AstraZeneca PLC (AZN) Earnings Call Transcript & Summary

Good afternoon and good evening, everyone. My name is Pam Cheng, I am the Executive Vice President of Global Operations, IT and Chief Sustainability Officer. I am pleased to welcome you to AstraZeneca's 2022 Sustainability Highlights Call. Thank you to all who have joined live. I appreciate this is a late hour for those of you in Europe. For those unable to join live the slides presented today and a recording of this call will be available on our website. Next slide, please. These are our usual safe harbor statements as you are very familiar with. Next slide, please. I will begin today's call with some prepared remarks, focus on the progress that we have made across our sustainability pillars. Then we will open the call for questions. I will be joined by the sustainability leadership team as well as some of our lead experts during the Q&A session. [Operator Instructions] Next slide, please. At AstraZeneca, sustainability is embedded in everything we do. With a robust governance structure in place, our sustainability strategy is developed and reviewed quarterly by our senior executive team and is approved by the Board of Directors. Our Board's Sustainability Committee formed in September 2021, monitors the execution and communication of our sustainability strategy as well as provide input to the Board and other Board committees on sustainability matters as needed. As announced in January of this year, Katarina Ageborg, our former Chief Compliance Officer and Executive Vice President of Sustainability, decided to retire after almost 25 years of service. Jeff Pott assumed responsibility as Chief Compliance Officer in addition to his current responsibilities as Chief Human Resource Officer and General Counsel. And I have assumed responsibility for sustainability in addition to my existing responsibilities as Executive Vice President for Global Operations and Information Technology. Moving to Slide 5. I want to highlight a summary from our materiality assessment conducted in 2021, which involved the collection of internal and external feedback to help us prioritize our sustainability strategy. This assessment led to the broadening of scope to 9 material focus areas where we can make the most impact, each with their own targets and commitments. We have also made great progress with our sustainability ratings in 2022, which notably included a third place ranking in the Access to Medicines Index. In 2022, we improved our score significantly due to our COVID-19 medicines, better IP sharing, manufacturing and supply chain capacity building. We have also maintained an MSCI AA rating and the CDP A rating for climate and water security. Lastly, we were included in the Bloomberg Gender Equity Index for the fifth consecutive year. Moving now to Slide 6, please. In 2022, we have also made notable progress in our overall sustainability strategy and are on track to meet our near- and longer-term goals. By no means is this an exhaustive list but it provides some progress highlights in terms of areas of focus. I will go into more details in each of the 3 areas in the subsequent slides. Slide 7, please. At AstraZeneca, we want to transform health care to secure a future where all people have access to affordable, sustainable and innovative health care. We recognize that in order to truly create sustainable and resilient health systems, it is essential that there is a collaboration at the system level between all stakeholders, including the governments, public and private providers and health care payers. The Partnership for Health System Sustainability and Resiliency, or the PHSSR, one of our initiatives, which was launched in 2020 in response to the COVID-19 pandemic is a collaboration with the London School of Economics, the World Economic Forum and AstraZeneca, motivated by a sheer commitment to improve population health through and beyond the COVID-19 pandemic. From new models of care, to innovative financing mechanisms and breakthrough technologies, PHSSR aims to make change happen by identifying transferable solutions with the greatest potential and supporting their adoption to deliver better care for all. Today, the PHSSR has expanded to over 30 countries and we are already seeing implementations of recommendations in many of the geographies. For example, the German Sustainability Index developed as a follow-up from the PHSSR report and supported by a broad coalition of stakeholders in Germany, showcases areas of policy reform where health care system sustainability is disregarded and where intervention must be targeted to improve the health system. In Japan, one of the countries in Phase 2 of PHSSR, our engagements with policymakers resulted in the establishment of Medical Dx which is a platform for sharing medical information digitally aiming to improve early diagnostics. Lastly, in Poland, the health system matrix is being utilized to evaluate the 10-year health strategy and to identify gaps, which may negatively impact health systems' sustainability and resilience. Moving