Suppliers
Our supply chain is complex. It ranges from major strategic relationships with contract manufacturers that make final medicines for us to suppliers of key materials.We have EHS standards for suppliers. We also include EHS requirements, based on the standards, in our initial agreements with new key suppliers and when we renew contracts.
We conduct regular EHS audits of our key suppliers to assess performance against our EHS standards and key legislation. We also carry out EHS audits before we start working with major new suppliers. We select which suppliers to audit on the basis of risk, including potential hazards. (The audits also cover basic questions on human rights. See human rights and suppliers.)
In 2004, we carried out 35 site-based EHS audits. Sixteen of the audits were in Asia, eleven in Europe, six in the US, one in Canada and one in Mexico. We also carried out four follow-up reviews.
We found a wide variation in performance across the sites audited. The lowest score was 22% and the highest was 92%. We make recommendations to sites following the audits and have a process to monitor progress, with a particular focus on poorly performing sites.
In 2004, three potential suppliers achieved unacceptable EHS scores (less than 30%) and therefore we did not source from them. No existing supplier scored below 30%.
In 2004, we developed an action pack for use by our procurement managers to help them identify the EHS risks associated with procurement activities.
In the US, we signed up to Green Suppliers Network (GSN) - a programme run by the US Environment Protection Agency to help small and medium-sized suppliers to reduce their environmental impact. In 2005, we will encourage our suppliers to participate in the project.
Key audit findings
Environment
We found the basic elements of an environmental management system at all of the sites we audited and 50% of the chemical sites were certified to the international environmental management standard ISO 14001. Most sites had a good understanding of environmental regulations and positive relationships with regulators.
In China and India, we generally found a high level of compliance with regulations and effective management of wastewater. However, the lack of infrastructure in these countries presents challenges. For example, the waste disposal options are limited and electricity is generated mainly from coal or poor-quality oil. We also found that air emissions were poorly controlled in a few cases.
Health and safety
We found that health and safety was generally well managed at sites in Europe and North America. However, we identified some challenges in emerging economies, especially in areas relating to fire prevention and response, occupational hygiene and control of chemical exposure, identification of hazards and risks, and systems for reporting and investigating incidents.
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