Identification and Assessment of Risks and Impacts:

Fosun Pharma identifies E&S risks and impacts associated with its facilities and operations through risk assessments in compliance with applicable national standards and E&S regulatory permitting requirements. The company commissions qualified third party institutes to undertake and prepare Environmental Impact Assessments (EIAs) for all its operations and facilities and ensures that actions in the EIA management plans are effectively implemented in a timely manner.

Policy, E&S Management System, and Programs:

Fosun Pharma has in place a corporate level Environmental Health and safety (EHS) policy statement, standard operating procedures (SOPs), and key performance indicators (KPI), including those related to quality control, waste and hazardous waste management, resource efficiencies, life and fire safety (L&FS), occupational health and safety (OHS) management, supply chain and contractor E&S management, and internal auditing mechanisms, which are applied to all its facilities and operations. The company annually publishes a detailed Corporate Social Responsibility (CSR) report premised on core elements of the Global Reporting Initiative sustainability reporting standard. The 2019 CSR report contains comprehensive details on EHS related performance information on company operations. The company and various subsidiaries have attained voluntary management certifications e.g. ISO14001 (environmental management) and OHSAS18001/ISO45001 (occupational health and safety). In addition, clean production audits have been undertaken at various company manufacturing facilities.

In order to achieve standardized application of E&S management system (ESMS) practices across all company facilities and operations while allowing for location-specific operational and risk management nuances: (i) the above-mentioned corporate policies, SOPs, KPIs, and other elements of the company’s ESMS are distributed as document templates to all subsidiaries; (ii) each subsidiary customizes these templates and KPIs by populating them with data and content befitting local risks, impacts, conditions, and regulatory requirements; (iii) once customized, subsidiary-level EHS documents (including EHS related KPIs) are submitted to the company’s corporate EHS department for approval, and once approved they become effective and binding on a particular subsidiary; (iv) this system of customization includes a series of scheduled and unannounced EHS audits by the corporate-level EHS team as well as by external auditors, and should non-conformances be identified during such audits, detailed procedures require corrective actions to be taken by that subsidiary by a certain completion timeline, with responsibilities assigned to specific staff; (v) as part of the above, subsidiary-level EHS KPIs become the basis for conducting performance evaluations at a subsidiary and at each of its departments and operational teams.

The company monitors its operations against a wide range of EHS related KPIs such as number of lost time injuries, L&FS non-compliances, and energy consumption, the scope of which covers construction and operational activities. KPI results are reported on a monthly basis to the corporate EHS management team and to the corporate EHS committee and senior management. All EHS incidents, if any, are discussed in quarterly corporate and facility-level EHS and safety meetings, with the discussion focusing on analysis of systemic root causes and prevention-oriented corrective actions to minimize recurrence. The company uses a set of criteria to evaluate and select potential suppliers and contractors and undertakes regular supervision of the activities of selected service providers, which includes on-site EHS audits. Supplier and contractor agreements include binding EHS related clauses such as requirements on waste management and labor and working conditions.

Organizational Capacity:

Fosun Pharma has an Environmental Health and Safety (EHS) committee at the Corporate level, supported by a dedicated EHS department which provides guidance and technical support to subsidiaries to ensure continued material compliance with corporate EHS policy and procedural requirements, as well as applicable national and local regulatory standards.

At the subsidiary level, a similar EHS committee is in place headed by the subsidiary person in charge and consisting of senior managers of each operational unit. The facility EHS committee exercises oversight and facility-level decision making to ensure all departments and personnel with designated EHS responsibilities meet facility-level EHS KPI targets which have been annually developed and agreed with the corporate EHS department. Each subsidiary has dedicated EHS/OHS officers responsible for day-to-day compliance verification work and for providing technical support to all facility level colleagues. To ensure EHS responsibilities are collectively owned, all subsidiary employees are required to fulfil EHS KPI targets assigned to them.

The company adopts a systematic approach to EHS skill transfer and knowledge building: (i) Regular training on various EHS topics are conducted with extensive participation by staff - participants are required to meet a minimum test score post-training; (ii) cross-facility EHS audits conducted throughout the year (except during COVID-19 times when such visits were put on hold for health and safety reasons) provides an opportunity not only for mutual supervision between facilities but also for cross-fertilization of knowledge; (iii) various technical WeChat groups among EHS and other staff are in place as a forum for real time exchange of operational improvement ideas and good practices; (iv) audits and technical visits by external EHS experts are arranged at various company facilities from time to time which provide another opportunity for knowledge uptake.