to Slide 8, please. As you know, we are taking bold actions on climate because we recognize the connection between population and planetary health. We are driving innovation and continue to take a leadership role through our climate actions. This slide showcases the progress we have made on our Ambition Zero Carbon, notably, decoupling business growth from absolute Scope 1 and 2 emissions reductions. We have reduced our Scope 1 and 2 emissions by 59% and our energy productivity has increased by almost 90% since 2015 through investments in efficiency and on-site renewables via the Natural Resource Efficiency Fund. Our electric vehicle fleet accounts for about 10% of our total fleet and represents further opportunity to increase efficiency. We are lagging our current target of 100% by 2025 as we face some challenges due to lack of infrastructure in a number of markets as well as lack of supply of EVs. Our scope 3 emissions have increased by 8% from 2019 baseline. However, the reduction in our emissions intensity shows that greenhouse emissions per USD 1 million revenue has reduced by 28% compared to 2021. We have increased the use of primary data with suppliers and have set a target for 95% for our key supplier spend to have science-based targets. By the end of this year, 1/4 of our major suppliers will have verified science-based targets. Our Scope 3 represents about 96% of our global emissions. So engagement across our entire value chain is critical in order to achieve our targets. We are proof that you can drive growth while reducing emission. As a reminder, we have set ambitious targets to reduce Scope 1 and 2 emissions by 98% by 2026. And to have our entire value chain footprint by 2030 and to reduce emissions by 90% by 2045. We are proud to have been among the first 7 companies globally to have our targets verified by the Science Based Targets initiative and we encourage others to adopt this approach. In addition to our pursuit of science-based climate targets within our own organization, we are also leading the way to raise the bar across the sector and beyond. The Sustainable Markets Initiative Health Systems Task force, or the SMI, is a public-private partnership led by our CEO, Pascal Soriot, brings global health leaders together with the aim of accelerating the transition to net zero. The Health Systems Task force recently announced an industry first -- shared supplier targets designed to simplify our access of suppliers to encourage action at scale among our supplier base. Additionally, in 2021, we launched the Energize program, a collaboration between the Schneider Electric and now 16 global pharmaceutical companies to facilitate access to renewable power at scale for our suppliers. This cohort of companies intends to go to market together, resulting in a potential aggregate of 2 terawatt hours of electricity demand in Europe and North America. To date, more than 210 AstraZeneca suppliers are registered with this program. I also want to highlight our progress on electronic product information. During my recent visit to our manufacturing site in Japan, the team has been exceptional in converting the traditional paper leaflets to eleaflets for all products for the Japanese market. We were among the first companies to do so, finishing 8 months ahead of regulatory deadline. Now this project reduces costs, simplify our operations, save trees and contributed to our sustainability goals. And we look forward to working with markets around the world to completely eliminate paper leaflets for all of our medicines. Lastly, I want to provide some further insight into the $1 billion commitment to Ambition Zero Carbon. As announced at WEF in 2020, approximately 50% will be invested in the development of our next-generation propellant, an ongoing initiative with 2 registrational trials already underway moving our respiratory devices to a propellant with a new zero global warming potential, that will future proof our medicines and the revenues. The remaining 50% is allocated to global clean heat initiatives, investment from natural resource funds and our electric vehicle fleet. Next slide, please. At AstraZeneca, we are committed to reducing our impact on the planet and investing in nature and biodiversity to benefit planetary and societal health. We recently published our science-based approach to biodiversity, strengthening our existing statements on forestry, pharmaceuticals in the environment and water stewardship. We continue to develop a deeper understanding of our relationship with nature and we are committed to supporting global progress towards the goal outlined in the Kunming-Montreal Global Biodiversity Framework. Through our AZ Forest program, we have committed to plant and maintain 50 million surviving trees by end of 2025 together with our partners and local communities. Since 2020, we have planted over 10.5 million trees in Australia, Indonesia, Ghana, the U.K. and the United States. In addition to AZ Forest, working in parallel to help restore nature and biodiversity, we are investing in projects that will