistent across all operations in the MENA region and the World Bank countries of operation and include timeframes for investigation and providing feedback, and to allow for anonymous reporting. Thus in accordance with ESAP this will be addressed.

Retrenchment

The company does not anticipate a reduction in the current workforce.  However, if such becomes necessary in future, the company will develop and implement a retrenchment plan based on consultations with the affected workers, unions, the national labor requirements and in accordance with IFC’s PS2 requirements.

Occupational Health and Safety

All operations regardless of whether they are certified against OHSAS 18001or not have an EHS Policy including procedures on employee health, accident prevention, workplace accident monitoring and reporting, safe operation of machinery and PPE (Personal Protective Equipment), contractor safety and chemical handling.

Manufacturing areas are equipped with suitable air conditioning systems designed according to GMP protocols, including use of high efficiency particulate air (HEPA) filters in ventilation systems, particularly in sterile product manufacturing areas.

Facilities follow GMP provisions and detailed Standard Operating Procedures (SOPs) including health and safety rules.  The SOPs are derived from a risk assessment of the relevant tasks which are reviewed annually at each plant/department/operative unit and include the identification of risks and related mitigation measures.  

In the course of the site visits safe storage and handling of chemicals, MSDS (Material Safety Data Sheets) availability, adequate machine guarding for moving parts of equipment, proper ventilation and PPE use where required was observed.

A Permit to Work system has been implemented at all plants and is functional for dangerous work. The company posts warning signs and has implemented other effective means to inform employees for risks.  External service providers monitor workplace conditions specific to dust, noise, heat stress and other exposures in compliance with national and WBG EHS Guideline requirements at all the facilities.

OHS training is provided to newly hired employees by the EHS manager/coordinator at each plant and there is ongoing generic EHS training.  Daily oversight to ensure effective implementation of OHS plans and procedures is undertaken by the EHS team for direct and contract employees alike at all plants.

External first aid training is provided and a representative from each department receives this training on a rotating basis at all facilities.  All the company facilities have health clinics on site and employ medical doctors or nurses in accordance with the local legislation.

Hikma’s CC Department conducts an annual initiative at Hikma locations worldwide titled ‘You Are Hikma’ which celebrates the company’s core values by raising awareness among its staff on EHS issues.

Accident rates and the total lost time incident rates are recorded at all plants and where these occur, an investigation is performed both internally and externally and documented.  Going forward Hikma will benchmark Lost Time Injury Frequency Injury Rate (LTIFR) at all plants in the MENA region and the World Bank countries of operation against accepted international benchmarks, and where the LTIFR is higher than the benchmark, implement action plans to align with such.  This is defined in the ESAP and such information will be reported to IFC in the Annual Monitoring Report. 

Going forward, the company will monitor and report lost time accidents as a LTIFR for each individual operation at the corporate level in order to effectively and regularly benchmark operations internally, and with good industry practices; this is defined as a requirement in the ESAP.  

Upon acquisition of a facility the existing approach to OHS management is assessed in the due diligence against the company’s approach as outlined above and measures are then implemented to ensure the facility aligns with such.

Protecting the Work Force

Hikma’s Code of Conduct reflects strong ethical practices in relation to labor and human rights and prohibits the use of forced or child labor.  The minimum age of employment is 18 at all facilities and the national identification card of all new hires is requested before the processing of a work contract.

Workers Engaged by Third Parties

This work is typically associated with equipment maintenance and repair, building construction work, painting, fire equipment maintenance etc. As noted, the company’s Code of Conduct applies to contract staff as well and the EHS policy along with associated procedures are provided to contractors to which they are expected to comply.  Daily inspection to ensure such is conducted by the EHS team.  

To support and ensure a consistent approach to contractor safety the Company will ensure the “Contractor Safety Policy” as implemented at the Jordan facility and which is an example of good practice in this regard is incorporated as part of the contractual agreements with third party contracts associated with the various operations in the MENA region and World Bank countries of operation; this is defined in the ESAP.  

Supply Chain

The company has a supplier evaluation process that ensures that selected suppliers have GMP certificates or their equivalent, and Hikma’s main suppliers are all ISO 14001 and OHSAS 18001 certified. Supplier audit questionnaires are implemented that include aspects related to the environment, human rights, child labor, anti-bribery measures and other relevant issues. Each facility manages its own contractors and suppliers, and carries out periodical audits as required by GMP. 

Resource Efficiency

The company aims for continuous improvement in energy consumption and each plant has energy reduction initiative and targets. By way of example, Hikma Jordan’s 2016 target is reducing energy use by 10% with the projects to achieve this including installation of online monitoring systems for fuel and steam, a waste water treatment plant upgrade (via online measuring dissolved oxygen blown from diffusers and keeping this at an optimum level-~2 mg/l), installing solar panels, replacing old chillers and installing photocells for lighting where suitable.  In addition, Hikma reviewed the use of company vehicles and those most heavily used were replaced with hybrid vehicles. This has improved fuel efficiency while at the same time resulting in a reduction in vehicular emissions by 50%.

