Supplier Engagement Case Study - AstraZeneca
What is AstraZeneca’s supplier engagement target?
As part of its full suite of science-based targets, AstraZeneca commits that 95% of its suppliers by spend, covering purchased goods and services and capital goods, and 50% of its suppliers by spend covering upstream transportation and distribution and business travel, will set science-based targets by FY2025, and to reduce absolute scope 3 GHG emissions 50% by FY2030 from a FY2019 base year. See the company's full target language on the SBTi’s Target Dashboard.
To achieve its targets, AstraZeneca has developed a supplier engagement program and believes in communicating clear expectations to suppliers. The company has worked with other pharmaceutical companies to accelerate decarbonization for their shared supply chains by standardizing messaging and simplifying the target-setting process. AstraZeneca’s engagement program can serve as a useful example to other international businesses.
How does AstraZeneca select the right suppliers to cover its target?
AstraZeneca currently engages 85% of its top suppliers, and plans to engage 95%, or 3,500 suppliers, by the end of 2023. The company classifies suppliers by spend and category, prioritizing high-spend suppliers in high-emissions categories. The decision to set a supplier engagement target came as a result of forecasted data availability and quality challenges with the company’s absolute scope 3 target; supplier engagement targets are easier for AstraZeneca to track and incentivize the company to build capacity in its value chain with the intention of increasing the availability of quality data in the future. Requiring suppliers to set and report progress against their own targets helps improve the quality of emissions data reported to AstraZeneca over time, and therefore supports tracking against their own absolute emissions target.
How does AstraZeneca secure internal buy-in to implement its supplier engagement program?
AstraZeneca recognizes the importance of speaking with one voice when it comes to climate commitments. The company primarily achieves internal buy-in by communicating to procurement teams that supplier engagement targets are critical company requirements. This buy-in comes from the top-down, with executives who are well informed and aligned to the supplier engagement targets. This ensures that employees understand the targets and commit to playing their part.
AstraZeneca also established the Sustainability Champions Network upon launching its engagement program. This network engages procurement leaders who are passionate about sustainability to spread messaging from the core supplier engagement team during category-wide meetings.
How does AstraZeneca implement its supplier engagement target?
AstraZeneca’s core supplier engagement team consists of four people led by a Director of Procurement Sustainability. This team works closely with procurement employees, who engage with suppliers one-on-one. Overall programmatic communication happens via annual conferences with all suppliers, with a particular focus on communicating supplier expectations each year leading up to the target deadline.
AstraZeneca set out three key environmental expectations upon launching its engagement program in 2022: suppliers are expected to annually report ESG information to EcoVadis and emissions data to CDP, and set science-based targets through the Science Based Targets initiative (SBTi). It has also included these requirements in its Expectations of Third Parties, which sets out the requirements and expectations of all third parties that work with AstraZeneca.
How does AstraZeneca enable and track supplier performance?
Besides its annual conferences, AstraZeneca hosts internal webinars and training to get procurement teams up to speed to support its suppliers through direct engagement.
AstraZeneca enables and tracks supplier performance in multiple ways. First, using public reporting tools such as EcoVadis and CDP’s global disclosure system. Furthermore, AstraZeneca and other companies involved in the Pharmaceutical Supply Chain Initiative, an initiative of major pharmaceutical industry brands, collaborate to ensure consistent messaging around sustainability through a capability building program, aiming to build supplier knowledge and expertise to make the target-setting process clearer for their shared suppliers.
AstraZeneca’s commitment to sustainability is a powerful incentive for suppliers to set science-based targets. Having an ambition to set science-based targets is a minimum requirement for working with them.
How does AstraZeneca monitor and report its target progress?
AstraZeneca keeps track of its progress towards supplier engagement goals by monitoring commitments on SBTi’s Target Dashboard, and reporting progress annually. To track progress against its own scope 3 reduction targets, AstraZeneca’s supplier engagement program has supported the increased availability of actual supplier emissions data reported through CDP. In 2022, 38% of AstraZeneca’s scope 3 reporting came from actual supplier emissions data (versus spend-based data) - 18% more than what was reported in 2019 (20%).
To improve the program, AstraZeneca uses two-way feedback from its suppliers, procurement leads and Sustainability Champion Network. Supplier feedback is collected quarterly during one-on-one business reviews. Since inception, AstraZeneca has been working to develop local-language materials to reduce the burden on international suppliers. Overall, the company aims to assist its suppliers wherever possible—while keeping its asks prescriptive and clear.
This case study is an example provided by the company and does not constitute endorsement from the SBTi.