sequester carbon, restore habitats for biodiversity and bring wider co-benefits, such as improving food security, building climate resilience and restoring polluted watersheds to improve local water quality, initiatives that would ultimately contribute to the creations of jobs and skills and support biodiversity and endangered species and encourage economic growth through agroforestry and regenerative agriculture. We have substantially increased our water use efficiency and have reduced our water footprint by 19% since 2015. Supported by efficiency projects, partnerships and engagement with suppliers and designing out waste and pollution from the beginning, our aim is to decouple water use and waste generation from business growth. Because of our significant progress, in 2022 we increased the ambition of our water use target, now aiming to reduce water use by 20% by our 2015 baseline levels in support of water security and resilience in areas where we operate. Moving to Slide 10, please. We continue to create a positive societal impact and embed ethical behaviors throughout all of our business activities, markets and value chain. By promoting ethical, transparent and inclusive policies and practices, both within our company as well as across all our partners and suppliers, we seek to foster a culture of doing the right thing. As signatories to the UN Global Compact for the last 12 years, we have committed to its guiding principles to respect human rights. We are also committed to International Labor Organization standards on child labor and minimum working age. We aim to prevent human rights violations by proactively identifying any issues in our business and supply chain and responding promptly with appropriate action. We continue to benchmark and improve upon our approach to human rights through industry working groups, including the Pharmaceutical Supply Chain Initiative, Business for Social Responsibility and Fair Wage Network with a particular focus on due diligence, human rights audits and responsible sourcing initiatives. And we are committed to driving the highest ethical standards, notably by maintaining 100% of active employees trained on our Code of Ethics. From an inclusion and diversity perspective, we are strengthened by a diverse workforce and value the difference of our employees, suppliers and stakeholders across our value chain. We are determined to promote an inclusive and equitable environment where people belong, using our diversity as a competitive advantage to push the boundary of science and deliver life-changing medicines to patients. We continue to evolve our I&D strategy to allow us to prioritize and streamline our efforts in areas we can drive lasting systemic change for our organization and for the society. Every component of our I&D mission is critical to our success. In 2022, there were 49.5% females in management positions on track to achieve gender equality by 2025. 17.7% of SET members or their direct reports are from emerging markets and Japan, where we are on track to reach our 20% target by 2025. Our global Inclusion and Diversity Council is chaired by our CEO and comprises senior and rising leaders who are representative of our global workforce. This group is accountable for advising on and enhancing organizational progress towards global I&D ambitions as well as working with local leaders to ensure an approach that is tailored to meet local needs. Our Board of Directors and the SET conduct biannual and quarterly reviews, respectively, of our workforce composition covering gender, ethnicity and age representation. Lastly, we remain committed to providing a healthy and safe working environment and are embedding a SHE culture which stands for safety, health and environment across our entire organization. Areas of focus include fostering a culture of learning, human and operational performance principles, engineering and preventative maintenance and supporting employees' health through flexible ways of working, access to disease prevention and treatment and mental health services. Now before we move to the Q&A session, I want to reiterate our continued commitment playing our part in tackling the biggest challenge of our time from climate change to access to health care and disease prevention. We are harnessing the power of science and innovation and our global reach to make a positive impact on society, health care systems and the environment. This starts with us but matters to everyone everywhere. I am proud of our efforts to address climate change. Our focus on increasing equitable and affordable access to our medicines and our continued cultivation of an inclusive environment that recognizes the power of diversity in driving innovation. In 2023, we will continue to accelerate our efforts in delivering our sustainability goals but we cannot do it alone. Through our expansive collaborations and partnerships, we will further unite and drive collective action at scale, setting a benchmark to inspire others. With that, we will now move to our Q&A session. Please advance to the next slide.

