ESG and corporate performance of a company are linked: Geena Malhotra, Cipla

As the world evolves into a more complex and hyper-connected place, the sustainability challenges the world is facing are evolving even faster.

ESG, Environment, social responsibility, corporate governance, ESG, Cipla, Geena Malhotra
A report by EY mentions how research has consistently showcased that ESG and corporate performance of a company are linked.

The future of new age businesses is to be future-ready and integrate sustainability principles across all their activities. More and more firms are committing to realising global goals of sustainability, working alongside other sectors and business leaders. In a resource-scarce world that is increasingly vulnerable to climate change, sustainability has not only emerged as the way forward, but also as an integral business imperative. 

Cipla is working in the field of climate change which poses a risk to business operations and physical assets. It also presents an opportunity for the pharmaceuticals sector to rise responsibly to the health challenge by making drugs that are affordable and accessible. Cipla claims that it is using a science-based approach to innovate and sustainably achieve our business performance goals. In an exclusive interaction with, Geena Malhotra, Chief Global Chief Technology Officer – Cipla, shared their ESG agenda and game plan in detail and how the company is steering an extensive sustainability and compliance drive. Excerpts:

What are your views on how critical ESG is in creating value for the organization and helping to contribute to long-term success? 

As the world evolves into a more complex and hyper-connected place, the sustainability challenges the world is facing are evolving even faster. A report by EY mentions how research has consistently showcased that ESG and corporate performance of a company are linked. Now, while it has been known for years that good governance practices by companies yield stronger corporate performance, recent studies have been proving that investments across all these three pillars of ESG have been driving investment returns in the longer run. As we strengthen our capabilities and deliver growth consistently, at Cipla, we are extremely conscious of the impact our resource consumption brings. Towards this, through our sustainable business strategy, we aim to achieve the targets that we have set for ourselves in a way that ensures long-term value creation for the Company, creating positive social impact for our stakeholders, and preservation of natural capital. This helps us, not just for our current operations but in order to develop new products for patients in the most efficient way possible. The focus on aspects of ESG helps us to deliver value to the society and continues to help us serve our purpose of ‘Caring For Life’. We are committed to using a science-based approach to innovate, achieve our goals as well as to work towards some of the most pressing challenges. The biggest opportunities for the Pharmaceutical industry to create shared value – i.e., where we see the coming together of market potential, societal demands and policy action – are grouped around the themes of good health and well-being, access to medicine, preventive healthcare, environmental sustainable initiatives and community partnerships.

Could you elaborate on Cipla’s ESG goals and progress you’ve made so far? Roadmap on achieving your goals?

Our ESG goals are anchored towards reducing our environmental footprint, expanding healthcare access and building globally benchmarked governance practices. We recognise our moral and ethical responsibility towards each other, future generations and other species to sustain our environment and consistently strive to ensure responsible environment management. This year, we set for ourselves bold aspirations towards our Environmental, Social & Governance (ESG) journey. By 2025, we aim to achieve zero waste to landfill, champion antimicrobial resistance (AMR) stewardship, green chemistry, ensuring wellbeing of employees and partners along with attaining carbon and water neutrality. 

In terms of the goals outlined, the progress made thus far is:

