Supply Chain

Supplier due diligence and partnerships

As a crucial initiative for delivering high-quality pharmaceuticals to patients, Takeda added six steps to the sourcing process to assess supplier risks from a holistic perspective, including sustainability and business continuity risks. The standard diligence process evaluates whether there are potential risks in the areas of animal welfare, EHS, labor and human rights, financial health, corruption and bribery, data privacy and information security. While this is not a comprehensive list of the risks Takeda screens for, it provides an overview of the type of information business stake-holders can expect to receive to make well-informed decisions when it comes to supplier selection.

If specific risks are identified during standard diligence, Takeda conducts enhanced diligence, with experts from across the company as well as external resources, as required. We also partnered with Takeda Business Services to design a more efficient and effective process for supplier registration and qualification, better ensuring the completion of due diligence and flagging of potential risks known as Integrated Due Diligence.

We have also furthered the use of EcoVadis, a digital supplier-sustainability assessment and scorecard system, to help monitor the sustainability performance of strategic, high-risk or other types of suppliers. The platform enables us to monitor KPIs for suppliers as a basis for supplier engagement and improvement. We see an opportunity to further advance supplier performance by increasing their ability to manage their own supply chain impacts.

When we identify supplier sustainability risks related to Takeda’s Supplier Code of Conduct principles, or if a supplier receives a low score from EcoVadis, we begin a program of onsite labor, ethical, EHS and management system assessments based on PSCI protocols using third-party audit companies. These assessments result in corrective action plans (CAPs) to improve a supplier’s sustainability performance that are periodically reviewed by Takeda and the supplier.

1

Value
& Expectations

Takeda Supplier
Code of Conduct

• Adherence to applicable laws
• Regulations & Supplier Code

• Business practices

• Animal welfare

• Data privacy

• Human rights
• Labor & employment practices

• Health & safety
• Environment

3

Post Contract Monitoring

Measuring Supplier Sustainability Performance & Risk

4

Continuous
Improvement
& Development

Capacity Building

Third Party Labor Rights

Respecting human rights, including third party labor rights is one of our greatest responsibilities, given our scale and potential influence. Our Supplier Code of Conduct outlines our commitment and expectations for suppliers on modern slavery practices, including child labor, forced and bonded labor, and human trafficking. Takeda’s approach to third-party labor rights is outlined in various statements:

• Conflict Mineral Statement
• California Transparency in the Supply Chain Act
• An annual statement in accordance with the United Kingdom’s Modern Slavery Act of 2015

Suppliers with certain spend thresholds go through standard due diligence and enhanced due diligence during onboarding, which includes human rights and labor assessments. As an active member of the PSCI human rights and labor working group we have worked to build more awareness around modern slavery and share industry best practices and have focused on management team development with several members participating in Social Accountability Auditor training.

Supplier diversity

As a global company, we source materials from around the world. We use the power of our spend to expand the diversity, equity and inclusion of our suppliers in a number of ways. For example, our Procurement Policy calls for including at least one small or diverse supplier in each request for proposal and requires our prime suppliers to provide second-tier reporting. 

Our Supplier Diversity, Equity, and inclusion program includes, but is not limited to,  fostering and maintaining relationships with small to medium enterprises, minority-owned businesses (or underrepresented groups or any group that a government deems to have minority status in the population), women-owned businesses, disability-owned businesses, LGBTQ-owned businesses, or Veteran-owned businesses.

Takeda’s Supplier Diversity, Equity & Inclusion program objectives are in keeping with Takeda Values of Patient, Trust, Reputation and

Business (PTRB):

• Driving Inclusion: To reflect the diversity of the patients who benefit from our products
• Partnering for purpose: To partner with small and diverse businesses and advocacy groups that can provide value to our business and throughout our supply chain to foster an inclusive and innovative supplier base
• Creating economic impact: To support the communities in which we live and work through wealth and job creation
• Upholding our value: To respond to the requirements of our customers – that they expect Takeda to share their values

Our Program for Diversity & Inclusion:

• We require inclusion of diverse suppliers for sourcing events within our Procurement policy and provide resources to find small and diverse suppliers.
• We advocate for current and prospective diverse suppliers with our Procurement and Business Stakeholders
• We look for opportunities and innovative ways to further inclusion within our supply base and with our large and strategic suppliers
• We host Supplier Days for our Procurement and Business Stakeholders to meet current and prospective diverse suppliers

Mentoring and Development

Each year, at minimum, we mentor 4-5 local current and prospective suppliers through our formal mentoring program, leading to successful business growth and recognition for positive impact on the diverse community. Diverse suppliers are paired with a Procurement lead or business stakeholder for up to 1 year. Through this program, we assist diverse suppliers in further developing their businesses, through educational and investment programs. We continue to develop programs to address inclusion on both a local level and will soon be expanding our program on a global level. These programs include providing a new resource within our Company (initially launched in the US) to help our employees locate current and potential diverse suppliers for their sourcing needs. We continue to grow our development and advocacy through various NGOs throughout the US, such as Diversity Alliance for Science, WBENC, NGLCC, NMSDC, Disability:IN, and NVBDC and Globally, through groups such as WEConnect International.

Supplier performance and innovation

The SP&I team facilitates supplier segmentation for areas of the business through a framework that, among other factors, includes risk and a sustainability rating. SP&I uses a supplier scorecard with objective data to measure and leverage supplier capabilities. This scorecard includes a KPI that tracks social and environmental risk and performance. The SP&I team also works with suppliers to identify external sources of innovation, remediate performance issues and provide continuous improvement opportunities. As we enhance our supply chain sustainability efforts, we expect to further develop our supplier relationship management efforts as well.

For our latest KPIs and Goals related to ethical source and supplier risk assessments, refer to our ESG Appendix