[Operator Instructions].

Pam, thank you very much for your commentary. We've received 1 written question. The first question we've got through is on -- about our Scope 3 emissions, which have increased from 8% from our baseline year, how will we achieve or how will you achieve your 2030 targets?

Sorry, I was speaking on mute. I'm going to give [indiscernible] on that question and I'm going to hand it over to Juliette and team to opine on a bit more. As a growing business, the spend in our value chain is increasing. And consequently, our modeled Scope 3 footprint is increasing. So therefore, engagement across our entire value chain is critical to reduce our Scope 3 emissions, which represents, as I've said, 96% of all AstraZeneca total greenhouse gas emission. So as a reminder, we are committed to reducing absolute Scope 3 greenhouse emissions by 50% by 2030 and 90% by 2045 from a 2019 base year. I can assure you we are on track in achieving these broad ambitions. So with that, let me hand it over to Juliette to share the details. Juliette?

Yes. Thank you very much, Pam and thank you for the question, Lauren. Three very specific things to say to give you assurance of the actions that we're taking. First, Pam already talked about the collaboration across the pharmaceutical sector. Many of the suppliers are shared across the sector as a whole and programs such as Energize enabling suppliers to switch to renewable sources of energy that they might not have been able to do without the pharma sector coming together is one very practical step. Second is that as part of the Sustainable Markets Initiative, we have engaged across 7 of the private sector within the pharmaceutical industry and we have gone out and we shared a joint supplier standards. And that is educating and working with suppliers to enable them to look at how they disclose their emissions and then some real practical steps in addressing those emission reduction. Thirdly, in terms of partnership, more broadly through the Pharmaceutical Supply Chain Initiative, there are a number of programs, which really work with particularly the smaller suppliers that might not have the scale of some of the large pharmaceutical suppliers to enable them to begin to take practical steps to decarbonization. So when AstraZeneca enacts as part of the overall industry sector, we help not only ourselves but more broadly, some of that decarbonization, particularly within Scope 3, begin to occur. If we look at the big drivers, they tend to be around heat, energy and transport and we have programs in all of those 3 areas. Thank you, Lauren, back to you.

Lovely. Thanks all. And I can see [ Jacob Gemmell ], you've got your hand up. So I'll unmute your line. If you can ask your question, that would be great.

So just to follow up sort of on the Scope 3 side. You mentioned the Energize initiative and the 210 suppliers. Could you expand on that a bit, sort of how big part of the supplier base? And is it the top suppliers so far? Or help us understand a bit more how you can drive that onboarding in that program?

Thank you for the questions. Again, let me get started, and then I'll hand over to Juliette and team to add. So above and beyond the Energize program, certainly, we have about 210 of our key suppliers, these are key suppliers who have -- some of the -- a majority of them are our major suppliers. But above and beyond the Energize initiative, we've actually had significant cooperation from our supply base thus far, we have, as I said, our goal is to have 25% of our key supplier spends to have science-based target by the end of 2023. So I've been -- I'm also -- have -- my remit includes global procurement. So we've been out with majority of our suppliers in terms of influencing and really asking for their support in becoming -- taking on science-based target initiatives and we've had tremendous reception so far. Juliette?

Yes. Great. Thank you, Pam. So a couple of additional comments to make. The first cohort is now moving forward to contracting. And as Pam said, that's 2 terawatts of power, which is pretty substantial. The reach of Energize with 16 pharma companies has targeted European and North American suppliers because of the greater availability of renewable power in those areas. We are actually working through the Sustainable Markets Initiative to source and power purchase agreements in China and India where there is less availability on the market. These suppliers -- all suppliers have been invited to participate, however, over the last year, we have really focused on about 1,200 of our suppliers that are the largest by volume and value of spend. So I hope that gives you a little bit more detail into the question.

Lovely. Thanks, both. I have another written question and this is -- this time it's on Access to Medicines Index. Congratulations on your third place. Please, could you give us a sense how much was driven by your vaccine and what we can expect from the index next time it launches?

Thank you for the question. Stefan, would you like to address that?

