Riaan Verser, Company Secretary & Group Governance Officer, Aspen
Aspen Pharmacare has a proud heritage, dating back more than 160 years, and is committed to sustaining life and promoting healthcare through increasing access to its high-quality affordable medicines and products. With a market capitalisation of approximately $10billion, it is the largest pharmaceutical company listed on the Johannesburg Stock Exchange (JSE) and ranks among the top 20 listed companies on this exchange.
As a leading multinational company, it is imperative that Aspen’s ongoing application of international corporate governance best practice is achieved while maintaining its entrepreneurial approach to doing business.
Governance in the group extends beyond mere legislative and regulatory compliance and management strives to entrench an enterprise-wide culture of good governance aimed at ensuring that decisions are taken in a fair and transparent manner, within an ethical framework that promotes the responsible consideration of all stakeholders, while also holding decision-makers appropriately accountable. In line with the philosophy that good corporate governance is an evolving discipline, governance structures, practices and processes are actively monitored and revised from time to time to reflect best practice.
Focus on ESG
Below are just some of the environmental, social and governance (ESG) highlights for Aspen during its 2016 financial year:
■ Aspen remains a contributing participant to the UN Global Compact and is committed to the application of the Compact’s principles in all of its business activities
■ There has been ongoing emphasis on embedding the group’s values and the application of the group’s code of conduct across all operations
■ An independent assessment of the group’s ethics management programme undertaken by the Ethics Institute of South Africa confirmed that this programme was effective in all material respects
■ Aspen has been included as a constituent on the JSE/FTSE Responsible Investment Index following its listing on the former Socially Responsible Index of the JSE for five consecutive years
■ An extensive project has been initiated to address the reporting requirements stemming from the Organisation for Economic Cooperation and Development’s base erosion and profit shifting project
■ Aspen participates in the Carbon Disclosure Project and Water Disclosure Project and has expanded the scope of disclosure, achieving improved scores. Progress has been made in the development of appropriate activity-based intensity measures for the measurement of energy and water usage and projects to improve resource efficiency and/or reduce environmental impacts have been implemented
Implementing King IV Code
Governance in the group extends beyond mere legislative and regulatory compliance and management strives to entrench an enterprise-wide culture of good governance
The coming into effect of the South African King IV Code on 1 November 2016 has required Aspen to have a ‘blank page’ reconsideration of its governance systems, practices and procedures – Aspen welcomed the introduction of this Code and has been an early adopter of many of the recommended practices contained in King IV and aims to formalise the application of all 17 principles prior to the commencement of its next financial year. Where King III required organisations to apply certain principles or explain why it had not, King IV follows an outcomes-based approach, requiring entities to demonstrate qualitative application of good corporate governance.
In this regards it requires an ‘apply and explain’ approach in terms whereof it assumes application of 17 principles and strives to instil a qualitative approach and, to avoid mindless compliance, a quantitative approach.
Organisations should explain the practices that have been implemented to give effect to each principle and to realise the specific governance outcomes, namely ethical culture, good performance, effective control and legitimacy. Explaining the application of King IV will allow stakeholders to make an informed assessment as to whether an organisation is indeed achieving the four governance outcomes.
History has repeatedly shown that quantitive reporting does not necessarily translate into quality of corporate governance. Organisations that mindfully implement practices that give effect to King IV’s principles will benefit from achieving the four stated governance outcomes, namely an ethical culture, good performance, effective control and legitimacy.
King IV has a clear focus on transparency and recommends specific disclosures, among others in relation to executive remuneration, risk governance, ethics governance, information and technology, compliance and stakeholder governance.
Modern commerce implies that information is at the fingertips of society at large – as a result, ethical governance is not just expected but demanded of everybody who fulfils a leadership position. Many commentators have heralded King IV as an invaluable guide to leaders on how to govern ethically. In the current political, economic and social climate this report is to be embraced unconditionally and encouraged completely. Other ESG areas of focus for Aspen in 2017 will be:
■ Ongoing emphasis on ensuring an ethical and values-driven culture throughout the company
■ The development of appropriate activity-based intensity measures and continued focus on resource conservation across its operations
About the Author:
Riaan Verster (ACIS) is the Company Secretary & Group Governance Officer of Aspen Pharmacare Holdings Limited and as such is, inter alia, responsible for coordinating the Aspen Group’s application of and adherence to the corporate governance standards applicable to it. He is an attorney of the High Court of South Africa, holds B.Proc (cum laude) and LL.B degrees from the University of Pretoria and holds an LL.M degree from the University of South Africa.
