This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability (2012). Key environmental and social (‘E&S’) issues associated with this project include: ensuring effective implementation of the company’s SHE management system and organization; labor and working conditions; OHS; energy and water efficiencies; life and fire safety management; hazardous material and waste management; emergency preparedness and response including that related to the COVID-19 pandemic; and stakeholder engagement and grievance redress mechanisms

 Policy, E&S Management System, and Programs:

Aspen has a sustainable business strategy for the Group which has five strategic objectives one of which is being a good corporate citizen by conducting its business in a responsible, inclusive, and sustainable manner. The focus areas include enhancing relationships and reputation with various stakeholders, recalibrating the sustainability strategy and aligning environmental, social and governance (‘ESG’) priorities and exploring resource efficiency projects focused on improving security of supply and minimizing impact on the environment. The Group has documented and disclosed environmental management principles which govern environmental management at all its facilities. 

The company has established, implemented, and is maintaining an integrated management system aligned with the requirements of the ISO 45001:2018 (occupational health and safety management) and ISO 14001:2015 (environmental management) standards at most of its sites. The API manufacturing sites have the relevant accreditations, including US Food and Drug Administration (‘FDA’) accreditation. For non-certified sites, the company applies the environmental management principles and various Group-level SHE standards, that are implemented across all business units. In addition, the visited facilities were noted to have their additional site-specific policies and procedures e.g. the fire safety policy and SHE policy at Aspen’s Nairobi plant. Visited facilities were noted to have internationally recognized and certified environment and OHS management systems in place, and no significant gaps were noted in their implementation.

Identification and Assessment of Risks and Impacts:

Aspen identifies E&S risks and impacts associated with its facilities and operations through risk assessments in compliance with applicable national standards, E&S regulatory permitting requirements and Group-level SHE standards. Environmental and OHS baseline and issue-based risk assessments are conducted internally across all business units to identify and evaluate the magnitude of SHE risks through a formal and structured process of hazard identification, risk assessment and risk control. The Hazard Identification and Risk/ Impact Assessment and determining controls (‘HIRA’) Procedure is applied at all business units. Where risks are identified, the selection of required mitigation measures are determined by the principle of the hierarchy of controls. By applying the Design and Change Management Standard, issue-based risk assessments are also conducted for the management of changes and for any new projects prior to the design phase to ensure that all SHE risks are considered and mitigated. Prior to the acquisition of any new operations, the company commissions qualified third party consultants to undertake E&S due diligence and prepare Environmental Impact Assessments (‘EIAs’) or Environmental Audits (‘EAs’) at the business units in compliance with host country regulations and ensures that actions in the EIA management plans or EA corrective action plans are effectively implemented in a timely manner. New operations acquired would subsequently be  systematically incorporated into the Aspen’s Group SHE program.

Organizational Capacity:

Aspen’s Board monitors the status of environmental and OHS risks through review of material environmental and OHS management performance indicators on a quarterly basis. The Social & Ethics (‘S&E’) Committee assists the Board in monitoring the adequacy of SHE management systems in the Group and the extent to which these comply with relevant legislation.

Currently, Aspen’s Group SHE function consists of five members, the Group SHE Manager, the Group SHE Specialists (separately for SSA and International) and the Environmental Scientist. The Group SHE Manager reports to the Group Risk & Sustainability Manager under executive direction of the  Group Corporate Services Officer, who in turn, reports to the Group Chief Executive. The Group SHE Manager also provides regular relevant reports to the S&E Committee of the Board. The Group plans to strengthen and review the reporting structure with effect from July 2021 through moving the Group SHE function under the Executive direction of the Group Operations Officer and establishing a separate SHE compliance function under the Group Executive: Governance & Communications.

The corporate or Group SHE function develops and promotes Aspen's SHE standards and monitors the compliance and effectiveness of certified SHE management systems across the business units. Independent SHE legal compliance audits are conducted biannually across all manufacturing facilities. The Group SHE function  reviews the audit findings to establish trends and focus areas and tracks the status of corrective action plans. For non-certified business units, this function monitors the alignment of the business unit SHE management systems to the Group standards, develops and promotes SHE management protocols, and monitors SHE legislative compliance.

Each subsidiary has dedicated SHE officers responsible for the day-to-day compliance obligations and for providing technical support within the operations. This includes driving facility-level SHE key performance indicators (‘KPI’) targets which are developed annually and aligned with Group sustainability SHE KPIs.

