Companies are required to carry out socially and environmentally conscious business activities throughout the entire supply chain. In addition, in order to ensure a stable supply of products, it is necessary for them to make continuous efforts to identify and mitigate sustainability risks in the supply chain. In the spirit of coexistence and co-prosperity, we are strengthening cooperation with business partners such as raw material suppliers, manufacturing contractors, subcontractors, trading companies and wholesalers, and promoting “sustainable procurement” initiatives with them to contribute to the realization of a sustainable society and to increase the corporate value of both parties.
Sustainable Procurement Program
Our sustainable procurement is carried out by the following fourth-step scheme.
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(1)Explanation of our sustainability policy and sustainable procurement implementation program to suppliers
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(2)
Receipt of a signed agreement from suppliers to comply with the "Eisai Global Code of Conduct for Business Partners"
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(3)Monitoring and evaluating the sustainability performance of suppliers using EcoVadis third-party evaluation platform*
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(4)Improvement of the sustainability of suppliers through feedback of the assessment results via online interviews
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＊A comprehensive corporate social responsibility assessment platform provided by EcoVadis SAS. The EcoVadis assessment program consists of assessments of the environment, human rights and labor, ethics, and sustainable material procurement, covering the items of the Code of Conduct. In order to continuously monitor the progress of sustainability improvement, we request suppliers to re-evaluate their performance after a certain period of time according to the degree of risk determined based on the evaluation score (for low-risk suppliers, re-evaluation period is 3 years).
PSCI: Pharmaceutical Supply Chain Initiative
It makes sense for both pharmaceutical companies and suppliers to tackle sustainability issues and share the information and the results in the whole industry. In January 2021, we joined PSCI, a global non-profit organization that aims to promote responsible procurement of supply chains in the pharmaceutical industry.
Eisai Global Code of Conduct for Business Partners
The minimum requirements for business partners are summarized in the Eisai Global Code of Conduct for Business Partners (hereinafter referred to as "Code of Conduct"). It sets the standards for legal compliance, ethics, human rights and labor, health and safety, environment, as well as management system. The Code of Conduct complies with the PSCI Principles that is the Pharmaceutical Industry Principles for Responsible Supply Chain Management issued by the PSCI.
Promoting Sustainable Procurement
Supply chain of production sites in Japan
FY2020-FY2022 Initiatives
For the supply chain of our plants in Japan, we have started sustainable procurement from FY2020 for Tier-1 suppliers of major direct materials (including raw materials for pharmaceuticals, manufacturing contractors and subcontractors) in Japan and overseas, and for Tier-2 suppliers upstream (raw materials suppliers) if the Tier-1 suppliers are wholesalers or trading companies. During the three years through FY2022, we held 4 briefing sessions for sustainable procurement via online, which were attended by 194 suppliers in Japan. In addition, 17 major overseas suppliers were individually addressed. To date, we have received signed agreements to comply the Code of Conduct from 132 Tier-1 suppliers (93.8% on a trading volume basis). As for Tier-2 suppliers (manufacture companies when Tier-1 suppliers are wholesalers/trading companies), we received agreements to comply the Code of Conduct from 69 of the 80 targeted companies.
The number of suppliers that participated in the EcoVadis sustainability assessment was 74 Tier-1 suppliers (73.3% on a trading volume basis) and 35 Tier-2 suppliers. As a result of the evaluation, no company was classified as high risk based on our EcoVadis rating scoring criteria for overall score or individual score of human rights, environment and ethics. We aim to raise the level of sustainability throughout our supply chain through engagement with suppliers, and conducted individual interviews with 30 suppliers over the three-year period from FY2020 to FY2022. In the interviews we have shared improvements and promote corrective actions based on mutual understanding.
FY2023 Initiative Plans
We plan to continue holding briefing sessions for sustainable procurement to deepen our suppliers' understanding of the importance of sustainability and Eisai's policies. At that briefing, outside experts will be invited to speak about the growing demand for sustainability initiatives in the international community and the progress of environmental and human rights legislation.
We also plan to start sustainable procurement for our group companies in Japan.
Supply chain of overseas production sites
FY2022 Initiative
Regarding the supply chain of our overseas plants, we have started sustainable procurement for major Tier-1 suppliers of direct materials at the Vizag plant in India and the Suzhou plant in China. We have received agreements to comply the Code of Conduct from 19 suppliers of the Vizag plant and 19 suppliers of the Suzhou plant. Coverage on a trading volume basis (excluding transactions within the Eisai Group) is approximately 89.2% in the Vizag plant and approximately 97.3% in the Suzhou plant, including suppliers whose agreements have already been received at the head office in Japan. EcoVadis evaluations were completed for 13 and 10 companies in the Vizag and the Suzhou plants, respectively. As for the Hatfield plant in the U.K., we received agreements to comply the Code of Conduct from Tier-1 suppliers of direct materials at the time of contracting.
FY2023 Initiative Plans
Based on the results of the EcoVadis evaluation, four suppliers were classified in Vizag and one in Suzhou that are considered high risk based on our EcoVadis rating scoring criteria. To strengthen engagement, we will prioritize to request improvements to suppliers which was classified high risk in overall score or individual scores, including human rights and environment and high need for improvement in our criteria, through individual interviews.
We also plan to start a sustainable procurement program for overseas factories such as the Liaoning Plant in China.
Sustainable procurement of indirect materials
In September 2022, we established the ENW Global Procurement Standard, which defines the items to be complied with in all procurement activities of the Eisai Group. The Standard stipulates the promotion of sustainable procurement as one of the items to be complied with, and from FY2023, we will also request that indirect material suppliers agree to the Code of Conduct if the transaction value exceeds our standard.
Geographical Distribution of Suppliers
We are continuing a stable supply at our domestic manufacturing plants in strong cooperation with suppliers located in the areas shown in the pie chart. We also continuously confirm the operating and logistic status not only for all the 9 global manufacturing sites but for both raw material suppliers and manufacturing contractors.
Geographical distribution of suppliers at main manufacturing plants (Japan)
(Base on transaction amount with the suppliers which attended briefing sessions for sustainable procurement)
Supplier Selection / Collaboration with Suppliers
In order to build a sustainable supply chain, Eisai evaluates potential business partners (raw material manufacturing suppliers, production contractors), which work together for establishing the stable supply of high-quality products, in terms of Technology, Quality, Manufacturing Capability, Regulatory Affairs, Finance, Compliance, etc., on selection process.
In addition, after entering into supply agreement, Eisai works with its business partners to ensure a stable supply of high-quality products through the aforementioned sustainable procurement initiatives and other measures.