Supply Chain Responsibility

  • Focus: Store Brand Supplier Compliance

    Increasingly, customers want assurance that the products they purchase are made using ethically and sustainably sourced ingredients and are manufactured in workplaces that respect human rights and ensure worker safety.

  • Ensuring Human Rights Considerations

    Respect for human rights is expressed in our Supplier Ethics Policy, which all new and existing vendors must adhere to as a condition of doing business with the company. This includes suppliers producing direct import and CVS Brand items manufactured in other countries but sourced domestically.

    The social criteria in our Supplier Ethics Policy is aligned with the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, the United Nations Universal Declaration of Human Rights and the United Nations Guiding Principles on Business & Human Rights. These include commitments to prohibit human trafficking and child, forced or imprisoned labor; require that working conditions are safe and fair; forbid any form of discrimination with regard to age, gender, minoritystatus and/or other protected classes; and uphold the right to freedom oforganization, among other essential human rights. We monitor compliance with our Supplier Ethics Policy through risk-based audits conducted by external third parties. For more information about audits, please see the Global Supplier Audit Program section below.

    The same international principles that are applied to our Supplier Ethics Policy are also upheld in our workplace policies and practices, and in the CVS Health Code of Conduct. We believe every employee is entitled to a safe and healthy work environment that is free from discrimination and harassment, threats or acts of violence or intimidation and where all employees have an equal opportunity to grow and develop their careers and be appropriately compensated for their contributions to the company's success.

    In 2015, we engaged Business for Social Responsibility (BSR) to help us undergo a human rights impact assessment and develop a formal human rights policy which will encompass both our workplace and supply chain. The policy will leverage the United Nations Guiding Principles on Business and Human Rights and will include our current enterprise policies related to human resources and supply chain responsibility. We will finalize the enterprise-wide policy in 2016 and plan to communicate it internally and externally with key stakeholders, including sharing it in our CSR report.

  • Supplier Ethics Policy

    CVS Health requires all suppliers to conduct business in accordance with our Suppliers Ethics Policy and other applicable legal and ethical standards. We seek suppliers that share our values as well as our promise to deliver outstanding service.

    CVS Health suppliers are required to adhere to our company’s ethical standards, supplier requirements, and business processes, which are published on our supplier website and communicated in our CVS Health Supplier Ethics Policy.

    CVS Health also requires full compliance with all applicable anticorruption laws, including the U.S. Foreign Corrupt Practices Act. Vendors and suppliers may not, directly or indirectly, offer, pay, promise or authorize the payment of any money or thing of value to any government official, including any employee or agent of a government-owned or government-controlled business, for the purpose of influencing any act or decision of such government official, in his/her official capacity; inducing such government official to do or omit doing any act in violation of the lawful duty of such official; securing any improper advantage; or inducing such government official to use his/her influence in order to assist in obtaining or retaining business.

    Our internal Code of Conduct also addresses the company’s standard of ethics when interacting with suppliers. Colleagues with direct responsibility for import supply chain management have been trained on mitigating risks within the supply chain of products, including risks associated with human trafficking and slavery.

  • Global Supplier Audit Program

    We monitor compliance with the Supplier Ethics Policy through risk-based audits conducted by our partner, UL, and other external third parties. The CVS Health Factory Social Audit Program helps us assess our performance and allows us to compare the results against industry standards. This ensures that our direct import suppliers and other store brand suppliers are in compliance with social, legal and trade security standards in accordance with local laws in which they operate.

    Our factory audit program focuses on auditing new and existing foreign factories that manufacture both direct import and CVS Brand items. In 2015, we began to assess certain subcontractors based on their risk profile. This follows the implementation of our policy in late 2013 requiring factories to disclose to us a list of their subcontractors. CVS Health partners with UL to audit supplier factories of direct import goods against UL’s Responsible Sourcing Workplace Assessment (RSWA). The RSWA is aligned with the Global Social Compliance Program and ILO convention recommendations. The factory audit is based on the following assessment criteria:

    • Labor, including abuse, coercion, harassment, child labor and young workers, and forced labor
    • Health & Safety, including risk assessment and management, education, and accidents
    • Management Systems, including compliance, education and grievance mechanism
    • Environment, including risk assessment and management, general and hazardous waste, air emissions and noise pollution
    • Ethics & Business Integrity, including bribery attempt and facilitation

    In 2015, 100% of the factories producing CVS Brand and direct import products in countries outside of the United States and Canada, including all new supplier factories, underwent a human rights screening via the CVS Health Factory Social Audit Program.

