Sustainability – Growing Suppliers

Growing with Suppliers

Recordati recognises the fundamental value of the supply chain in creating safe and high-quality products and is committed to working with suppliers and strategic partners that share its values and ethical principles. Commercial relationships with other parties (suppliers, consultants and partners) are founded on respect for the principles of fairness, professionalism, efficiency, loyalty, transparency and equal opportunities. The Group establishes written agreements specifying the responsibilities of each party and requiring that the principles of the Code of Ethics be respected.

The Recordati group is served by suppliers predominantly located in the countries in which the Group operates production plants or has a commercial presence. The supply chain is characterised by the purchase of direct ingredients (active substance, packaging material, excipients and chemical intermediates), finished products and indirect services required for regular operation (consultancy services, marketing, supplies, licensing, etc.). In this regard, the main purchase categories are represented by raw materials (and in particular APIs – Active Pharmaceutical Ingredients), packaging, industrial products and services, and finished products.

Responsible sourcing

Discussing sustainability implies sharing the values and ethical, social and environmental principals in which the Group believes with suppliers and strategic partners. In this context, the Group requires suppliers to accept the Code of Ethics from the approval phase and reserves the right to terminate the contractual relationship in the event of conduct incompatible with the values and principles expressed therein.

Parameters used in the selection of suppliers include observance of the Group Code of Ethics, which, in accordance with International Labour Organization conventions, requires the observance of fundamental Human Rights for all workers. These selection criteria are binding and all suppliers must declare their commitment to the Code and the practices contained therein. This obligation is formalised through special contractual clauses. As a result, any violation of the Code represents a breach of contract, and the Group reserves the right to assess the severity of the situation and take immediate corrective action. In the most serious cases, the group reserves the right to terminate the contractual relationship.

Furthermore, in the supplier-approval questionnaire consideration is also given to environmental and social aspects. In fact, information is requested regarding existence of health, safety and environment management systems (e.g. ISO 14001 and OHSAS 18001).

As part of the Group’s responsible sourcing strategy, in order to strengthen monitoring of sustainability issues along the supply chain, the plan to audit the Group’s suppliers every three years by an independent third party (EcoVadis) using desk audits was launched in 2022. The suppliers involved were assessed across four key areas for sustainability: Environment, Labour and Human Rights, Ethics, and Sustainable Procurement. The main results related to the audits carried out in 2022 are shown below:

ESG assessments of suppliers

50 suppliers audited (via desk audits) on ESG issues, belonging to the main and most strategic product categories: suppliers of finished products (Contract Manufacturing Organisations – CMOs), raw materials, packaging, industrial services, logistics, and other services.

of suppliers have good or excellent performance. Zero critical suppliers

82% of suppliers monitored had a “good” or “excellent” general performance level. Only 18% of suppliers had a “partial” performance level, while no suppliers were found to be insufficient/critical.

buyers trained on the responsible purchasing programme

Around 20 of the parent company’s buyers were involved in training activities to facilitate the supplier engagement process.