GHG Emissions

For all the facilities electricity is procured via the national grid.  Diesel generators are present at sites as back up and are used in the cases of a power failure.  GHG emissions for the Group are thus dominated by electricity consumption and equates to some 76% of the CO₂ emissions. Other sources taken in to account when calculating the GHG emissions are natural / LPG gas combustion, diesel combustion, refrigerants, vehicle emissions and fuel consumption.  During the 2015 financial year, Hikma emitted around 26,500 tCO₂ equivalent from the combustion of fuel (Scope 1 – direct emissions) and 83,500 tCO₂ from electricity use (Scope 2 – indirect emissions). Since 2013 Scope 1 emissions have decreased some 10% and the company aims to reduce this aspect further, however Scope 2 (electricity usage) emissions increased 13%, mainly due to increased production at certain plants.

Air Emissions and Ambient Air Quality

All facilities monitor key air emission parameters according to GMP requirements and where applicable, local regulations.  Particulate emissions from sensitive production areas are controlled through high efficiency particulate air filters that are collected and disposed of by licensed contractors according to local requirements. 

Manufacturing plants are equipped with natural gas fired steam boilers and the emissions NOx being the notable one, comply with both local regulatory limits and those defined in the WBG EHS Guideline requirements.  

Wastewater Treatment

At the Hikma Jordan facilities there is a wastewater treatment plant including biological basins and chemical coagulation and the water quality discharge aligns with the WBG EHS Guideline values and in-country requirements.  In Egypt the wastewater quality results are within acceptable limits for discharge to the municipal waste water network provided for the industrial zone where the facility is located. Review of the waste water discharge parameters at the facilities in Algeria, Tunisia and Saudi Arabia indicates some improvement is required so as to align with the WBG EHS Guideline values and thus Hikma will agree with IFC on a time based plan to ensure such as defined in the ESAP.  Equally, future operations will also comply with national requirements / WBG EHS Guidelines and Hikma will report on such information annually to IFC as required. 

Materials Handling / Waste Management

Plants retain a list of hazardous materials used in production and these are handled and stored according to the respective material safety data sheets and GMP requirements. Hazardous materials are kept in a locked storeroom located away from the manufacturing areas in accordance with good industry practice.

All facilities contract a licensed waste handling company for the transport and disposal of both hazardous and non-hazardous solid waste.  Good Manufacturing Practices are used for handling of hazardous waste at all facilities. Hazardous waste is categorized as pharmaceutical in-process waste or off-spec product. All process related waste is collected in red biohazard bags which is separated from regular waste. A representative from the Quality Assurance Department accompanies the disposal trucks to the landfill to ensure proper disposal based on the contractual agreement between the disposal company and Hikma.  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 scrap dealers.

A hazardous and nonhazardous waste reduction program is executed in Hikma Jordan facilities with a target of 5% reduction. As part of corporate level ESMS the company will define and implement waste reduction targets for all operations as per the ESAP.  

Pesticide Use and Management

A procedure exists for use of insecticides including the type of chemicals to be used and frequency thereof.  No chemicals are used that are not registered at the relevant national Ministry of Health and natural methods are applied wherever possible.

One of the company’s four strategic platforms focused on corporate responsibility is that associated with “community”. Hikma has established a grievance mechanism for external stakeholders whereby grievances are managed via the CR Department. The company posts contact details (names, phone numbers, email addresses) on its website and at the security gates of all of its facilities so as to enable customers and stakeholders to make enquiries, submit comments or raise grievances regarding its operations.  

The company is active in local communities in which it operates, particularly in Jordan where they are headquartered. The focus of these activities is on education, preventive health care and early detection of cancer and diabetes. Specific community needs are identified annually by CR champions at each facility in consultation with local NGOs and others.  In Jordan Hikma provides supports to refugees at the Zaatari refugee camp via in kind donations upon request from NGOs and governmental entities. In addition, the company has made a donation to Children’s Museum in Jordan (CMJ) and UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East).

Hikma also sponsors an annual Global Volunteering Day in April annually in which the company employees participate.

Hikma will make this ESRS and ESAP available in Arabic and/or English (as applicable) on its website (www.hikma.com) and at each of its offices in Jordan and London. Locations and contact information for all Hikma facilities may be found at www.hikma.com

Additional enquiries should be directed to:

Susan Ringdal

Investor Relations Director

Hikma Pharmaceuticals PLC

1 New Burlington Place

London, W1S 2HR

Tel: +44 (0) 20 7399 2760

Fax: +44 (0) 20 7399 2761

Ibrahim Armouti

Group Treasurer

Hikma Pharmaceuticals PLC

P.O. Box: 182400,

Amman 11118,

Jordan

Tel 962 6 5802900

Fax 962 6 5827107

Email: IArmouti@Hikma.com