All SHE training needs are identified through applicable legal requirements and risk assessments and formally managed through internal and external training programs. Competent registered or approved training service providers are appointed through a procurement and selection process. SHE awareness and competency training programs are conducted to promote the implementation and maintenance of SHE policies and procedures.  Employee competency and the effectiveness of training is generally measured through formal assessment questionnaires, job observations and/ or semi-annual performance review processes. The company has also developed and implemented COVID-19 specific training interventions. These trainings are focused on equipping employees with knowledge on navigating change and building resilience, and to effectively implement relevant non-pharmaceutical interventions across the business.

Emergency response plan:

The company has developed and implemented site specific emergency preparedness and response plans and procedures (‘EPRP’) as part of each material business unit’s Business Continuity Plans (‘BCPs’). The EPRP for the facilities visited during the appraisal were noted to cover potential emergencies like fire, medical emergencies, spillage and confined space entry. The evacuation plans were noted to be displayed at strategic locations around the sites and included emergency contacts and details of relevant management team members. Emergency exits and assembly points were well identified. Regular drills are expected to be completed. However, due to COVID-19 restrictions some drills were not completed in 2020.

The visited facilities had fire extinguishers, fire hydrant system, fire hoses, ceiling mounted extinguishers, fire alarms with manual call points, sprinklers, smoke detectors, cameras – all linked to a central control room from which there is 24-hour monitoring (fireman on duty in the control room 24 hours per day).  An independent audit of the emergency response systems at each business unit is done annually. At the time of the review, the company had not reported any major emergency or incident in the past years at any of its facilities.

Monitoring and Review:

The company monitors a wide range of SHE related KPIs for its operations such as environmental KPIs which include carbon emissions; waste recycled; hazardous waste generated, water usage; and electricity consumption. OHS KPIs currently include disabling incident frequency rate (‘DIFR’); and lost workday frequency rate (‘LWDFR’HR KPIs include average staff turnover; average training spend per employee; and percentage of females in top management roles in the Group. KPI results are reported quarterly to the corporate SHE and HR management functions and senior management as well as the company’s board of directors. All SHE incidents, if any, are investigated and discussed at the monthly facility-level SHE meetings, with the discussion focusing on analysis of systemic root causes and prevention-oriented corrective actions to minimize recurrence.

All sustainability data is tracked in the “Credit 360” internal online reporting system which  covers water, waste, energy, health and safety, effluent, environmental improvement initiatives, significant spillages, environmental policy and audits, training and EHS compliance. Corporate EHS compliance audits are conducted once every two years. For the year ending June 30, 2020, independent SHE compliance audits were performed at 21 of the Group's manufacturing sites. The overall compliance results were satisfactory with a notable reduction of 57% in health and safety legal findings across the Group with the technical safety and fire and emergency preparedness categories showing the most improvement. All legal findings are managed by each facility through a formal Corrective and Preventative Action system and the Group SHE function monitors the compliance status and reports thereon to the S&E Committee. No fines were paid in respect of environmental and OHS notices from the Authorities in 2020. Internal management system audits are conducted in accordance to a site specific formal internal audit plan in compliance to ISO 14001 and ISO 45001 standard requirements. Any statutory audits required as per applicable national legal requirements are also conducted. For example, the Nairobi facility was noted to have annual environmental, OHS and fire safety audits.

The company annually publishes a detailed Integrated Report in which ESG disclosures, premised on core elements of the Global Reporting Initiative sustainability reporting standard, are made. A progress report for the United Nations Global Compact principles is published annually. The 2020 integrated report and sustainability data supplement contains comprehensive details on SHE related performance of company operations.

 As of December 2020, Aspen employed about 9,800 employees globally, with 92% being permanent employees and 8% temporary employees. The permanent employee ratios were 49% female and 51% male. Average staff turnover was 13% with staff departures through voluntary attrition, restructuring and terminations of employment contracts being the key reason.

The S&E Committee provides oversight of the Group's activities with regards to labor and employment, including the Group's standing in terms of the International Labor Organization Protocol on Decent Work and Working Conditions. It also monitors Aspen's relationships with its employees and reviews the effectiveness of skills development programs across the Group.

Working Conditions and Management of Worker Relationship:

Aspen is a member of United Nations Global Compact (‘UNGC’) and has thus committed to adhere to the principles of UNGC including abolition of child labor, elimination of forced and bonded labor, non-discrimination and freedom of association and collective bargaining. A progress report is disclosed on the company’s website on an annual basis (https://www.aspenpharma.com/wp-content/uploads/2020/10/Aspen-Communication-on-Progress-Report-2020.pdf).