Yes, absolutely. Thank you, Pam and thank you for the question. So yes, indeed, we climbed the rankings through the Access to Medicines Index from seventh place to third place. And probably many of you know that the Access to Medicines Index is split into 3 pillars: governance and access, where we improved to second place from previously third place; research and development, where we improved our scores but stayed at the sixth place; and then product delivery, where we are the best in the industry and ranks first place. So on the question of how much of this is related to the vaccine work. Definitely, it had a positive impact. But this is not a vaccine story alone. If you think about the product delivery category, we are committed to not enforce patents in over 80 countries. We disclose our patent status in index countries. We support Ebola research exemption. So there's a lot of work that we do that is unrelated to the vaccine. But of course, with relation to manufacturing and supply chain capacity building initiatives, which Pam mentioned in her presentation, those are related to the vaccine. And so also the licensing, the tech's transfer on [indiscernible]. These were particularly called out by the AtMI as best practices. To the other part of the question, what do we expect of the AtMI the next time around? As you know, this is a relative ranking versus other companies. So it's always difficult to anticipate the ranking. Our goal is always to improve our score to learn and do better from previous times. So our goal is always excellence in improving our quality and our scoring. But it's difficult to say will we land again on third place or second, fourth because it depends on what others do as well. So I'll just stop it there for the time being and happy to go into more depth later on.

That's great. Thanks, Stefan. I've got another written question this time on culture and inclusion and diversity. What it is AstraZeneca doing in order to encourage culture and inclusion and diversity?

Thank you for the question. I think it's a great question. Once upon a time, many companies looked at inclusion and diversity as an optional to do. We, at AstraZeneca believe that inclusion is our way and diversity is our strength. Both make a fundamental contribution to the success of our company because innovation requires breakthrough ideas that only can come from a diverse workforce empowered to challenge conventional thinking. So I hand over to Heather to opined in a bit more detail here. But our goal is, as I shared before, is that we need to foster an environment where every employee feels that they belong. They come to work and they do their best work. They have the courage to speak up and they have the courage to share the ideas and to learn from one another. So maybe Heather, could you opine?

Yes. Absolutely. Thanks, Pam. And just to add to that, I think some of the concrete things we've done is, we have a global Inclusion and Diversity Council in the company that's chaired by our CEO and includes young and emerging talents across the organization to help really get that feedback loop from our broader global workforce. We mentioned sort of some of the targets that we've set in terms of our management representation looking like our employee representation and the broader workforce and ultimately, the patients that we serve. And I think from a culture standpoint, certainly the speak-up culture is something we've talked about on some of these calls before. And we mentioned in our sustainability report, this also extends though to how we work with our third parties' suppliers and partners, really focusing on inclusion and diversity. We have a specific supplier diversity program and a goal to expand that to 10 countries by 2025. We're in 8 so far. So we're really doing work, I think, across our employee population, how we train our managers, the company culture but also how we make that broader impact in terms of working across our value chain and supply chain. Thank you. Back to you, Lauren.

Lovely. Thanks, Heather. And Will [indiscernible], I can see you have written a question and also have your hand raised. So we'll just open the line for you to ask the question.

I'll ask the question. Sorry, I wrote down the thing. Look, you gave data on the animals used for in-house studies but you haven't broken down the nonhuman primates you use. So can you give me those numbers for in-house and used by CRO? And in light of the DoJ investigation into NHP export from Cambodia, what are you doing to ensure that your NHPs and those used by the CROs are from breeding farms rather than being captured from the wild? And any kind of further comment you have on this broad issue and concerns generally about this would also be helpful.

Heather, would you like to address that?

Yes. Let me -- sorry, I was on mute there for a second. I can provide some comments and we can follow up with some specifics if necessary. So less than 2 -- basically nonhuman primates and dogs represent less than 1% of the animals that are used in research by the company. We don't have a further more detailed breakdown than that. And in terms of both internally with the company, we do work with some CROs as well. We do the majority of our work internally within the company abiding by the 3Rs, principles refining, replacing and reducing the need to use animals in research wherever we can with other alternatives. We are, of course, required to use certain animals in certain types of experiments from a patient safety perspective by regulatory organizations. But we continue to try to look at new technological alternatives that will replace that. In terms of our third-party suppliers, we have an extensive due diligence program across all third-party suppliers in certain high-risk areas such as animals and research. We have special requirements and due diligence that are done by our experts inside the company as well as additional assurance activities and audits that go beyond just what -- initially when we engage a particular company. And I think maybe to the more specifics, Lauren, we can follow up perhaps with -- on the question off-line.