    A primary focus is engaging lowerperforming suppliers and factories. Our goal is to work with them directly in order to remediate their factory performance on social compliance, rather than to exclude them immediately from our supply chain.

    We also conducted our annual supplier and factory training on social compliance and new subcontracting requirements in May 2015. In addition, we introduced additional supplier and factory training via online learning tools. In lieu of UL's Responsible Sourcing Workplace Assessment (RSWA) audits, CVS Health accepts other globally recognized third-party social audit reports, including:

    • ICTI: International Council of Toy Industries
    • WRAP: Worldwide Responsible Accredited Production
    • BSCI: Business Social Compliance Initiative
    • SA8000: Social Accountability International (SAI)

    CVS Health also utilizes UL’s Facility Security Tool (FaST) to maintain our Customs-Trade Partnership Against Terrorism (C-TPAT) certification status with the U.S. Customs and Border Protection. In 2015, we performed these audits on 100% of foreign factories that produce direct import products located outside of China, and significantly increased the number of foreign factories audited within China, to 93%.

    CVS Health takes its Global Supplier Audit Program very seriously, including setting policies around zero-tolerance and non-passing audits. In 2015, we enhanced our auditing compliance standards, strengthening our purview of health and safety, including more rigorous fire safety and protection. We also expanded our classification of zerotolerance incidences to include blocked pathways as a safety risk. These two enhancements resulted in an increase in zero-tolerance occurrences from 2014 by more than 49%.

    If a factory does have a zero-tolerance failure, such as child labor, forced or prison labor, abuse, harassment or attempted bribery, the company will take appropriate action up to and including canceling all orders and placing the factory on probation for one year. In 2015, we performed initial and follow-up assessments on a total of 776 factories and discovered 64 zero-tolerance incidents.

  • Focus: Supplier Diversity

    Across America, diverse- and women-owned enterprises are fast-growing segments of the U.S. economy. By tapping into this expanding supplier pool, we are able to build supply chain excellence, add distinctive goods and services to our business offerings, enhance our brand among customers, and create a competitive advantage. This is especially true as we broaden our reach through acquisitions in new markets and in our service offerings. By including diverse suppliers and diverse-owned pharmacies, we are also creating jobs and economic opportunities for local businesses in the communities we serve.

  • Supplier Diversity Program

    Our Supplier Diversity Program is designed to ensure all types of businesses are given the opportunity to build long-term relationships with CVS Health. The program consists of two tiers: Tier I focuses on monitoring our purchases to ensure we have diverse suppliers providing quality goods and services. Tier II monitors the diversity of the suppliers employed by our large-valued Tier 1 suppliers. Our program also supports small business enterprises. Our total spend with diverse suppliers and small businesses on both Tier I and Tier II for 2015 was approximately $2 billion. When we started 2015, our intent was to move closer to our goal of a $1 billion spend on diverse Tier I suppliers by 2017, or 10% of our total sourceable procurement spend. We got closer to both goals in 2015. Our spend for Tier 1 suppliers was more than $913 million, which represents 91% of our 2017 target and just over 8% of our total sourceable procurement spend.

    The strength of our program starts with a strong commitment at the top of our company and cascades down through the organization. We integrate supplier diversity initiatives into our overall corporate business plan, including goals specific to supplier diversity. Our supplier diversity team reports to the vice president of procurement, who reports to the CVS Health senior leadership team on a quarterly basis. In addition, the compensation of senior leaders, including the vice president of procurement, is directly tied to successful supplier diversity results. We also require a commitment to supplier diversity from our vendors and potential vendors.

