RISK MANAGEMENT AND ESG STATEMENT

CLINUVEL is a responsible corporate citizen and reflects international community standards in our policies. The UN tenets on human rights and labour standards embedded in the UN International Covenant on Economic Social and Cultural Rights (1966) and International Covenant on Civil and Political Rights (1966) are reflected in our Employee Handbook. These covenants recognise the right to work, including the opportunity to earn a living by work that is freely chosen and accepted (Article 6); the right to enjoy just and favourable conditions of work, including minimum remuneration, safe and healthy conditions of work, equal opportunities for all, rest, leisure, initiation of working hours and holidays with pay (Article 7); and the freedom of association and collective bargaining and the right to strike (Article 8). Specifically, CLINUVEL is committed:

• on Human Rights, to
  • freedom of association; and
  • supporting a diverse and inclusive workplace, with equality of opportunity of all employees regardless of race, colour, gender, religion, ethnicity, culture, political opinion, age, and disability.
• on Labour Standards, to
  • the right to organise and collective bargaining;
  • zero tolerance of child labour, forced labour and discrimination, harassment, and abuse of any kind;
  • providing a decent workplace focused on the health and safety of employees; and
  • supporting the training and education of all employees.

Opportunity is equal to all people in CLINUVEL and procedures are in place to escalate, review and address any human rights and labour standard concerns. The Group’s employees span 16 nationalities and gender representation is balanced, as reflected in the following table on the composition of genders on the Board, in senior management and across all employees.

Work-life balance is supported by our Employee Handbook and a new Remote Working Policy. Necessitated by the coronavirus pandemic, CLINUVEL initiated the Remote Working Policy to ensure the ongoing health and safety of all CLINUVEL employees and provides guidelines to enable an appropriate work-life balance with overall flexibility in the conduct of employees’ work, during and beyond the coronavirus pandemic. Employment security is conducted in accordance with labour laws and regulations in each of the countries in which we operate. All staff are encouraged to own an active training and development plan to support their professional fulfilment and job satisfaction.

We take a responsible approach to product development and distribution. CLINUVEL has no adverse impact on UN social objectives and makes a positive contribution through its pharmaceutical product development and distribution for unmet medical needs.

CLINUVEL’s research and development program is highly ethical. We undertake the minimum studies necessary to obtain the regulatory approvals required to distribute our treatments in man. We use Ethics Committees for study approval, adhere to OECD Testing Guidelines and the principles of GLP. We are committed to the OECD Replacement Reduction and Refinement Principles for non-human studies and ensure all studies undertaken are responsibly designed and conducted by laboratories certified by internationally recognised and respected bodies. CLINUVEL disseminates its research and encourages the independent publication of the results of its clinical studies in peer-reviewed scientific journals.

A rigorous pharmacovigilance program is maintained and reported to the European Medicines Agency (EMA) in the European Union and the United States Food and Drug Administration (FDA) on the real-world experience of SCENESSE® for adult patients with EPP. SCENESSE® is carefully managed to ensure no off-label usage. Marketing and communications are aligned to the approval terms and conditions of distribution of the EMA and FDA.

CLINUVEL is responsible for ensuring that its suppliers are fit for purpose throughout the product lifecycle (from product development to commercial distribution), through risk-based quality control procedures and open communication. CLINUVEL qualifies suppliers and reviews existing relationships according to a range of expectations and standards before commencing or continuing supply arrangements. CLINUVEL has over 15 key suppliers, most of which are domiciled in well-regulated countries that are signatories to the UN standards and objectives on sustainability and ESG criteria. CLINUVEL has a high proportion of medium- to long-term supplier relationships, enabling us to develop a good understanding of their values and commitment to ESG criteria. This diligent approach also applies to the assessment of our relationship with collaborative partners.

Should an area of concern be identified during a review of a supplier, a risk assessment is conducted to ensure the supplier is functioning within contracted capacity and standards. CLINUVEL then applies a collaborative approach with the supplier to engage in discussions with the aim of improving their qualification status and strengthening the relationship. These procedures enable CLINUVEL to maintain the qualified status of its medium- to long-term tenured suppliers. Furthermore, it ensures CLINUVEL’s ESG principles and those of its suppliers are consistently aligned.

Corporate governance is a key to effective risk management as it provides the policy, procedures, and compliance framework for a company’s operations. Our corporate conduct and ethics are guided by our key corporate values and governed by our Corporate Governance Protocol and annual Corporate Governance Statement.

