Building ESG strategy in a global pharma business

With investors, regulators, and consumers increasingly demanding that companies consider more than financial metrics and take a position on ESG factors, the first step is often the most difficult. The experience of a forward-thinking spinout shows that with the right technology, not only is it possible to deliver this efficiently, it also delivers real business value.

Global women’s healthcare company Organon is now using its ESG strategy to build consistency across executive decision-making, reporting, and investor engagement. This experience of taking that first step is a great example to organizations that are at an early stage or yet to make a start on ESG.

Byron Austin, Head of Corporate Responsibility & ESG Management at Organon, said: “We had promised our board that we were going to develop an ESG strategy by the end of the year. I knew that Datamaran could help us out. Quickly and efficiently, we were able to do an initial materiality assessment in a very short amount of time.”

Organon was only established in 2021, as a spinoff from pharma giant Merck, with 9,000 employees across 140 markets. Austin had to establish an ESG strategy to feed into a baseline for reporting as quickly as possible.

The most effective way of doing this was to use information from Datamaran’s benchmarking insights. Organon reviewed the material risks its peers were disclosing and found opportunities to differentiate itself.

Austin’s team also worked closely with Organon’s securities and governance lawyers to ensure the disclosure of risks was aligned across their first filings, including their 10-K report. They supported the decisions made during this collaboration with evidence from their materiality and benchmarking processes, along with regulatory and public opinion insights.

“It is a lot to assess, especially for folks who don't ‘live’ ESG or sustainability day-to-day,” Austin said. “The nomenclature was different, but there was some alignment between what we found in the materiality assessment and what we found in the enterprise risk management process.”

“I think going forward, when we do it again, there's going to be a lot more integration.”

This matching process informed an integrated, data-driven strategy that prepares Organon to face future ESG risks. For example, they could see environmental risk at a more granular level, incorporating issues like climate change, GHG emissions and natural capital.

Organon’s business model is rooted in ESG principles with a focus on critical material issues, particularly related to women. When Austin joined the organization, there was a draft ESG framework that focused on what he calls the “big-ticket items” around access to medicines. He knew there were broader external issues that had an impact, and Datamaran helped highlight those.

“The Datamaran materiality map and exercise really showed the breadth of material issues that are relevant to our company and our stakeholders,” he said.

Having established a clear external view of material issues, the team used it to communicate the ESG strategy effectively to stakeholders, particularly the executive leadership team. Austin recalled: “I remember doing this exercise around the COP26 meeting. There’s an expectation from stakeholders that we are committed to the climate transition and to a lower carbon economy, so it was another data point for an argument I was making internally – it was very helpful to do that.”

Senior leaders across different functions were surprised by some of the issues Organon’s stakeholders are most concerned about, and the executive team approached the analysis with curiosity. Broadening the view of ESG meant board involvement, and therefore a more integrated approach.

“This materiality exercise has allowed us to not only develop our strategy, and formulate goals and KPIs, but also to involve the entire board in the oversight of ESG,” Austin said.

The Organon team continues to use Datamaran to monitor material issues and keep the board updated on a quarterly basis. In addition to providing essential information for reporting, insights from Datamaran also support Organon’s leadership in their decision making, enabling them to proactively deal with tomorrow’s issues today.

“I knew that Datamaran could help us out. Quickly and efficiently, we were able to do materiality in a very short amount of time. And Datamaran continues to be incredibly useful as we finetune this strategy, which we are happy to report got approved by our executive leadership team and our Board of Directors by the end of the year. This was no small feat,” said Byron Austin, Head of Corporate Responsibility & ESG Management Read about Organon’s approach to ESG.

Read about Organon’s approach to ESG.