How Walgreen Boots is Using ESG Data to Drive Sustainability in its Supply Chain

Sustainability has become a key business imperative as capital markets, regulators, and consumers demand eco-conscious products and services.

Most high-profile manufacturing companies have announced sustainability measures to support global net zero goals.

Last November, for instance, CEOs from companies such as Nestle, Unilever, Tetra Pak, PepsiCo, IKEA, and Tata Steel signed onto an open letter where they pledged to reduce emissions by more than 1Gt annually by 2030.

The letter called on governments to enact policies that level the playing field and help “accelerate emission reductions, scale up innovations and achieve a net-zero world by 2050.”

Clearly, there is market momentum for net zero. Aside from the public good of lower emissions, it now represents a business opportunity and a way to attract young talent into the business.

There are many aspects to creating more sustainable businesses ranging from operational improvements, energy efficiency, product and material design, among others.

The World Economic Forum and US Special Presidential Envoy for Climate John Kerry announced the First Movers Coalition at COP26. Leading companies have committed to creating net zero supply chains by sourcing zero-emissions products and services and creating demand for new, low carbon technology.

But the question, though, is how do you effectively source zero-emission products and services?  The interconnectedness of modern supply chains can make understanding the ESG performance of your suppliers challenging. For instance, how do you know how your suppliers’ suppliers are performing?  

Walgreens Boots Alliance, which operates health and retail pharmacies throughout the US, Europe and Latin America, has been trying to shed some light on the environmental track record of its suppliers (and their suppliers) “to source better and buy better.”

“If you buy something, you’ve bought the risk that comes with it,” explains Tanya Ashton, Head of Sustainability - Global Sourcing Europe, at Walgreens Boots Alliance. She says that it is important to understand the ESG risks inherent in your supply chain, such as how your suppliers are sourcing their materials and whether they’re using unsustainable inputs like Palm Oil.

Speaking at IX Network’s recent Data-Driven Sustainability & ESG online event, Ashton shared how her company has been tackling supply chain transparency by using an online platform to collect data from its network of suppliers. The platform provides supplier ESG scorecards, benchmarks sustainability performance and identifies the most valuable opportunities for improvement.

The way it works, Ashton explains, is that Walgreens-Boots asks suppliers to fill in a survey within their online platform. The system helps to identify key information such as whether the supplier has an emissions reduction target in place, information about use of unsustainable inputs and whether a supplier has a chemicals policy in place, for instance.

The platform was developed by non-profit organization, The Sustainability Consortium, and is used by other big retailers so suppliers only need to fill in the survey once and are able to provide their data to all their customers.

That makes it an easier sell to their suppliers, says Ashton, and helps to minimize what she calls “survey fatigue.”

She recommends “finding the fewest clever questions to ask your suppliers and your supplier’s suppliers. We should be trying to make life as easy as possible.”

Walgreen Boots publishes key metrics gathered in the platform in their annual Sustainability report. For instance, the company publishes a chart that details how their suppliers are tracking against the company’s ethical standards. It publishes the number of companies that are “satisfactory,” “need improvement,” “critical,” or “zero-tolerance” (i.e. with issues like slavery or human trafficking).

Ashton says that the benefit to the supplier is that they now know how they are performing against their peers. It can become a competitive advantage, she explains, when a supplier realizes that they outperform their peers from an ESG perspective.  

We’re trying to create a “race to the top,” she says.