Case study: How Johnson & Johnson promotes environmental and social responsibility throughout its supply chain
As the world’s largest and most diversified healthcare company, with 134,000 employees in 60 countries, Johnson & Johnson works with over 70,500 suppliers across its three business segments Tweet This!: Consumer, Medical Devices and Pharmaceutical. Building a socially and environmentally responsible supply chain is, thus, a key priority.
This case study is based on the 2017 Health for Humanity Report by Johnson & Johnson published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Abstract
For Johnson & Johnson, creating a sustainable supply chain reduces sourcing risks, protects brand reputation and, most importantly, has comprehensive positive impacts on both society and the environment. In order to promote environmental and social responsibility throughout its supply chain Johnson & Johnson took action to:
- monitor compliance with the Responsibility Standards for Suppliers
- carry out Environment, Health & Safety (EHS) audits
- conduct social audits
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With this case study you will see:
- Which are the most important impacts (material issues) Johnson & Johnson has identified;
- How Johnson & Johnson proceeded with stakeholder engagement, and
- What actions were taken by Johnson & Johnson to promote environmental and social responsibility throughout its supply chain
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What are the material issues the company has identified?
In its 2017 Health for Humanity Report Johnson & Johnson identified a range of material issues, such as product quality, safety and reliability, ethics and compliance, innovation, global public health, workplace safety. Among these, promoting environmental and social responsibility throughout its supply chain stands out as a key material issue for Johnson & Johnson.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process s of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Johnson & Johnson engages with:
Stakeholder Group | Method of engagement |
Advocacy Groups/Trade Associations | · Organizational memberships · Direct engagement · Dialogue · Sponsorships · Conferences · Research efforts |
Consumers
| · Dedicated 24-hour, 7-days-a-week toll-free hotline in 23 languages · Johnson & Johnson website · Brand websites · Social media · Focus groups · Clinical trials |
Customers | · Direct contact through sales · Customer relationship managers · Customer call centers · Customer meetings · Industry trade groups/meetings |
Employees | · Credo survey · Intranets · Newsletters · Company webcasts · Town hall meetings · Quarterly business updates · Training sessions · Anonymous 24-hour, 7-days-a-week toll-free hotline in 23 languages |
Government/Policy Makers
| · Governmental affairs liaisons · Direct engagement · Johnson & Johnson Political Action Committee · Meetings · Advocacy |
Healthcare Providers
| · Sales representatives · Continuing medical education liaisons · Education initiatives · Clinical researchers · Advisory boards · Support and education programs for caregivers |
Socially Responsible Investors (SRIs) | · Annual report · Annual sustainability report · Annual shareholders meeting · Investor releases · Quarterly earnings · Road shows · Completion of surveys · Johnson & Johnson website · Conferences · Dialogue · Direct engagement |
Local Communities | · Direct local engagement · Philanthropic efforts · Employee volunteers · Sponsorships · Collaborative partnerships |
NGOs
| · Direct engagement · Dialogue · Collaborative partnerships · Sponsorships · Organizational memberships · Conferences · Social media |
Quasi-Governmental Organizations/Academic Institutions | · Direct engagement · Collaborative partnerships · Face-to-face meetings · Research · Academic studies |
Suppliers | · Direct engagement · Collaborative partnerships · Responsibility Standards for Suppliers · Outreach by category leaders · Supplier scorecards · Face-to-face meetings · Trainings and workshops · Supplier diversity initiatives · Surveys · Assessments and audits |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics, Johnson & Johnson invited more than 1,500 stakeholders to respond to a survey. Stakeholders were asked to rank topics by importance to them and by their potential for social, environmental and economic impact.
What actions were taken by Johnson & Johnson to promote environmental and social responsibility throughout its supply chain?
In its 2017 Health for Humanity Report Johnson & Johnson reports that it took the following actions for promoting environmental and social responsibility throughout its supply chain:
- Monitoring compliance with the Responsibility Standards for Suppliers
- Johnson & Johnson confirms and monitors suppliers’ compliance with its Responsibility Standards for Suppliers by means of a formal assessment and audit program. Assessments are conducted through EcoVadis – a third-party program. EcoVadis assessments involve an initial screening of supplier performance. Subsequently, the results (a score) play an important role in deciding which suppliers may require an on-site audit.
- Carrying out Environment, Health & Safety (EHS) audits
- Johnson & Johnson systematically conducts supplier EHS audits. All EHS site audits are conducted according to the audit protocol and checklist developed by the Pharmaceutical Supply Chain Initiative (PSCI). Johnson & Johnson identifies supplier non-compliances in the areas of environment, health and safety, and management systems. Non-compliance findings are categorised as critical, major and minor and are communicated to each supplier, along with Johnson & Johnson’s expectations that they must implement time-bound corrective actions and show improvement. Johnson & Johnson also supports suppliers in improving their performance, including through:
- follow-up technical visits which include expert training and best practice sharing
- business reviews with direct coaching and guidance
- information provided in the Sustainability Toolkit for Suppliers
- supplier relationship management engagement at category level
- participation in supplier capability-building conferences, webinars and other resources that are available through Johnson & Johnson’s membership in the PSCI
- In 2017, Johnson & Johnson carried out 189 EHS audits and technical visits.
- Conducting social audits
- In 2017, to establish an enterprise-wide framework for addressing human rights in its supply chain, Johnson & Johnson expanded the human rights requirements in its updated Responsibility Standards for Suppliers. In addition, a cross-functional Human Rights Working Group met regularly, guiding and informing the development of Johnson & Johnson’s human rights risk assessment approach and audit program. Johnson & Johnson’s supplier social audit program is scheduled to be fully implemented in 2018. Supplier selection and prioritisation criteria will include results for EcoVadis scores regarding Labour and Business Ethics, location in a country considered high risk for violation of human rights and the supplier category.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Achieve gender equality and empower all women and girls
- Business theme: Workplace violence and harassment
- Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
- Business theme: Labor practices in the supply chain
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Workplace violence and harassment
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References:
1) This case study is based on published information by Johnson & Johnson, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page
3) https://g4.globalreporting.org/Pages/default.aspx
4) https://www.globalreporting.org/standards/gri-standards-download-center/
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