As part of the company’s corporate-level ESMS, Fosun Pharma is in the process of developing a detailed set of EHS related policy, SOPs, KPIs, and organizational and personnel setup/structure, to be applied to all upcoming activities related to the import, storage, distribution, and manufacturing of COVID-19 vaccines and COVID-19 test kits as part of the proposed project. The company will share with IFC: the abovementioned policy, SOPs, KPIs, and organizational charts; and copies of manufacturing-facility-level documents including but not limited to the following: (i) approved EIA full reports including management and monitoring plans; (ii) L&FS assessment reports and mitigation and monitoring plans; (iii) OHS hazard point analysis reports and management plans; (iv) hazardous material and waste management assessment reports and management plans; and (v) greenhouse gas quantification results, reduction strategy plans, and energy and water efficiency assessment reports and management plans.

As of February 2019, Fosun employed more than 31,370 employees with most staff being local direct hires. The male to female ratio in 2019 was 52:47 which reflected the ratio of available talent in the sectors in which the company operates and the nature of work. Staff turnover was around 16% in 2019 - closely aligned with sector average rates -with natural attrition and staff moving on to pursue personal and further education goals being key reasons.

Working Conditions and Management of Worker Relationship:

Fosun pharma has a corporate human resources (HR) policy and employee manual applicable to all subsidiaries and which are consistent with local labor laws and IFC PS2 requirements, with each subsidiary having dedicated HR personnel on its roster responsible for all HR implementation matters. The corporate HR policy includes a statement on equal opportunity and non-discrimination; and includes provisions to strictly forbid any forms of workplace harassment – with no known instances of such having been reported in the past. These principles are regularly communicated to all staff. Fosun Pharma adheres to its requirements to prohibit any instances of child labor or forced labor practices in its own facilities and operations and in contractor and sub-contractor operations. Renumeration is determined based on job/skill specifications and prevailing market rates and are above minimum wage levels defined by the local authorities. All employees are enrolled in the mandatory social insurance scheme. Working hours including overtime adhere to national labor regulations.

A labor union is in place and most employees have voluntarily joined the union, and the company places no restrictions on freedom of association. The union is an integral part of day-to-day administration of the collective bargaining agreement in place at the company and acts as a conduit to channel potential employee grievances and plays a mediator role when needed. The company has published a formal grievance policy to all staff supported by a three-tier grievance procedure (i.e. Department head, HR, and Management team). Staff members could lodge anonymous and non-anonymous grievances through multiple channels such as by phone, by email, via drop boxes, and through company social media channels. The company grievance policy sets out grievance management requirements such as maximum response times, etc. The HR department confidentially retains a record of all grievance cases.

Occupational Health and Safety:

Fosun Pharma has developed a detailed list of leading and lagging OHS KPIs (e.g. Lost Time Incident Frequency Rate or LTIFR - the number of lost time injuries occurring in a workplace per 1 million person-hours worked) which are applied to all subsidiaries and operations and with a focus on proactive prevention of incidents. In 2019, the number of severe injuries was reported as zero, with overall LTIFR calculated to be 0.343, representing a 40% improvement compared to 2016. The company reports in detail on its OHS performance in its annual CSR reports. OHS management at the company and its subsidiaries falls under the remit of the EHS department (at corporate and facility levels) with support from the HR department.

All subsidiaries manage OHS as per the following risk identification and mitigation process: (i) Assessment of potential OHS risks for any greenfield construction or retrofit project activities leading to identification of risk points within operational areas of a facility, specification of the nature, severity, and occurrence probability of each type of identified risk, with an overall risk score calculated and assigned to each major risk and risk point; (ii) based on assessment results and pre-established OHS KPIs, developing and implementing risk-point-specific mitigation plans (comprising management controls, procedural routines, and engineering measures), and resulting site-inspection checklists; (iii) regular inspection of each risk point (including high-risk areas and duty stations) by assigned safety officers using established inspection checklists; (iv) regular internal audits by corporate EHS team to supplement day-to-day site inspections; (v) corrective actions undertaken within defined completion timelines in case of non-compliances identified; and (vi) lessons learned from the above including corrective actions undertaken are captured and shared among all staff to enable continual operational improvements.

Regular health check-ups for all staff and tailored health check-ups for staff working at high-risk duty stations are administered regularly at approved health checkup facilities. Construction safety, employee health and safety, and L&FS training for EPC contractors are regularly administered by the EHS department of each subsidiary. All contractors are required to demonstrate that its workforce is suitably qualified, especially for specific technical positions (e.g. electricians), and that they carry out work according to OHS risk point analysis results and required day-to-day mitigation measures.

The company has implemented COVID-19 response measures as per national requirements at all subsidiaries including undertaking all necessary health and safety precautions in the workplace to minimize potential COVID-19 infections. There have been no cases of staff being made redundant and no instances of no-pay-leave arrangements owing to COVID-19.

Resource Efficiency (RE):

The company utilizes a series of detailed KPIs to monitor facility level resource efficiency performances with an overall goal of continually reducing its carbon emission and energy and water consumption footprints. The corporate EHS department works closely with each subsidiary to continually explore new technologies or management controls which could bring about efficiency improvements. Examples of notable resource efficiency programs implemented to date include installation of solar panels and other renewable energy equipment, retrofitting high energy efficiency and heat recovery equipment and water recycling systems, and prioritizing temperature and humidity management at various company facilities.

