Responsible sourcing

We manage our supply chain through our two business units: Microbial Control Solutions (MCS) and Nutrition, Care and Environmental (NCE). Many of the materials we procure are site and product specific. However, common approaches are used across both. We prioritize procuring goods from renewable resources that are grown and produced under environmentally and socially responsible conditions. To ensure our suppliers are aligned with our values and ambitions, we conduct supplier screenings and assessments. Our global Supplier Code of Conduct was updated in 2022.

Additionally, we comply with regionally specific requirements, such as the UK Modern Slavery Act  Statement and the California Transparency In Supply Chains Act Statement.

Our procured materials contribute to our GHG emissions footprint reductions. We prioritize selecting more environmentally friendly transportation methods and materials. We ensure workers at our supplier sites are treated safely, ethically and with respect, in line with our corporate values of Safety and Health, Ethical Behavior and Respect for People and Planet.

To achieve more sustainable supply chains across the business, we have set a goal for 100% of our key suppliers to complete a comprehensive environmental, social and governance (ESG) assessment by 2030.²¹

In 2023, we launched our EcoArx program that aims to drive our responsible sourcing activities throughout our supply chain. The name EcoArx comes from a combination of the prefix 'Eco,' which underscores our dedication to both 'Ecology' and 'Economics' - two key aspects of sustainability, while also nodding to our collaboration with EcoVadis - and 'Arx' ,which is our pledge to uphold the integrity of Arxada's supply chain.

The EcoArx program is grounded in Arxada's sustainability strategy, which is seamlessly integrated across the entire enterprise. In our pursuit of understanding the potential ESG impacts of our suppliers, we require a customized supplier sustainability assessment and/or audit, to be facilitated by an external provider. Our sustainable procurement program builds off the foundation of our updated Supplier Code of Conduct, which emphasizes our commitment to following the key principles of the United Nations Global Compact (UNGC) and the International Labor Organization (ILO) Forced Labor Standards.

We have planned strategically to utilize the EcoVadis IQ Plus plafform to complete supplier risk assessments to better understand the sustainability and risk performance of our value chain.

Supplier screening & assessment

Prior to entering into a contractual agreement with a supplier, we conduct supplier screening and assessments that consider risk factors such as financial, geopolitical and environmental risk. In addition to regularly reviewing this risk assessment, we ask all our suppliers to complete an EcoVadis questionnaire. This provides a thorough overview of a supplier's corporate social responsibility performance. Our EcoArx responsible sourcing program provides greater insight into the activities of our suppliers and we look forward to highlighting results of the program in our 2024 report.

We are committed to making sustainability improvements within our and our suppliers' operations. We rolled out our sustainable sourcing strategy in late 2022, designed to comprehensively manage and reduce our Scope 3 emissions by working collaboratively throughout our supply chain.

Supplier Code of Conduct

In 2022, we refreshed our Supplier Code of Conduct (SCoC), setting forth our principles for labor, environment, health and safety that we expect all suppliers to observe and follow. The code consists of nine sections:

The code emphasizes our commitment to following the key principles of the United Nations Global Compact and the ILO Forced Labor Standards, the Foreign Corrupt Practices Act, the UK Bribery Act and all applicable anti- bribery and anti-trust laws of other countries. Through our audits and through our upcoming adoption of EcoVadis IQ Plus, we are monitoring our suppliers' adherence to our Supplier Code of Conduct. When non-compliance with our Supplier Code of Conduct is apparent, we have the right to request corrective action and reserve the right to terminate our agreement with that supplier.

Looking forward to 2024

We are excited to continue the implementation of EcoArx and the finalization of the onboarding to EcoVadis IQ Plus. This will include additional organization of our company-wide procurement process, the implementation of a new Sustainable Sourcing Vision and Sustainable Sourcing Policy, and improvements to internal and external communication channels. We are aiming to implement new processes, creating standard operating procedures to support and enable our sustainable procurement strategy. This will help us continue to improve our responsible sourcing efforts across Arxada and our supply chain.

^{[21] Our key suppliers make up approximately 20% of our supplier base and account for approximately 80% of our spend. With a comprehensive ESG assessment, we intend an evaluation that goes beyond legal and mandatory obligations.}

^{[22] The estimate for reduced emissions was calculated using the 2023 U.S. Environmental Protection Agency (EPA) Emission Factors for Greenhouse Gas Inventories. The emissions factor used was EPA Medium- and Heavy-Duty Truck.}