Corporate Responsibility

ESG governance

PolyPeptide strives to adhere to fundamental principles of business ethics, corporate responsibility, and compliance as laid out in the company’s Code of Conduct. Building on its core values of innovation, excellence, and trust, PolyPeptide pursues an integrated strategy (see chapter Strategy) to incorporate the material environmental, social and governance (ESG) aspects as part of its strategic priorities.

With the IPO and the listing on SIX Swiss Exchange in April 2021, PolyPeptide implemented a governance structure consistent with the Swiss Code of Best Practice for Corporate Governance issued by economiesuisse and international requirements (also see Corporate Governance Report). A new Board of Directors was elected, along with the establishment of the Innovation & Technology, the Remuneration & Nomination, and the Audit & Risk Committees. In the second half of 2021, the Group also created the position of General Counsel at the level of the Executive Committee, and towards the end of the year further reinforced the overall organization, including new global responsibilities for Quality as well as Employee Health & Safety (EH&S). Effective 1 January 2022, the PolyPeptide Management Committee (PMC) was established to ensure the effective implementation of the Group’s integrated strategy.

At PolyPeptide, the overall ESG responsibility lies with the Board of Directors. In the second half of 2021, the Group with support of Finch & Beak, a specialized advisory firm, conducted an ESG materiality assessment following a structured process aligned with applicable standards. As a result of this process, twelve material ESG topics were identified. The Board of Directors assigned these topics to its committees, approving the integrated strategy approach and setting the Group’s ESG agenda.

The responsibility for the implementation of the Group’s ESG agenda has been delegated to the PolyPeptide Management Committee and the ESG Steering Committee. In line with the strategic priority to foster collaboration as “OnePolyPeptide”, a Group-wide approach is pursued, building on the solid groundwork laid at each site in previous years. All relevant functions are represented in the ESG Steering Committee and each material ESG topic has been assigned to the manager of the respective global function in order to make sure that the ESG aspects are adequately reflected within the functional plans and in the day-to-day local activities.

PolyPeptide ESG governance

ESG materiality assessment

PolyPeptide conducted its materiality assessment in a five-step process in a cross-functional working group that included global function heads and selected Executive Committee members.

The first step consisted of a comprehensive desk research on relevant ESG trends, current and emerging regulations as well as applicable rating and reporting standards, complemented by a peer analysis. This resulted in a list of all sustainability-related topics. Secondly, duplicates were removed and overlapping topics were clustered. The resulting long list of topics was discussed with the working group in order to incorporate feedback and include missing topics. In a third step, the list was further evaluated by the working group for risks and opportunities. This provided first insights on the outside-in impact of ESG topics on PolyPeptide.

In the fourth step, the stakeholder relevance was assessed through interviews with internal stakeholders. This was followed by the fifth and final step with an internal workshop session in which the working group assessed both, the outside-in impact (financial materiality impact) and the inside-out impact (societal materiality impact), also to comply with the concept of double materiality. Along the process, feedback on materiality and all definitions were requested and validated.

As the result, a total of twelve material ESG topics were identified with clear definitions derived from applicable standards and with reference to the United Nations Sustainable Development Goals (SDGs; see table below). PolyPeptide endorses the UN Agenda 2030 and considers the SDGs launched in 2015 as an important reference point to determine and manage its own material ESG topics. Fully acknowledging the comparably limited size and impact of its business, PolyPeptide through its integrated strategy still aims to contribute to the agenda of the world community.

Integrated ESG management

The twelve material ESG topics have been clustered under the headings of “Sustainability partner”, “Employer of choice” and “Business excellence” and will be managed as integral part of PolyPeptide’s strategy. The Group believes that the integration of the identified material ESG topics into its strategy is the most effective way to continuously improve and to meet both business needs and stakeholder expectations, ultimately to benefit the health of millions of patients around the world. PolyPeptide thereby aims for long-term partnerships, with the material ESG topics of green chemistry, people development and supply chain engagement seen as particular customer value enhancing and differentiating opportunities.

As part of its ESG agenda, the Group plans to consistently report on ESG matters, benefiting in many relevant areas from the groundwork laid over recent years, for example:

