Management Approach

We are committed to effective corporate governance, which promotes the long-term interests of shareholders and other company stakeholders, builds confidence in our leadership and strengthens accountability by the Board of Directors and management. Our Board recognizes that one of its key responsibilities is to ensure that Lilly is governed in a manner that provides both independent oversight and efficient and prudent decision-making. Over the years, our Board has instituted several governance best practices to ensure effective independent oversight. 

Learn more about the general principles of corporate governance by which Lilly’s Board operates in our Corporate Governance Guidelines. 

The Board takes an active role in overseeing the development and execution of our business strategy. Each year, the Board and executive management conduct an extended review and discussion of the company’s strategy, goals, external environment and key risks. Decisions reached in this session are reevaluated throughout the year, including as the Board reviews the company's financial performance, the performance of our business units and progress in our product pipeline. Our Board and management are also actively engaged in the assessment, management and oversight of sustainability matters pertinent to our business. We identify issues that matter most to our business and develop robust strategies to address them. We also 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. These topics are well integrated into our business strategy and operations. We seek to continuously 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

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. View our DCG Committee charter. In addition, the Talent and Compensation Committee is responsible for oversight of human capital management matters, including diversity, equity and inclusion. 

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. 

Additionally, key enterprise-level risks are overseen by the full Board and our enterprise risk management process is overseen by the Audit Committee of the Board. Company management is charged with managing risk through robust internal processes and controls. The enterprise level risks are reviewed at least annually with the full Board, and relevant enterprise risks are also addressed in periodic business function reviews and at annual Board and executive management strategy sessions. Company management frequently collaborates throughout the year to keep an open dialogue on emerging risks identified from a variety of internal and external sources.

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 by including relevant expectations in each executive officer’s performance plan. Delivery against these expectations is a factor in determining base pay increases and equity award values that our executive officers receive. This approach provides accountability for sustainability performance for the individual and allows for adjustments in compensation based on the contribution to the achievement of the company’s performance and sustainability goals. It also considers the sustainability topics most relevant for an executive officer’s responsibilities. For example, for sustainability topics such as environment, performance objectives are established for the individuals most accountable for these topics, such as the executive vice president of manufacturing.

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 – Includes senior executives from key areas of the business, the committee ensures proper oversight and plays a central role in monitoring corporate HSE strategy, compliance and performance against goals, as well as 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 Lilly maintains a sustainable, compliant and industry-leading Process Safety Management & Combustible Dust Program and sets the strategic direction and continuous improvement plan for reducing process safety risks. 

• Pharmaceuticals in the Environment Governance Committee – Sets strategic direction, provides long-range oversight, supports effective internal collaborations and recommends resources for the programs that control active pharmaceutical ingredient 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 focused on monitoring performance, execution and continuous improvement activities within the day-to-day operations of a specific site or business area. 

See important information about our Sustainability report.