  • Carbon Neutrality
  • We have reduced GHG emissions by 10% from FY20
  • Our usage of renewable energy from solar/ wind has been 15%, which has increased from 9% in FY20
    • We have set up one of the largest open access solar power plant in Maharashtra; 30 MW Open access group captive solar plant at Tuljapur, Maharashtra, across 115 acres
    • Since FY19, we have added 48 MW of solar energy portfolio through various initiatives like on-site roof top or ground mounted solar under RESCO model, third party solar open access power purchase agreement, and group captive solar open access project 
    • The energy consumed is 40% renewable as compared to the consumption of 32% in FY20 (including hydro power from grid electricity)
  • As of 2022, 1/4th of Cipla’s boilers are now on renewable energy Biomass or Cleaner Fuel (Natural Gas)
  • Water Neutrality:
  • The water recycled at Cipla sites is at 31% (globally) and 38% (India sites) and we have reduced the water withdrawal by 5% in FY21
  • Zero Waste to landfill: 
  • We have been recycling 100% of our post-consumer plastic equivalent waste and have converted some of it into benches, paver blocks, bricks and stationeries for community schools
  • Along with this, every 3rd site at Cipla is now a Zero Waste to landfill site
  • We have diverted almost 13,280 MT of plastic waste from landfills
  • Water neutrality: 
  • The rate at which water is recycled at Cipla’s sites is up at 40% from 36% in FY20 and we have also adopted rainwater harvesting within and outside of Cipla’s sites 
  • AMR Stewardship:
  • Antimicrobial Resistance (AMR) is a global priority for Cipla. In 2020, Cipla Therapeutics entered into a strategic alliance with SIGA Technologies to deliver sustained innovation and access to novel antibacterial drugs, particularly against biothreats. 
  • We have the highest rank among generic pharma companies assessed in Access to Medicine Foundation’s AMR Benchmark Report 2020
  • We have also conducted external audits of Cipla sites for AMR Stewardship
  • Green Chemistry and Making it Right:
  • In line with the Green Chemistry principles, we have initiated an elimination process of harmful substances at the R&D stage. For one particular project, efforts for solvent (IPA) elimination has resulted in cycle time reduction of 2500 hours and avoidance of 300 tCO2e of GHG emissions
  • Wellbeing of employees and Partners 
  • We have set up an Inclusion & Diversity Council to build a truly diverse and inclusive workforce. Along with that, we have also introduced a group Mediclaim policy to cover LGBTQ and live-in partners and have wellness initiatives including mental health for employees
  • At Cipla, we have also introduced health check-ups, wellness camps (9,400+ employees covered), in-office workshops, gym memberships, nutritional counselling, guided meditation for our employees
  • We also follow HIRA, HAZOP, CHAMP processes for safety
  • In terms of providing aid to the doctor community, we have facilitated patient-doctor connect by helping doctors embrace teleconsultation / e-Health
  • Our supplier sustainability code of conduct is in place, including EHS and wellbeing of supplier partners
  • We have been championing ESG in Pharma. One such example is by our pledge to support ‘Terra Carta’, a charter unveiled by HRH The Prince of Wales that provides a roadmap to 2030 for businesses to move towards an ambitious and sustainable future, to drive ESG discourse within the sector and at a regional level, etc. Cipla is the only Indian pharmaceutical company to pledge support.

    What are the challenges you have faced so far?

    We have long recognised that businesses have a social responsibility to all its stakeholders– and where the planet and society thrive. However successful implementation of the sustainable development goals requires collective action by industry players, governments, international organisations and civil society.
Geena Malhotra, Chief Global Chief Technology Officer – Cipla

As we see it there are two pronged challenges, firstly as private players work towards achieving the goals on renewable energy, there is an imminent need for regulatory policy reforms. Therefore, a uniform policy and implementation support through policy makers and speedy approvals will fast track the processes and encourage significant investments. Secondly, we see the keen intent and purposefulness by private entities to transition to cleaner and greener sources, however with myriad options such as Green Hydrogen, Solar, Wind, EV, etc., there is a need for partnership forums to take it ahead. This will be beneficial for our MSME industries who can leverage the economy of scale through the joint partnership routes that significantly reduces the carbon equivalent footprint and brings down the cost of operations significantly.

What are the initiatives that Cipla is undertaking to showcase sustainability in manufacturing operations? 

At Cipla, we have reimagined the whole fabric of processes and capacities involved in manufacturing in tune with the new normal. 

