01

Sustainability structure

The Execution Center for Corporate Sustainability of PharmaEssentia was established under the CEO, with 5 cross-departmental functional taskforces. Then, the Execution Center for Corporate Sustainability is responsible to report the project's progress to the Board of Directors quarterly.

02

Responsibilities of Sustainability management

The Board of Directors is the highest supervisor of risk management and the highest decision-making unit, approves the objectives and policies of the overall risk management, and continuously monitors the effective operation of the risk management mechanism. Our company has also set up an Audit Committee, a Corporate Governance Officer and an Auditing Office to assist the Board of Directors in controlling the existing or potential risk issues of the enterprise, so as to strengthen the internal monitoring mechanism. For financial risks such as market risk, credit risk, and liquidity risk, all relevant financial activities are carried out in line with our internal control mechanisms. And all major financial activities shall be approved by the Board of Directors.

The Execution Center for Corporate Sustainability coordinates the identification of non-financial risk issues across ESG, and is responsible for planning and promoting cross-departmental and unit-related sustainable development policies, goals, strategies, and implementation plans. Cooperate with the five taskforces to implement in accordance with the annual sustainable development plan, and jointly manage and respond to the 11 highly significant topics concerned by 10 types of stakeholders in 2021.

03

ESG Risk Management

Goal Setting

In our milestone of promoting the sustainable blueprint, we introduced "SMART: Specific, Measurable, Attainable, Relevant, and Time-based" as the management principle to set our goals. Putting environmental (E), social (S), governance (G) as short-term, mid-term, and long-term sustainability goals for highly significant topics which allow us to thoroughly examine the systems of the Company and take responsibility for the effective allocation of resources to promote sustainable corporate development. The Execution Center for Corporate Sustainability is in charge of coordinating non-financial risk issue identifications relate to ESG aspects. It oversees the likelihood and level of impact of risks for business operations, and provide feedback on existing management mechanisms to the management approaches to material topics.

Identification of ESG Risk Topics

In line with the 2018 Corporate Risk Management Framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the World Business Council for Sustainable Development (WBCSD), PharmaEssentia’s non-financial risk issues of PharmaEssentia are identified through understanding the likelihood and impact of risks through organized and structured COSO framework, which management mechanisms and future action plans are planned accordingly.

Identification of Sustainability Risk Issues

Identification Results of Sustainability Risk Matrix

Risk Management

According to the analysis based on PharmaEssentia's operation value chain, 11 material topics and their impact on the organization were identified. Its related risks were also evaluated from 4 aspects: strategy, operation, finance and legal. We further identified the corresponding relevant risks (probability and severity), and assessed risk events that may have an impact on sustainability objectives. Formulate a continuously optimized management mechanism, and expect enterprises to more effectively manage the risks we may face. Enhance our competitiveness and create more business opportunities in a constantly changing environment.

 Possible Risks and Impacts on the Value Chain of Material Sustainability Topics

Existing Management Mechanism and Future Optimization Actions for Sustainability Risk Issues