• Green chemistry: The search for green solutions has been seen for several years as an opportunity to improve process performance and to reduce the environmental footprint of the Group’s activities. To that end, it set up an innovation program focused on green peptide manufacturing, including the reduction and recycling of its solvent consumption across the Group or its replacement or even avoidance through green solvents or solvent-free technologies. As part of an effort launched in 2019, PolyPeptide identified optimization opportunities, for example in the resin rinsing steps that are responsible for over 75% of the solvent used in the production of peptides by Solid Phase Peptide Synthesis. By introducing innovative practices, the amount of solvent used for the rinsing of the resin can be reduced by up to 70% compared to the standard way of operating the reactor. PolyPeptide communicated its findings in scientific publications and seeks to expand the application of green manufacturing techniques in customer projects. It is currently preparing metrics to measure and report implementation progress from 2022 onwards.
• People development: To support growth, PolyPeptide has extensive hiring efforts ongoing. As per the end of 2021, the headcount of PolyPeptide was 1,101, with average full-time equivalents up by 14.4% to 1,041 (910), with most of the new hires in the manufacturing, process development and quality functions. An inaugural global employee survey was conducted in March 2021 with a participation rate of 77% of employees, yielding overall good results with valuable insights for further improvements. Building on robust training procedures at site-level that ensure compliance with GMP requirements and leadership development programs, PolyPeptide aims at further strengthening the Group-wide processes to hire, onboard, train and develop talent, particularly for middle management positions.
• Supply chain engagement: PolyPeptide’s Supplier Code of Conduct, which is available on the corporate website, was introduced in 2018 as an integrated part of all supply agreements. It is based on the principles of the United Nations Global Compact and sets out the requirements expected from suppliers in respect of ethics, freely chosen employment, labor, wages and working hours, health and safety, environment, and management systems. As part of these requirements, suppliers shall recognize and be committed to upholding the human rights of their employees and treat them with dignity and respect as understood by the international community. The Group audits the suppliers with focus on quality and criticality, and it plans to further develop and refine its audit model with regard to ESG considerations such as human rights, environmental protection, and health and safety of employees. With this, it also aims to reflect emerging regulations, including non-financial reporting obligations in Switzerland which will apply for the first time with respect to the financial year 2023. By strengthening the supplier performance evaluation program for the Group, PolyPeptide believes that it can also further strengthen supplier relationships and performance.

PolyPeptide sees the ESG materiality assessment and the implementation of a robust ESG governance as the formalization and strengthening of efforts that started a few years ago.

For example, the sites manage their environmental, health and safety (EH&S) performance at local level, with relevant consolidated performance indicators being part of the Group’s balanced scorecard. The Group achieved its goals for 2021with less than one lost time incident per 100 employees and zero reportable environmental incidents. The environmental management system to identify, manage, control and monitor environmental impact at the site in Braine-l’Alleud (Belgium) reached the ISO14001 certification in 2021.

The Group uses the sustainability rating services of EcoVadis whose methodology covers a broad range of non-financial matters, including the protection of the environment or the consideration of social and ethical aspects in the business conduct. Starting with a rating for the production sites in Malmö (Sweden) and Braine-l’Alleud in 2019, the coverage was gradually expanded covering four out of the six GMP manufacturing sites in 2021. In 2021, the site in Torrance (California, USA) was awarded a silver rating, which currently also is the rating for the sites in Malmö, Braine-l’Alleud, and Strasbourg (France).

In the fourth quarter of 2021, PolyPeptide conducted a global Code of Conduct e-learning program to reinforce the rules and behaviors for day-to-day business and to protect employees and the interests of the company. By the end of 2021, 98% of online trainings had been completed.

Efforts in 2021, also in context of the IPO, included the implementation of a Trading Policy as well as a Disclosure Policy with new Communications Guidelines. In addition, a whistleblower program has been established to detect corrupt, illegal, or other unethical conduct and to protect the global reputation of the Group. It includes an independent 24/7 hotline in three languages operated by an independent third-party service provider.

ESG agenda

The Board of Directors mandated an ESG implementation plan with specific tasks for 2022, with progress to be reported going forward:

• As part of the integrated strategy, the planning of the relevant global functions shall be made more standardized to include the twelve material ESG topics with their performance indicators for management and reporting purposes.
• For the three material ESG topics of green chemistry, people development and supply chain engagement, specific strategies with targets shall be developed by the end of 2022, possibly leading to a further amendment of the Group’s balanced scorecard used for the evaluation of management performance.
• PolyPeptide plans to conduct in 2022 a CO₂ footprint assessment for the manufacturing sites in Braine-l’Alleud and Malmö, using the GHG greenhouse gas protocol as standard, and subsequently integrating the other sites. For this effort, PolyPeptide can build on the experience gained at the site in Braine-l’Alleud, which joined in 2010 a regional initiative to support Belgium’s strategy against global warming. A ten-year action plan was implemented with goals set for 2023 versus the baseline from 2010. The Group is confident to over-achieve the set goals, thereby improving energy efficiency in Braine-l’Alleud by more than 20%¹.
• With regards to environmental protection and employee health, the Group, also in the context of its strategic priority of “OnePolyPeptide”, aims to further align and standardize its current processes across all sites. It plans to certify all sites according to ISO14001 for environment management systems and ISO45001 for occupational health and safety over the next four years.
• The Group plans to expand its coverage of the sustainability rating by EcoVadis to all of the six manufacturing sites by 2023. Building on the current silver ratings achieved for the four sites in Malmö, Braine-l’Alleud, Strasbourg and Torrance, the sites in San Diego (California, USA) and Ambernath (India) will be integrated in the scope of the EcoVadis assessment.
• PolyPeptide plans to engage in 2022 with the Pharmaceutical Supply Chain Initiative (PSCI) for the site in Malmö, and to evaluate a step-by-step integration of its additional sites.

In pursuing these activities, PolyPeptide seeks continuous improvement through a pragmatic, though effective and integrated approach. Taking into consideration the complexity of the business and the still emerging requirements, this first Corporate Responsibility Report has not been prepared in accordance with any recognized standards and has not been externally assured. The company plans to decide during 2022 on an ESG reporting standard to be implemented for the financial year 2023 and to be published in 2024.