Corporate Governance

Management Approach

We believe that a strong system of corporate governance is important to creating long-term shareholder value. In pursuit of this objective, the interests of our principal stakeholders are considered: shareholders, patients, health care professionals and payers, employees, partners and suppliers, and local communities. We believe it is important to balance the interests of our many divergent stakeholders, because part of long-term shareholder value creation includes fair treatment of those who touch or are touched by the company .

Our Board works to provide independent oversight and effective decision-making. The Board operates under a variety of governance best practices to maintain effective independent oversight. Learn more about our principles of corporate governance in our Corporate Governance Guidelines.

The Board actively oversees the development and execution of our business strategy. Annually, the Board and executive management conduct an extended review and discussion of the company’s strategy, goals, external environment and key risks. The decisions reached in this session are revisited throughout the year alongside financial performance, the performance of our business units and progress in our product pipeline. Additionally, the Board is engaged in strategic oversight of sustainability matters and receives regular updates on these matters. We engage with a variety of stakeholders on an ongoing basis and incorporate feedback as appropriate. Learn more about Lilly’s governance structure, Board of Directors and Executive Committee .

Sustainability Governance

Our approach to sustainability governance includes Board oversight, management accountability, corporate policies and management systems and stated public policies and positions on key topics. We seek to continue to improve in these areas, as we believe they are foundational to our long-term success and our ability to promote the interests of shareholders and other company stakeholders.

Board Oversight

Our full Board is engaged in strategic sustainability oversight, receives regular updates on these matters, reviews our long-term environmental goals, and weighs in on significant strategic investments, including those related to our overall sustainability priorities. Additional monitoring or oversight of specific sustainability topics may be delegated to the committees of the Board.

The Directors and Corporate Governance (DCG) Committee of the Board is responsible for identifying and bringing to the attention of the full Board, as appropriate, current and emerging social, environmental, political and governance trends and public policy issues that may affect the business operations, performance or reputation of the company. In addition, the DCG Committee oversees matters of corporate governance, including Board performance, non-employee director independence and compensation, corporate governance guidelines and shareholder engagement on governance matters. The Talent and Compensation Committee is responsible for oversight of human capital management matters. The Audit Committee, together with the Ethics and Compliance Committee, oversee the company’s compliance with the company’s code of ethics. The Audit Committee also provides oversight of the company’s programs, policies, procedures, and risk management activities related to information security, cybersecurity and data protection. The Science and Technology Committee assists the board in exercising reasonable oversight of product safety and medical risk management. View our Board committee charters.

Sustainability Governance Committee

Central to our sustainability oversight is our Sustainability Governance Committee, chaired by our sustainability leader and composed of senior leaders from Health, Safety and the Environment (HSE ), Human Resources, Ethics and Compliance, Legal, Treasury, Procurement and Investor Relations. This committee reports to our senior leadership Executive Committee and has a broad sustainability mandate that includes leading the coordination of our sustainability strategy, evaluating our sustainability approach compared to peers and the broader environment, assessing and responding to sustainability regulations, leading formal, periodic sustainability strategy updates, institutionalizing sustainability topics throughout Lilly and facilitating execution of sustainability reporting activities.

Sustainability in Executive Compensation

We reinforce the importance of sustainability efforts by including relevant expectations in each executive officer's performance plan. Performance against these expectations can affect base pay increases and stock awards, holding individuals accountable while adjusting compensation based on their contributions to the company's performance and sustainability goals.

Health, Safety and Environment (HSE) Governance

HSE management at Lilly is integrated through a formal structure, including the following groups, individuals and programs:

Global HSE Committee – Comprising senior executives from key business areas, the committee ensures effective oversight and plays a central role in monitoring the corporate HSE strategy, compliance, performance against goals, and continuous improvement.
Senior vice president responsible for corporate engineering and global HSE – A member of the Global HSE Committee works closely with HSE and other functional leaders to ensure an appropriate and thoughtful response to HSE risks and opportunities, monitor emerging and evolving issues, approve appropriate metrics and goals and oversee compliance with all HSE regulations, policies, procedures and standards worldwide.
Manufacturing HSE Committee – Supports HSE efforts and drives ongoing improvement throughout manufacturing.
Lilly Research Laboratories HSE Lead Team – Promotes HSE aspects across research and development.
Process Safety Management Committee – Ensures that Lilly maintains a sustainable, compliant, and industry-leading Process Safety Management and Combustible Dust Program while setting the strategic direction and continuous improvement plan for reducing process safety risks.
Pharmaceuticals in the Environment Governance Committee – Establishes strategic direction, oversees long-term initiatives, fosters effective internal collaboration, and recommends resources for the programs that control active pharmaceutical ingredients discharges from manufacturing sites.
Executives and lead teams – Oversee HSE performance in our business groups and administrative functions.
Local safety teams – Includes cross-functional team members who focus on monitoring performance, execution, and continuous improvement activities in the day-to-day operations of a specific site or business area.

Lilly has brief, principle-based policy statements that are implemented in two ways:

through our global procedures, which describe underlying principles and general expectations

through our global standards, which provide auditable, detailed requirements.

These key governance documents and our related management systems together detail Lilly’s HSE management and performance expectations. Lilly’s global policy statements, procedures and standards articulate our commitments and guide our efforts. They include the following:

HSE Policies

Our Global Policy on Protecting People, the Environment and Our Assets – We strive to maintain a secure workplace and to protect people and the communities in which we operate and serve. We are focused on continuously improving our health and safety practices to promote the well-being of our people. We are committed to conducting business in a responsible and environmentally sustainable manner. We are committed to a robust security culture to protect our people and brand from harm, and our assets from loss, theft or damage. Each of us is responsible for implementing our security practices and applying them in our daily activities.

Global HSE Procedures

Health, Safety and the Environment – Outlines general principles and sets general requirements in the areas of employee responsibility, management responsibilities, emergency preparedness and reporting of HSE incidents.

Safe Use of Mobile Electronic Devices While Driving – Establishes criteria and limitations for the use of mobile electronic devices while operating a Lilly vehicle, including driving on Lilly property, and conducting company business.

Global HSE Standards

Management System Standard – Defines requirements to ensure a robust process is in place within each part of the organization to effectively manage compliance with Lilly HSE Standards, applicable regulatory requirements and other HSE standards.

Environmental Standard – Establishes requirements to identify and manage the environmental and energy-related aspects of our operations.

Health and Safety Standard – Provides requirements for identifying and evaluating workplace hazards and establishing control measures to eliminate or reduce the risk of injuries and illnesses.

Process Safety Standard – Establishes requirements designed to reduce the potential for catastrophic events (fires and explosions), focusing on the establishment of safe initial conditions, management of change, and the prevention of system decay.

Product Stewardship Standard – Provides a systematic approach to managing product and process risks throughout the product life cycle, from research and discovery to product end-of-life.

Global Engineering Standards – Establishes requirements for the design and operation of facilities and equipment to ensure compliance with internal and external requirements and responsibly manage environmental aspects of operations.

With respect to the importance of climate-related risks, our CDP response provides comprehensive discussion of how the risk of climate change is considered and governed. Read our latest CDP response.