Aspen has a corporate HR strategy, policies and procedures, aligned with UNGC principles, which are customized in each business unit to ensure local relevance and compliance with applicable labor legislation and are consistent with IFC PS:2 requirements. The Group’s HR function is partially decentralized and each business unit has dedicated HR personnel responsible for implementation of HR policies and procedures. The corporate Diversity and Inclusion Framework and corporate Code of Conduct includes statements on promotion of equal opportunity principles and non-discrimination in respect of employment policies and practices. Sexual harassment in the workplace is prohibited and appropriate corporate policy is implemented across all operations and any material reported infringements are escalated and investigated requiring resolution to the satisfaction of the Aspen Ethics Committee and the Board’s S&E Committee. The company policies are communicated to staff during induction, regularly through the company’s communication channels and periodic training sessions. Aspen’s Code of Conduct prohibits any instances of child labor, forced or compulsory labor in its own operations and in contractors and suppliers.

Employee wage rates across the Group comply with legislated wage rates in the relevant jurisdictions and, where applicable, employees are paid in accordance with rates agreed upon with trade unions and/or collective bargaining councils. Salaries are benchmarked against industry standards in each region to ensure that high performing employees are offered competitive remuneration packages that promote retention objectives. All employees are enrolled in the mandatory social and medical insurance scheme. Working hours adhere to host country labor regulations and internal policies and practices to ensure appropriate hours of work and the management of overtime.

Freedom of Association and Grievance Mechanism:

The company supports freedom of association and recognizes the right to collective bargaining. Employees across the Group are free to exercise their rights to belong to trade unions and collective bargaining councils. At the end of 2020, approximately 24% of the Group’s employees were members of a trade union and approximately 31% were represented by collective bargaining councils (some employees are members of a trade union and are also represented by a collective bargaining council). Formal processes are in place for engagement with trade union representatives in each country.

The company has a formal grievance policy accessible to all staff, supported by a three-tier grievance procedure (i.e. Department head, HR, and Management team). Staff members can lodge anonymous and non-anonymous grievances through multiple channels such as by phone, by email, or via drop boxes. The company has established a grievance handling committee at each business unit that meets on an ad-hoc basis to review and respond to staff grievances. The HR department confidentially retains a record of all grievance cases.

The company has a whistleblowers’ standard operating procedure aimed at ensuring whistleblowers are protected against occupational detriment for making bona fide reports about unethical conduct and/or breach of policies. This procedure includes reference to an independently managed anonymous tip-offs hotline aimed at ensuring that all incidents are brought to the company’s attention and that whistleblowers feel safe to do so anonymously. The independently monitored whistleblowing hotline is accessible to employees across the Group’s businesses, whereby employees can report suspected fraud and/or activities which are considered to be transgressions of the Group’s Code of Conduct including HR incidents. In 2020, there were 48 HR related grievances captured by this anonymous mechanism and these were resolved. Tip-offs training and awareness sessions are conducted periodically to promote utilization of the facility where necessary. The tip-offs service has also been extended to key customers and suppliers. All reported incidents are formally recorded and reported to the S&E Committee or regional Ethics Officer or in country HR officer for consideration.

Occupational Health and Safety:

Following the corporate HIRA procedure, all business units manage OHS processes by conducting risk identification and mitigation process. As discussed above, most business units have certified OHS management systems. HIRA is conducted at all business units and recommendations are defined. Health and safety induction is provided to employees, external contract workers and visitors. Regular safety training programmes are provided to employees as well as external contract workers. Required health and safety equipment is provided including personal protective equipment (‘PPE’) depending on hazards related to the type of task being performed and the production unit, including hard hats, safety shoes, safety glasses, masks or respirators and hearing protection. PPE usage was noted to be adequate at the facilities visited. High efficiency particulate air filters were present at the pharmaceutical facilities as per Good Manufacturing Practices protocols. Health and safety signage was adequate and, as needed, in English, and the pre-dominant local language as applicable at the various facilities.

The DIFR and LWDFR currently represent the Group's material health and safety KPIs. The company plans to transition health and safety KPIs to Total Recordable Incident Frequency Rate and High Consequence Incident Frequency Rate for implementation with effect from 2021. The DIFR reflects the percentage of employees who suffered disabling injuries in the last 12 months, irrespective of whether such incidents resulted in lost workdays. The DIFR tolerance is set at less than or equal to 1.00 and a rate of 0.56 was achieved for the year ended 30 June 2020. The LWDFR indicates the percentage of employees who were absent from work due to work-related disabling injuries over the last 12 months. The LWDFR tolerance, set at less than or equal to 0.75, was achieved with a rate of 0.51 obtained for the year ended 30 June 2020. The tolerance levels are reviewed and approved by the S&E Committee on a two-yearly cycle. In 2020, 40 disabling incidents were recorded across the Group's manufacturing facilities compared to 62 incidents in the prior year. No occupational fatalities were experienced during the year. Formal systems are in place to ensure that incidents are recorded, investigated, and analyzed in a structured and timely manner in order to identify root causes and prevent the recurrence of incidents.