Subsidiary-level footprint-reduction initiatives are listed in the company’s 2019 CSR report, together with the amount of energy savings achieved (in kWh) and carbon footprint reduction (in tCO2eqv) for each initiative. Direct and in-direct GHG emission data, and energy and water consumption and efficiency data (e.g. cubic meters water consumed per RMB100,000 of product output value) are presented in the annual CSR reports. These data points also translate into specific RE KPIs which the company utilizes to regularly track the RE performance of each subsidiary.

As part of annual production and operational planning, the corporate EHS department holds in-depth technical discussions with counterpart EHS teams at each subsidiary to set annual RE related KPI targets and to agree on achievable means (e.g. through adoption of new technologies, equipment retrofit, and updates to control procedures) to meet those targets. The company’s policy is to utilize low global warming potential refrigerant in cold storage facilities that it owns and operates, to the extent that is technically feasible.

Pollution Abatement:

Fosun Pharma manufacturing subsidiaries are required to disclose annual environment performance monitoring data (e.g. air emission and wastewater discharge data, and hazardous waste transfer records) via official environmental permitting websites. Each subsidiary follows corporate level pollution abatement requirements (in the form of company policy, detailed SOPs, and KPIs) and national and sub-national regulatory requirements and emission/discharge standards. Subsidiary performance in relation to waste management KPIs such as COD, NH3-N, NOx, SO2, solid waste management, and hazardous waste handling and management are closely monitored by the subsidiary and corporate EHS department, with continuous improvement targets assigned and performance tracked. Each subsidiary is also required to meet applicable sectoral standards e.g. air pollution emission standard for pharmaceutical industry GB37823-2019, water pollutant discharge standard for biopharmaceutical products GB21905-2008, and water pollutants for chemical synthesis pharmaceutical products GB21904-2008. IFC’s review finds that abovementioned standards are materially consistent with standards listed in the World Bank Group (WBG) EHS guidelines (General; and Pharmaceuticals and Biotechnology Manufacturing).

Management of all chemicals utilized and stored at each facility are subject to applicable national and sectoral standards such as GB18218-2018. Before commissioning, each facility undertakes a detailed risk assessment related to the use, storage, and management of hazardous materials and wastes at its premise, leading to an operational hazardous material and waste management plan submitted to the local authorities for review and approval, and which defines the types, classes, and quantities of chemicals which can be utilized and stored at a company facility. Hazardous wastes are collected and stored in designated secure locations within company facilities with access controls in place. These storage spaces are built to meet anti-leakage and anti-explosion structural containment and reinforcement specifications as per applicable regulatory requirements. Wastes classified as medical wastes are segregated, labelled, and handled strictly according to applicable regulations. All hazardous materials and wastes are properly labelled and stored in designated storage buildings according to requirements applicable to each class of material/waste. Inflammable and explosive materials are evaluated and detailed control documents and material safety data sheets (MSDS) are prepared. Hazardous and medical wastes are transported, handled, and disposed of by licensed third parties, and the company retains waste audit trail records to satisfy itself that such wastes have indeed been handled as per established procedures.

The company places a high priority on minimizing potential adverse impacts from its operations on the health, safety, and security of local communities. Most Fosun Pharma manufacturing facilities are located within industrial parks (IP), with limited exposure to local communities given that such IPs are typically set up to be at considerable distances from local residences and sensitive receptor areas. In cases where there are local communities in proximity to a company facility, during the EIA process and subsequent facility-level emergency preparedness and response (EPR) planning, local stakeholder feedback is incorporated into EHS risk mitigations and into EPR plans. Contractors and their workforces are bound by a worker code of conduct to minimize potential disturbance and risks to local residents and communities.

As part of its corporate level ESMS, the company implements detailed L&FS and Emergency Preparedness and Response (EPR) SOPs, which require, among other things: (i) for facilities about to undergo greenfield construction or retrofit activities, submission of detailed L&FS design and schematic plans to the local fire department for review, with final approval granted after a post-construction site-audit confirms that the facility has been constructed as per design specifications; (ii) during construction and operational phases: detailed quarterly inspection audits of all L&FS risk control points are carried out to verify proper equipment functioning and that SOP requirements including management controls are duly executed; (iii) various scenario-based and location-specific L&FS and emergency drills are conducted each year to ensure that all staff are well prepared in case of various emergency scenarios arising at various parts of a facility. The content of these scenario-based drills follows from the detailed EPR plan which each company facility is required to develop before facility commissioning. Each facility is required to update its L&FS and EPR SOPs and plans every three years or whenever a facility plans to undertake any retrofits, expansion activities, or major new equipment installations. Updated SOPs and plans are submitted to the corporate EHS department for approval, and refresher training is provided to staff to ensure familiarization with updated EHS requirements in day-to-day operations.