1. Introduction

This document provides a framework for Walgreens Boots Alliance (the “Company”) to follow when reporting internally and externally on matters related to Corporate Social Responsibility (CSR), allowing for more complete, accurate and consistent data capturing and reporting.

This document does not cover specific local reporting requirements with which the Company’s businesses may be required to comply.
 

2. Basis for reporting

Walgreens Boots Alliance has an approach to recording, measuring and reporting on CSR performance, a defined set of reporting criteria and a set of CSR measures and performance indicators that are applicable to all businesses.

2.1 Scope of reporting

Walgreens Boots Alliance’s external performance reporting includes all subsidiaries in which the
Company holds a controlling interest. Investments in less than majority-owned entities in which the Company does not have a controlling interest, but does have significant influence, are excluded from the scope of this reporting. The main areas that are excluded when reporting CSR information externally are:
 
  • Divestments in the period - Businesses that are no longer subsidiaries of the Company due to divestment are excluded from reported data.
  • Equity method investments - Equity method investments are excluded from the Company’s external reporting scope. However, Walgreens Boots Alliance works with many of its equity method investments to provide support on CSR activities, many of which are consistent with the CSR framework.
  • Franchise operations – Franchise operations run by a third party where we are the franchisor are excluded from the Company’s external reporting scope.
  • Outsourced activities – These are excluded from the reporting scope except where the outsourcer’s activities are dedicated to the Company’s business and where the associated impacts are material, e.g. third-party product deliveries made exclusively for Walgreens Boots Alliance. The Company’s Code of Conduct and Business Ethics sets out the principles for dealing with, and the requirements for, suppliers.

2.2 Approach to reporting

Walgreens Boots Alliance reports CSR performance data in total and by Division, consistent with its financial reporting. The Company’s operations are organized into three Divisions: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale.

Walgreens Boots Alliance’s framework of CSR priorities covers four key areas: community, environment, marketplace and workplace. 

Performance data are collected and reported for the community, environment and workplace areas, and qualitative information is collated for the marketplace area. In addition to reporting against these three areas at the consolidated and divisional levels, the Company captures, analyzes and reports data at a more detailed level to provide a clear understanding of contributing factors to CSR performance. This includes:

Community Contributions are analyzed as follows:
  • Cash (charitable and other donations) and non-cash (employee time, in-kind donations and management costs)
  • Focus of the organizations contributed to: health, education, social welfare, other (arts, culture, emergency relief, economic development)
  • The reach of the organizations: local, national and international   
Environment The three significant contributors of CO2e emissions are energy usage, product delivery and business travel. Emissions are analyzed as follows:
  • Energy by use (in GWh) and by type: electricity (direct/indirect); gas (indirect); and other (combined heat and power, oil and liquefied petroleum gas)
  • Product delivery, by total emissions
  • Business travel, by type (road, air and rail) and, in the case of air travel, by length of journey (short, long) 
In addition to the above analysis, the Company also externally discloses the metric, CO2e emissions from business travel per 1,000 employees. 
Waste is analyzed as follows:
  • The amount sent to landfill and incineration
  • Materials recycled and materials recovered via incineration
Workplace
  • Employee retention (more than one year and more than five years)
  • Employees by gender

Internally, Walgreens Boots Alliance also monitors a number of metrics to show how its businesses and Divisions have performed against CSR reporting measures in the context of business activity levels. 

Standard definitions for external Walgreens Boots Alliance reporting purposes have been developed (refer to Appendix I) and are made available to the businesses via the Company intranet and also as part of the Company’s CSR performance reporting instructions, which are distributed annually.

2.3 Target setting and monitoring

Walgreens Boots Alliance has established a framework of 12 CSR goals that are set out in its annual Corporate Social Responsibility report. Individual business management teams are responsible for establishing specific, locally relevant targets (within the CSR framework) with the support of their local CSR champion and the central CSR management team.   

Progress against these targets is regularly reviewed by the business management teams and monitored by the Corporate Social Responsibility Meeting.
 

3. Data capture and review

3.1 Data capture and consolidation (Walgreens Boots Alliance systems)

CSR performance data are entered into a central consolidation system. Instructions for data submission and any new data requirements or changes to definitions are communicated to the most senior finance person in each business and local CSR champions in advance. 

3.2 Foreign currency exchange rates

Community contributions are collected by each business and input into the consolidation system in local currency, which is translated into U.S. Dollars at 12-month average exchange rates.

3.3 Data quality

The capture of CSR performance data continues to evolve. Walgreens Boots Alliance businesses are dispersed around the globe and in many instances rely on third parties to provide elements of data.  