Yes, happy to. Thank you so much, Will, for the question. Thanks, Heather and Pam. So next question we have written is from [ Christopher Asaolu ]. Are the organizational changes, adjustments to lead sustainability efforts within the company temporary or permanent? If temporary when should permanent appointments be expected?

So thank you for the question. I can take that one. I don't know the definition of permanent but I can speak to the fact that this organizational change is not temporarily. Let me start by saying that it is such a privilege for me to be leading sustainability and super excited about what we can all do together. You've heard about our ambitious targets and we've got an organization that are excited and motivated to drive forward. We will continue to drive the great work that Katarina has been leading for some time. I think the new organizational structure, it is quite natural. I head up global operations and IT, where, no pressure to me but I own about 80% of our Scope 1 and 2 greenhouse gas emissions and obviously, a significant part of our Scope 3 as well. So naturally, it's in the remit of what I was doing as EVP of Global Operations and IT. And certainly, I have the passion to be leading in this space. Now in terms of ethics and transparency being with Jeff Potts and who is a Chief Human Resource Officer and Compliance Officer and General Counsel, there's a lot of synergy in that space as well. And from a health equity and access to health care perspective, this is where we are working as 1 team along with a different set of areas to ensure and again, whether it's operations or marketing companies around the world to really drive -- continue to drive the health equity agenda across the board. So the organizational change is not temporary, I assure you that. We believe that there's a lot of synergies in the new structure.

Lovely. Thanks very much. Another question we've got is from [indiscernible]. My question, could you please describe your processes for assessing and managing human rights risks in conflict-affected fragile and high-risk areas?

I could -- go ahead, go ahead, Heather.

All right, Pam. I can -- I think I can start off with that one, Lauren. So in terms of human rights risks and we really -- we consider human rights part of ethical business culture when we think about our sustainability priority areas. And there's a number of different responses to it. I think, first, in terms of dealing with suppliers and our partners, part of our due diligence process does cover human rights, which is a very broad area, so it covers things like fair labor standards, health and safety, a number of different other areas, inclusion and diversity, et cetera. So that is part of our due diligence process. We also, for certain types of human rights risks, for example, forced labor and modern-day slavery, there are legislation in several countries but we apply this globally. And that -- although we're not in a super high-risk industry for this, we certainly have certain types of materials or equipment supplies, et cetera, that do trigger this risk more so, for example, biological -- human biological samples. Some of the products that are used in manufacturing process for tablets and pills and such. So in those areas, we do apply additional screens, publicly -- looking at different public resources but also doing more audits and questions, et cetera, in those areas. And frankly, also trying to increase awareness. So we really want to leverage our third parties and our suppliers to really raise awareness in these areas but also raise standards and share best practices. So we see it as a way to make a broader impact through that partnership.

Lovely, thank you very much. And we've had a question from [ Pete Dsouza ]. As the drug mix shifts more to specialty illness, I presume it's much harder to measure access to these kinds of treatments. How will you quantitatively understand access to the kind of medication AstraZeneca is involved with if third-party data providers care mostly about the most common diseases?

Great question. Thank you. I will start and Stefan, I hand over to you after a brief remark here. I think it's really important to remember that Access is, it goes beyond just pricing, for example, right? It really is about what are we doing with the local markets and local communities around early diagnostics education to ensure that we are catching the disease early and that we are looking at the entire ecosystems of health care in the communities. So Stefan, maybe you can add a bit more color?

Absolutely. Thank you, Pam. Yes, indeed, so I mean, we have a full spectrum of therapeutics in our portfolio. And for rare disease, obviously, we almost know these patients by my name. It's such a small patient number. But then there are 700 million people suffering from chronic kidney disease in the world. So we have the full spectrum. And I think what is really important is not just to know how many patients we reach but what is the gap? How many people could benefit from the medicines and what can we do as a company to provide sustainable access to these patients? And so access to screening, early detection of diseases like lung cancer, chronic kidney disease, this is extremely important and there is a huge role in our sustainability efforts. So we have very broad partnerships with medical organizations, with industry peers, with governments to broaden the access to screening, early detection, to guideline-based care. And this unlocks huge human value. Obviously, if you treat diseases earlier, to give you an example, if you treat lung cancer, on average, there's a 20% globally that has a 5-year survival rate. But if you treat it early in stage 1, that improves to 70% to 90% chance of surviving for 5 years. The health care costs are obviously much lower as well. In the United States, if you treat stage 1 lung cancer, it costs an average around $160,000. But if you treat it in stage 4, it costs over $400,000. Let alone all the broader economic value that is unlocked through people living longer, healthier lives, the productivity that they have in the workplace and in unpaid settings. So I think the really important measure that we are increasingly interested in is the delta, how many more people could benefit from the access to our therapies but also access to screening, to earlier detection because that's the right thing to do for patients, for the economy and of course, it supports our business as well. I'll hand it back to you, Lauren.

