Walgreens Boots Alliance believes that responsible sourcing is key to our success. Through purchasing from hundreds of diverse suppliers in the U.S., Walgreens helps local economies and stocks products that appeal to a range of consumers.
In its own product brand supply chains, Walgreens Boots Alliance holds suppliers to ethical standards and carries out audits to detect issues related to economic, environmental and social matters.
Walgreens has a long history of working to increase its total spend on products and services from minority-owned, women-owned and other diverse suppliers. Our purchases with diverse suppliers include retail and pharmaceutical products and both Tier 1 spending, directly with diverse suppliers, and Tier 2 spending, which is with large-scale suppliers who report to us their diverse supplier spending related to the Walgreens account.
Promoting the development of small and diverse businesses fosters economic vitality in the communities we serve. Selling to a large retailer can be a challenging step for a small supplier, so Walgreens provides programming and coaching to assist these suppliers in preparing to market and promote their product brands.
During fiscal 2017 Walgreens engaged with or purchased from more than 2,500 diverse and small businesses in the U.S., including more than 900 minority-owned and women-owned businesses, and more than 1,400 small businesses including other classifications that Walgreens tracks.
Walgreens spending with diverse and small suppliers has increased substantially over the years, reaching over $3.3 billion in fiscal 2017, up from $125 million in fiscal 2007, and including Tier 1 and Tier 2 spending, professional services, retail products and goods not for resale (goods used in our operations).
In our 2017 Modern Slavery and Human Trafficking Statement
we restate our continued commitment to address and mitigate the risk of modern slavery and human trafficking in our operations and provide an update on actions taken in the reporting year to do our part to eradicate these abhorrent practices. The statement meets the requirements of the UK Modern Slavery Act 2015 and the California Transparency Act, and supports our commitment to the CGF resolution and priority principles for action against forced labor. Our global task force on the modern slavery crisis evolved during fiscal 2017 and will become a permanent working group that will help ensure a consistent approach and ongoing improvements in our response to this issue.
Our Code of Conduct and Business Ethics
makes a clear commitment to strive to ensure that slavery and human trafficking are not taking place within any of our supply chain business partners and states that we will not tolerate such activities.
Our Ethical Trading Standards Policy, established in fiscal 2016, contains a worldwide set of vendor responsibility and ethical sourcing standards, including our opposition to the exploitation of workers through any form of forced or bonded labor, slavery, human trafficking or other labor practices that involve harsh or inhumane treatment. Walgreens Boots Alliance requires its vendors to comply with these principles and to share them with any subcontractors they may use. During fiscal 2017, we established a requirement that each business and Division of the Company must report annually on its level of compliance with the policy.
The Company developed during fiscal 2017 new training modules on modern slavery and ethical sourcing, with a focus on employees involved in sourcing, supply chain and recruitment activities. The new training was implemented during calendar 2017.
An external service provider, Dow Jones Risk & Compliance, provides due diligence reviews of business partners globally.
As reported in our previous Modern Slavery and Human Trafficking Statement, our biggest ongoing risk of exposure to modern slavery sits within the product supply chain of our owned product brands. To combat this, we have maintained our well-established program of ongoing supplier assessment, which is delivered through our own ethical trading auditors or via a small number of pre-approved third party assessment bodies. Our suppliers are required to comply with our assessment program, which includes planned and unannounced audits. We have a formal rapid escalation process for any serious ethical issues identified within our supply chain. Our policy in zero tolerance cases is to terminate the relationship with the supplier.
In fiscal 2017 we conducted more than 1,300 ethical compliance assessments on new and existing owned brand suppliers. Where we identified critical noncompliance issues we worked with our suppliers on remedial action plans to help ensure issues were addressed and corrected. In the small number of cases where suppliers are unwilling to work with us to achieve compliance within an agreed time frame, it is our policy to terminate our business relationships, as a last resort.
The table below provides a breakdown of assessments of owned brand suppliers, and outcomes during fiscal 2017.
|Assessments of owned brand suppliers during fiscal 2017
||Percentage of total
- Satisfactory and needs improvement: Meets our ethical trading standards expectations but could require differing levels of remedial corrective actions.
- Critical: Falls below the expectations of our ethical trading standards and requires immediate remedial action to address the critical noncompliances to enable new or ongoing business partnership.
- Zero tolerance: Issues identified that are not accepted or tolerated by our business and are related to incidents of the following but not limited to: child labor, convict/indentured/forced labor, corporal punishment, slavery and human trafficking, acts of bribery.