The Company continually seeks ways to improve the quality and reliability of data through robust collection processes in which completeness, accuracy and relevance are reviewed in light of Walgreens Boots Alliance definitions, policies and procedures.

In instances where estimation or extrapolation techniques are used, the following points are considered by the businesses:
 
  • Is the sample upon which the estimation/extrapolation based representative of the data? 
  • Has the sample been reviewed at least annually?
  • Has the technique for estimation/extrapolation been reviewed at least annually?  
  • Can the data be benchmarked to or checked against alternative sources of data for reasonableness?
  • Have the current year’s data been compared to the prior year’s to identify any significant changes?

The businesses are challenged to work with suppliers and to continually enhance internal data capture processes to improve the quality of each element of CSR performance data. 

3.4 Management review

The involvement of senior management is important to support the ongoing improvement of CSR performance data collection, validation and reporting. 

All CSR performance data annual submissions by individual businesses are prepared by local finance teams and local CSR champions. Prior to submission, the data and supporting commentary must be reviewed and approved by the most senior finance person in each business. 

Divisional finance teams review and approve the submissions, which are then provided to the Company’s central finance team and to the central CSR management team.

The central finance team produces an internal report to benchmark all businesses across the Company, comparing year-on-year performance (where available) and cross-business performance. This report is presented, reviewed and approved at the relevant Corporate Social Responsibility Meeting.
 

Appendix I: Definitions of Walgreens Boots Alliance CSR performance metrics

1. Community

Cash donations
 
  • Charitable cash donation: Cash donated in support of community projects to organizations officially created or legally registered for charitable purposes, reflects direct company contributions. Donations from employees, customers and suppliers are not included.
  • Other cash donation: Cash donated in support of community projects but not paid to organizations officially created or legally registered for charitable purposes, reflects direct company contributions. Donations from employees, customers and suppliers are not included.
Non-cash donations
 
  • Employee time: Defined as the value of time employees spend on community programs during paid working time. Employee time is valued at an average staff salary rate and includes employer’s employment taxes, healthcare, social security and Medicare contributions, pension contributions and employer matching 401K contributions.
  • In-kind donations: These are products, equipment, the use of premises or other non-cash items donated to community programs. They include product donations, generally valued at their cost price, gift vouchers and the provision of space at vacant properties to charitable organizations. Also captured is advertising space in Company magazines (e.g. Boots Health & Beauty magazine) that benefits both the charity and the business. Fifty percent of the advertising costs are included, in line with the London Benchmarking Group (LBG) global standard. Bulk product donations, where individual product cost price is not available, are valued based on weight, applying a suitable assumed average cost multiplier and using, where appropriate, third-party guidance (e.g. Feeding America).
  • Management costs: These are defined as the value of costs incurred managing community programs and consist of direct expenditure as well as an allocation of relevant overhead and expenses.

Areas impacted by the Company’s contributions
 
  • Health projects include donations made to not-for-profit hospitals, health organizations and other health-related activities.
  • Education projects include donations made to schools, colleges, universities or other projects or organizations that promote education, training or development programs.
  • Social welfare projects include donations made to organizations focused on issues such as homelessness, legal support, domestic violence, the elderly and people with disabilities. 
  • Other projects include donations made to organizations or activities not covered by categories above, such as the arts, culture, emergency relief and economic development.

Types of groups the Company contributes to
 
  • An international organization is defined as an organization that works in more than one country.
  • A national organization is defined as an organization that works throughout an entire country. For U.S. purposes the entire country is defined as a sizeable majority (more than 75 percent) of the states.
  • A local organization is defined as an organization whose work does not meet the national definition.


2. Environment

2.1 Waste

Waste reporting is typically reliant on data provided by waste contractors within a country. Normally, waste data measurement is based on metric tonnage as provided by third-party contractors. For sites where the third party’s contract is based on an agreed standard metric tonnage per volume collected, the rate applicable for the year is used as the basis of calculation. For sites where contractor data are unavailable (for example, stores within shopping centers where the Company’s business does not manage the waste contract), estimates are used based on actual data from a store or warehouse of an equivalent size.
 