CLINUVEL’s Board of Directors comprises the Managing Director, Dr Philippe Wolgen, and five independent Directors. They are, individually and collectively, well credentialed, with a breadth of qualifications and depth of experience in a range of fields to provide appropriate guidance to the Company. In the last year, the number of Directors has increased by one to six. The Board operates in accordance with a Board Charter that is set out in the Corporate Governance Protocol. The election and tenure of Directors is managed in accordance with the Australian Securities Exchange (ASX) Listing Guidelines. The gender representation at Board level is uniquely balanced, reflecting the broader Company. The compensation of Directors and key executives, covering key performance indicators for the assessment of short-term and long-term performance awards, are detailed annually in the Remuneration Report in the Annual Report.

CLINUVEL is focused on the maintenance of a long-term shareholder base which includes employees and a balanced composition of private, corporate, and institutional investors. CLINUVEL seeks an active and constructive dialogue with its shareholders, in accordance with ASX Listing Guidelines. We communicate frequently with shareholders, as outlined below, by operating an active program of regulatory and discretionary disclosures of information on the Company through announcements to the ASX. This includes regular corporate updates to keep shareholders informed on the Company’s performance and progress on key strategic initiatives.

CLINUVEL’s Corporate Governance Protocol meets the requirements of ASX principles and recommendations and includes a Code of Conduct and Ethics and policies on Conflicts of Interest, Share Trading and Shareholder Communications. CLINUVEL has zero tolerance of corruption of any kind. We operate a training schedule to ensure compliance with laws and regulations in the countries in which we operate. CLINUVEL staff are also encouraged to report any breaches of Company values, regulations and laws and are protected from harassment and abuse on any reports of non-compliance or breaches. CLINUVEL engages with the leading law firms across the continents to ensure adherence to the highest level of governance.

CLINUVEL’s Corporate Governance Protocol sets out the code of conduct and ethics and other policies to ensure conflicts of interest are avoided and honesty and integrity prevail. We are law abiding and comply with anti-bribery and anti-corruption laws in the countries in which we operate.

The twenty-first century has heralded new and improved innovation in communication channels that enable the instantaneous worldwide dissemination of information. These advances are advantageous for the operation of capital markets and investment activities. A key part of CLINUVEL’s approach to communicating to stakeholders is the use of multiple online channels to provide up to date information on the Company’s strategy and performance. The process of dissemination starts with an announcement to the ASX, after which CLINUVEL distributes to multiple news media outlets, our ‘email updates’ list, and posts on various social media platforms. We also maintain a library of announcements and information on the Company on our website, www.clinuvel.com. However, the technological advances in communications and information exchange are not without significant potential risk to companies and orderly investment activities in general.

Information dissemination online has become the social norm and has outpaced the protection of privacy and copyright regulation and enforcement. Laws and regulatory instruments have been unable to keep up with these real-world practices and trading activities on equity markets. Identified and anonymous parties can copy and post information in breach of copyright and can make false and misleading statements, either intentionally or unintentionally, in online channels near-simultaneously. Parties involved in stock shorting activity actively seek to drive a company’s share price down to make a profit from share trading – they buy shares at a lower price than the shares they have borrowed to sell. Katz and Hancock (2017) of Ropes and Gray LLP note that ‘shorters’ actively use online communications either directly or indirectly through antagonists, to post reports on business platforms and discussion forums to undermine the confidence of shareholders and induce them to sell their shares at lower prices.

We feel a responsibility to protect key stakeholders, patients, and doctors as well as shareholders from these activities and misinformation. We play a role to point regulators in the countries in which our shares are actively traded – CUV on the ASX in Australia, UR9 on the Xetra-DAX in Germany and CLVLY in the US through over-the-counter traded American Depositary Receipts administered by the Bank of New York Mellon – to inappropriate activities. In general, we seek to reduce the risk that misinformation distorts the investment decisions of investors in CLINUVEL.

CLINUVEL’s main approach in the face of this activity is to focus on the progression of publicly stated strategic initiatives and provide regular and objective information to markets on the Company’s progress. This enables market participants to assess an objective flow of information to appropriately inform their investment decision in CLINUVEL. In the medium- to long-term, the performance of the Company should improve the demand for CUV and curtail the activity of ‘shorters and distorters’. This approach in action is reflected in the pace of the progress of the Company which has enabled more frequent material announcements to the ASX. The number of CLINUVEL announcements to the ASX increased from 44 in the year ending June 2018 to 62 and 67 in the 2019 and 2020 financial years, respectively. The Company’s discretionary announcements providing updates of the business in Chair Letters and News Communiqués are more frequent than other companies or peers in the ASX / S&P 200 Index, and are authored by the Chairman and Managing Director to communicate directly to shareholders, and reflect a peer group leading practice.