    Supplier diversity at CVS Health is aligned with our broader corporate diversity program. Our multi-pronged approach includes encouraging the integration of supplier diversity into our overall procurement practices, partnering with national organizations to identify potential and develop new diverse supplier relationships, and helping to build the capacity of these suppliers. Diversity is also an important component of the pharmacy partners we work with on behalf of our PBM business.

    Encouraging Supplier Diversity within Our Organization

    In 2015, we broadened the internal reach, visibility and transparency of our supplier diversity program. Our aim was to capture the diverse suppliers we were already doing business with and look for opportunities to attract new diverse suppliers through our procurement process. We did targeted outreach to our merchandising team and appointed supplier diversity champions within our logistics, treasury, legal and print business units. As a result, we identified 33 suppliers who were diverse but not certified. Our Supplier Diversity office has been supporting these diverse businesses through the certification process. Our Supplier Diversity team also hosted its first enterprise-wide, business-building event in New England with the aim of increasing jobs and positively impacting the local community. The day-long event was attended by 164 diverse suppliers, 31 CVS Health colleagues and 19 advocacy group representatives, and offered workshops and an opportunity for one-on-one supplier meetings with CVS Health decision-makers. Of the suppliers we met with, 76% scored medium to high on the probability of doing business with CVS Health.

    Partnering with Outside Organizations

    We are continually expanding our diverse supplier networks through participation in an array of national diversity organizations and by hosting and attending local and national events.

    In 2015, we participated in a number of Supplier Diversity Development Council-sponsored events, including:

    • Women's Business Enterprises National Council, in Austin, TX
    • National Minority Supplier Development Council, in San Diego, CA
    • National Gay Lesbian Chamber of Commerce, in Fort Lauderdale, FL
    • US Pan Asian American Chamber of Commerce, in Baltimore, MD
    • Greater New England Minority Supplier Development Council and Center for Women & Enterprise, in New England

    We also held two construction business building events in Baltimore, MD, in support of new store builds and remodels, and in Florida, in support of the expansion of CVS Pharmacy y más and our Navarro retail stores.

    Building Capacity of Diverse Suppliers

    In 2015, CVS Health launched its Executive Learning Series for Diverse Suppliers, designed to build the leadership skills diverse suppliers need to secure contracts with large businesses. Sponsored by CVS Health and created in partnership with Rhode Island’s Roger Williams University, the professional development program offered 160 hours of training over an 18-week period to leaders of 10 diverse businesses from across the country who applied and were selected to participate. The program helped participants broaden their skills in a variety of areas, including management, technology, finance and human resources. It was developed following the successful 2014 collaboration between CVS Health, Roger Williams University and National Grid.

    Diverse Retail Pharmacy Program

    Diversity is also an important component of the pharmacy partners we work with on behalf of our PBM business. Our Diverse Retail Pharmacy Program encourages diverse-owned retail pharmacies, many of which are independently owned, to become certified with CVS Health. The certification allows them to expand and establish potential business opportunities with our company, as well as become qualified for targeted government programs. In order to encourage growth and participation, CVS Health provides guidance and assistance to potential partners about the certification process.

    At the end of 2015, we had more than 100 retail pharmacy partners in the program and had spent more than $300 million with them during this year.

    Achieving Recognition for Supplier Diversity

    In 2015, CVS Health, again, was honored to be named again as one of America’s Top Corporations for Women Business Enterprises from the Women’s Business Enterprise National Council (WBENC). We were also named Corporation of the Year by the Florida Minority Supplier Diversity Council and by the Center for Women and Enterprise in New England. We were also recognized as Top Supplier Diversity Program by Black EOE Journal, one of America’s Most Admired Corporations for Supplier Diversity by Minority Network USA Magazine, among the “Best of the Best” by Professional Woman's Magazine and in the Top 100 Corporations “Best of the Decade” by Women's Enterprise USA magazine.

Learn about our other strategic priorities within our Leader in Growth pillar:

Regulatory Compliance and Voluntary Standards Are Met or Exceeded​

Safe, Rewarding and Inclusive Workplace

Read the full report:

2015 CSR Report