  • Our investments in manufacturing capital include development of new drug delivery systems, facilitation of infrastructure supporting API and formulation developments and strengthening of platform technologies.
  • Now, even as digital analytics and automation are redefining the benchmarks of performance in pharma operations, they are also catalysing changes in terms of enhancing equipment availability, unlocking capacity and ensuring environmental sustainability. The two pillars of analytics and automation are set to totally revamp and change the approach taken in terms of working on the shop floor while ushering a massive shift towards a transformed network in manufacturing. This shift will translate into swift dispensing-to-dispatch operations, adherence to inventory stock norms, etc.  . 
  • Our facilities are upgraded regularly to meet evolving Current Good Manufacturing Practices (cGMP), and EHS – Environment, health & safety standards.
  • All our manufacturing sites across India are certified for the Environment Management System (EnMS) and Occupational Health & Safety Management System (OHSMS) on ISO 14001 and OHSAS 18001/ IS0 45001, respectively. An established auditing process helps ensure consistent improvement in the defined areas. This year, our facilities have gone through 23 external and 77 internal audits, with no major non-compliance/ observation being reported.
  • Along with that, internal and external audits at our manufacturing locations keep track of our energy management performance and help identify areas for improvement. Internal audits are conducted every six months, and a surveillance audit is done annually, while external recertification is carried out once every three years.

    What are your thoughts on Green manufacturing specifically in Pharma? 

At Cipla, we aspire to create plants of the future that are interconnected, touchless operations that can deliver a new horizon of performance across manufacturing and supply chain to help unlock capacity and sustainability and equally build digitally native organisations. 

Some of the initiatives we have taken towards green manufacturing are:

  • Biomass Briquettes: Converting agricultural waste to fuel – Agricultural waste in India is usually set afire, causing pollution, increasing emissions, and impacting air quality and health. Cipla replaced the existing furnace oil-based boiler systems with either biomass-based boilers or natural gas-based boilers to generate steam in the facilities. The biomass comprises agro-waste from mustard husk, sawdust, paddy straw, cotton stalk, cane trash and soya husk as briquettes. The repurposing of agro-waste into fuel briquettes not only has a positive environmental impact in terms of lower footprint than conventional fossil fuel, but also a social impact. It helps the farmers earn extra income through the sale of residue, while creating new unskilled and semi-skilled jobs. In FY 2020-21, 8% of total energy consumption was met through biomass briquettes, which is equivalent to averting 11,481 tCO2e of emissions vis-à-vis usage of furnace oil.
  • Renewable energy – Cipla follows a two-pronged approach to enhance the share of renewable energy in the energy mix, increasing the use of renewable power and using alternative fuels for our processes. In FY 20-21, the rise (from 9% in FY 19-20 to 15% in FY20-21) in the share of renewable energy was enabled through a series of focused sustainability initiatives: 
  • Alternate fuel use increased by 59% compared to FY 2019-20 
  • Continued efforts to increase the proportion of renewable power for our Bangalore units (Virgonagar, Bommasandra) through third-party open access route (solar/wind) and the resultant achievement of 94% power consumption from green sources.
  • Commissioning of on-site solar roof-top plant under RESCO model with a total 3,575 kWp capacity.
  • The captive solar plant at Tuljapur, Maharashtra, setup in partnership with AMP energy was commissioned in December 2020. It supports the green energy requirements for manufacturing units at Kurkumbh and Patalganga. In Q4 FY21, 53% of the power needs for these units were met through renewable energy.
  • Waste Management – Cipla has consistently scaled up our waste management practices by reducing generation quantities and directing waste to authorised Treatment, Storage and Disposal Facilities (TSDF). We are increasing the share of recycling and co-processing to bring down the quantity of waste disposed of to landfills. Our waste streams, which include hazardous waste, non-hazardous waste, e-waste, biomedical waste and others, are inventoried periodically and are disposed of in compliance with applicable government regulations. We also conscientiously work towards decreasing waste generation, finding solutions for recycling and reprocessing of waste and diverting waste from landfills. At our formulation sites, the primary waste consists of packaging waste, rejected materials and shelf-life expired products. 

    What are Cipla’s thoughts on the SEBI push for ESG?

The recent introduction of ESG reporting by SEBI has the potential to move the needle on sustainability in India. In my opinion, this new proposal is a welcome move that will not only push businesses across all sectors to disclose ESG-related information but will also bring greater transparency in reporting and drive sustainability to the front and center of every boardroom conversation. 

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First published on: 17-02-2022 at 15:24 IST
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