Health and wellness check-ups for all staff and tailored occupational health medicals for staff performing high-risk tasks are administered regularly at approved medical facilities. The company has implemented COVID-19 response measures as per host country requirements at all business units including implementing 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.

Third-party Workers and Supply Chain:

Aspen’s Code of Conduct for suppliers requires that suppliers and service providers undertake responsibility for conducting business in compliance with applicable environmental laws and regulations. Through the Group’s Contractor Management Standard, each business unit has established, implements, and maintains a documented contractor (including sub-contractors) management program. The program supports the company in identification, evaluation and control of safety, health and environmental hazards/aspects and risks/ impacts associated with contractors and sub-contractors.

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 a risk based contractor compliance evaluation and inspection programme.. Supplier and contractor agreements include binding SHE related clauses such as requirements on waste management, OHS, labor and working conditions. All contractors are required to demonstrate that its workforce is suitably qualified, especially for specific technical positions, and that they carry out work in a safe and environmentally responsible manner in accordance to their approved SHE Plan.

  Resource Efficiency:

Aspen tracks its annual electricity usage at all manufacturing business units. Electricity is mainly sourced from the national grid in each host country. Additional energy sources utilized by Aspen are fuels, liquid petroleum gas, purchased steam and natural gas. As part of its energy conservation initiatives, the company has implemented a series of energy efficient lighting and solar projects and plant and process optimizations.

Water is extensively used in the company’s manufacturing processes, in the cleaning of equipment and facilities, for employee hygiene, in steam generation and to maintain the required manufacturing environmental conditions. Municipal water is the primary source of water across the Group, although groundwater is also used at some of its manufacturing sites.  The company conducts an annual review of the water risk assessment for all manufacturing sites using a web-based tool to understand their exposure to risks and inform future sustainable water management and water stewardship initiatives. Water conservation initiatives implemented so far, include the installation of process and utility water recovery and recycling systems, the use of efficient closed water-based cooling systems and reconfiguration and optimization of the Purified Water System operation to decrease water rejection cycles.

The company measures, calculates and tracks their direct and indirect Greenhouse Gas (‘GHG’) emissions in accordance with the GHG Protocol Corporate Accounting and Reporting Standard. The main sources of Scope 1 emissions are from fugitive refrigerants, and the consumption of fuel and natural gas, primarily used in stationery combustion equipment such as boilers and standby generators, and the operation of Aspen-owned vehicles. Scope 2 emissions comprise of purchased steam and purchased electricity. The 2020 total carbon emissions at Group level were reported at 197,149 tCO2eqv of which scope 1 was 43,122 tCO2e and scope 2 was 154,027 tCO2e. The company is in the process of setting group-wide carbon emission reduction targets and conducting climate change risk assessments which will include scenario analysis.

Pollution Abatement:

The company has implemented some initiatives on air quality measurements and incorporated periodic stack emission tests and installation of technically advanced air handling systems and exhaust filtration systems at all relevant facilities to maintain the correct environmental conditions and minimize the risk of the release of harmful substances into the atmosphere.

Thirty-two percent (32%) of Aspen’s waste is classified as hazardous. The company has established and implements a corporate waste management standard to manage both hazardous and non-hazardous waste in compliance with the waste management legislation applicable in each country. The company uses specialized licensed waste management service providers to manage the transportation, treatment, and disposal of waste in accordance with contracted terms and relevant host country legislation. In 2020, the company reported a significant reduction (25%) in total waste generated and a reduction in the percentage of waste recycled from 83% to 80%.

The quality of effluent discharge is monitored and controlled across all sites, in accordance with local municipal by-laws. Wastewater treatment plants are in operation where required to ensure legal compliance to local permit conditions. In the event that there is a deviation from the required standards, a thorough root cause analysis is conducted, and corrective action plans are implemented.

 Most Aspen manufacturing facilities are located within industrial zones with limited exposure to local communities 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 EPRP planning, local stakeholder feedback is incorporated into SHE risk mitigation and into EPR plans. Due to the nature of pharmaceutical and chemical products, compliance control measures are in place across the supply chain, to address the safe and compliant handling and transport of all materials and products through the code of conduct for suppliers and service providers.

Unarmed security personnel are employed at Aspen facilities, some security personnel are employees, and some are employed through security contractors. The company has security policies and procedures for access control and security systems across all manufacturing and commercial sites to prevent unauthorized entry. Additional measures are implemented by in-country management teams to ensure employee safety in countries where the risk of social and/or political unrest is high. Security contractors are subject to the Group’s code of conduct for suppliers and service providers as well as relevant Group standards such as risk assessments carried out during change management processes that are consistent with IFC PS 4 requirements.