Lovely. Thank you, Stefan. Thank you, Pam. We have another question. How has AstraZeneca overcome the structural problem of weak representation of women in STEM to already reach closer gender quality in management positions?

Thank you. I think the short answer to that is we've come a long, long way. I have to say, being a chemical engineer myself, purely, the populations of females in engineering has increased over time, quite certainly. And if you look at global operations where we are responsible for manufacturing and supply chain, global operations within AstraZeneca, our total female population is close to 45%. We've done specific efforts, outreaches to ensure that we encourage female in engineering and STEM roles. We have similar numbers in R&D as well. And we shepherd them through the ranks either through technical ladders and managerial ladders. So if you look at where we are, our baseline of sort of, in an organization about 15,000 of manufacturing and supply chain, approximately 45% of which are women. And with that great base of talent, we have quite a bit of opportunities to kind of uplift and encourage women through their career development and the capability development and resulting in the higher percentage of female in management, as I talked about. So I know, Juliette, you are passionate in this space as well. Perhaps you can add to that.

Yes. Thank you, Pam. So it's a super question and maybe a couple of things to say very specifically about actions that we've taken to address and overcome barriers. And we have committed to female mentorship and actually providing mentors and specific development programs to many of our female rising leaders, making sure that we capture people early in career and help remove barriers that are specific to them and the challenges that they might see. Secondly, we have an open culture where twice a year, we run a broad employee survey. It's a 100% opportunity for everyone to participate. And that drives real action planning from the senior level of the organization down to each individual unit. And one of those questions is looking very specifically around the extent to which employees feel included. And that enables action plans to be driven at a local level. I think the third thing is that we have an incredibly active and passionate employee resource group. And we have employee resource groups at a local level and also at a global level. And we participate and work actively with those employee resource groups. They are the voice of the organization. They come forward with many very practical suggestions that address challenges that employees face in society more broadly and how do we ensure that those societal challenges don't translate into the workplace. So it's really been about committing to a number of those activities over the last 3 to 4 years in a real double down way and we are now seeing, as Pam shared, some of the changes come through in our overall statistics and data. Back to you, Lauren.

Thanks all. And Mikhail [indiscernible] and I can see you've got your hand up. We're going to unmute your line. Please go ahead and ask your question.

Okay. Great. So I'm looking at the employee survey here. And I had a question, what is the participation rate on that? And if I look at the scores, it looks quite good. But then I look at employee turnover. And for the first year, you're giving the total employee turnover and it's 18.9%, which seems quite high to me. How would you explain that high figure?

So let me try to address that. I think, Mikhail, can you tell me which year are you referring to in terms of the turnover data?

Mikhail, you'll need to raise your hand again in order for us to unmute your line.

I believe that's 2022, Pam, referenced the 18.9% in our [indiscernible].

Yes. So previously, you've only given voluntary employee turnover and this year, you're giving the total employee turnover, which is more relevant, in my mind. And I can't compare to what it has been previously because you're not disclosing that. But 18.9% sounds quite high to me, especially when I look at the employee survey and where you score quite high, I would say. Sorry, I had twofold question. First, what is the participation rates in these employee surveys? And the second one is how you explain the high turnover rate?