  • Total waste sent to landfill is defined as waste produced by Walgreens Boots Alliance operations and sent to landfill for disposal.
  • Total waste sent to incineration is defined as waste produced by Walgreens Boots Alliance operations and sent to incineration, without heat recovery, for disposal.
  • Materials recovered via incineration are defined as waste produced by Walgreens Boots Alliance operations and sent to incineration via a contractor where energy recovered from the process is used to generate electricity or heat.
  • Materials recycled are defined as waste produced by Walgreens Boots Alliance operations and sent off-site for recycling.
2.2. Carbon emissions

Total CO2e emitted (in metric tonnes) is calculated using activity data (e.g. amount of fuel used) and applying relevant conversion factors following the Greenhouse Gas (GHG) Protocol recommendation and using the most accurate calculation approach available. To reach the most accurate emissions estimations, the latest available specific locally sourced factors are applied, where reasonable.

2.2.1 Conversion factors
 
  • For standard tariff electricity, country specific CO2 conversion factors published by the International Energy Agency (IEA) are used as a proxy for CO2e, with the exception of Walgreens Boots Alliance’s largest territories, the USA and the UK. U.S. data are converted using Environmental Protection Agency (EPA) Emissions & General Resource Integrated Database (eGRID) specific CO2e factors that take into consideration where the electricity was produced within the country. UK data are converted using the UK Department for Environment Food & Rural Affairs (DEFRA) CO2e factors.
  • For passenger air travel the latest available DEFRA factors are used across all Divisions. 
  • For all other metrics, conversion factors are applied on the basis of business location. The Retail Pharmacy USA Division follows the U.S. Environmental Protection Agency (EPA) published factors. The Retail Pharmacy International and Pharmaceutical Wholesale Divisions follow DEFRA published factors. Note: where CO2e factors are not available CO2 factors are applied as a proxy.
  • Conversion factors are updated annually to reflect the factors published by the IAE, EPA and DEFRA that are in effect as of 31 August.
2.2.2 Energy
  • Electricity - The calculation of CO2e emitted from electricity is based on the following factors:
    • Standard tariff - Consumption data are converted using the relevant conversion factors as described above. Where data on electricity consumed are not available, an estimate is made based on annual expenditure on electricity. Estimates are based on stores/properties of an equivalent size. 
    • Green tariff - This is country specific and entered individually by the business. Generally, in cases where the standard tariff is already subsidized, this is accounted for using the grid average conversion factor.
    • Onsite Combined Heat & Power (“CHP”) plant - This is specific to the Company’s on-site energy plant in Nottingham, UK and based on a calculation defined by the GHG Protocol that uses actual electricity and heat output figures.
  • Gas and other - Consumption data are converted using the relevant conversion factors as described above. Where data on actual consumption (in mWh) are unavailable, an estimate is made based on annual expenditure.
2.2.3 Outbound product delivery

This covers the resulting CO2e emissions from delivery of products to stores and to customers. This includes deliveries by own-fleet vehicles and for operations outsourced to third parties where deliveries are made exclusively for Walgreens Boots Alliance businesses. This excludes deliveries from third-party suppliers to Company warehouses, cross-dock centers or direct to stores. The amount of CO2e emitted is calculated using activity data and applying the relevant conversion factors as described above.
 
  • Own-fleet vehicles (including leased vehicles): 
    • Drivers with fuel cards - fuel consumed captured by third-party billing of fuel 
    • Drivers without fuel cards - distance captured
    • Third-party vehicles - where the delivery is made exclusively for a Walgreens Boots Alliance business, captured by third-party kilometer data 
2.2.4 Business travel

The amount of CO2e emitted from travel undertaken by employees for work or business purposes is calculated using activity data and converted to emissions applying relevant conversion factors as described in section 3.2.1.
 
  • Road travel – car travel undertaken by employees for work or business purposes
    • Employees with fuel cards - captured by third-party fuel billing
    • Employees without fuel cards - captured by Company expense systems, using kilometers travelled
    • Air travel – calculated using third-party (e.g. travel service provider) data on kilometers travelled other than for non-commercial flights which are calculated using third-party data on fuel consumed
    • Rail travel - calculated using third-party (e.g. travel service provider) kilometer data 


3. Workplace

  • Employee: An employee is a person employed by Walgreens Boots Alliance on a full- or part-time basis, for an indefinite or fixed term. 
Employee retention
 
  • Employees working for Walgreens Boots Alliance for more than one year are those who have served the Company for more than one year. Where a business or operating unit has been acquired, the applicable start date is the date the employee first began employment with a company that is now part of Walgreens Boots Alliance.
  • Employees working for Walgreens Boots Alliance for more than five years are those who have served the Company for more than five consecutive years. Where a business or operating unit has been acquired, the applicable start date is the date the employee began employment with a company that is now part of Walgreens Boots Alliance.
Employees by gender
 
  • Men: total number of employees who identify themselves as male.
  • Women: total number of employees who identify themselves as female.

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