Thank you very much. I think the participation rate was in the 90s. I believe it was 92%. We had an overall 92% response rate on our poll survey. So that's very, very high. Now to answer your question in terms of the total turnover of 18%, it is higher than what we've seen in the past. And one of the major drivers, which we are not alone in seeing is actually the aftermath of COVID and COVID. So -- and we -- I'll give you an example. In our technology center in India, for example, during COVID, there was significant -- I mean, we saw the -- a sharp rise in the turnover, I believe in many parts of India. The turnover rate for technology, service centers were around 35% and we were experiencing around 20%, for example. So we benchmark ourselves on turnover in each of the major markets where we have presence in. And almost across the board, AstraZeneca turnover is slightly lower than -- in some cases, significantly lower than the industry in which -- the other one that's -- the other market that's notable is China. Obviously, China, as you all know, the collective turnover for everyone in China is higher than the rest of the world. And over the past couple of years, there has been significant and fierce competition with the local biotechs, for example. But once again, as we kind of benchmark our turnover data, we consistently overall stay below the industry average. So I don't know if any of my colleagues want to add anything on that. Okay. Let's move, Lauren, to the next question.

That's great. I've had a question from [indiscernible]. My question is, animal testing figures seem to be increasing year-on-year. Pam just provided the figures. Whilst the company is committed to 3R principles, what has been driving this increase? And do you see it decreasing in the upcoming years?

Thank you, Lauren. We don't have a specific reduction target in terms of use of animals. And we note in our annual report, that's because technology has not yet advanced to the stage where we can really eliminate the use of animals from our research and development activities. They do remain a small and necessary part of developing new medicines. In terms of the increase, the need to use animals and the frequency or numbers or natures of the tests depend on many different interrelated factors, including how many programs we have at the preclinical research phase, the complexity of the disease or condition under investigation, regulatory requirements. But I'd also point out to the fact that our pipeline continues to grow and expand. And certainly, we've acquired new areas of business as well in terms of the different therapeutic areas and diseases that we're looking at. We are absolutely committed to the principles of the 3Rs, replacement, reduction and refinement use of animals in research, pursuing new technologies that can take the place of animals. And we believe that with our active and ongoing commitment, the numbers would actually be higher with our growth. So we haven't completely decoupled growth from usage but we're certainly doing our best to minimize it and only where absolutely necessary and according to the highest standards.

Lovely. Thanks, Heather. Thank you so much. And obviously, just to add a little bit with the addition of Alexion and that also will have incurred some increases there. Right. And to off -- one of the questions we have written down -- and bear with me, does AstraZeneca use or plan to use carbon offset credit? How much of your strategy relies on offsets or compensation?

So I'll start and pass it over to Juliette and team. I mean I think it's really important to recognize that AstraZeneca's sustainability targets are really -- our targets are centered around absolute reductions. Scope 1 and 2, as well as Scope 3. And we use these offsets in a very, very limited way. So maybe, Juliette, you can share some details here.

Yes, absolutely. Thank you, Pam. And so our strategy is based on a reduction and elimination of greenhouse gases. However, as you will see in our SBTi verified targets, that's down to 50% from 2030 down to then the net zero of 90% by 2045. And during that 2030 to 2045, we will have what we are calling nature-based solutions as part of that carbon offsetting strategy. Our nature-based solutions are focused on broad biodiversity, not just purely carbon credits and they are also focused on creating in local communities that we work with, where we're setting those projects up, both creating skills, jobs and actually making sure that we create sustainable programs that are beyond it. So our strategy is following the hierarchy of reduction and removal first. And only where that proves impossible for a period of time, we will use nature-based compensation as part of our strategy. We published a biodiversity paper last month and we are really happy to send that to you. Perhaps, Lauren, we could do as a follow-up, which really outlines the kind of strategic approach that we are taking more broadly to nature, biodiversity.

Lovely, thank you. And we have another question in -- on what progress -- any progress to report on efforts to improve diversity in clinical trial populations?

That's another great question. On clinical trials, while we have not set explicit targets, we are absolutely committed to ensuring that our trial represent the diversity of the communities we serve, by embedding diversity and inclusion parameters into the entire clinical development life cycle. That includes a diverse geographic selection for clinical trial development as well as early access and continue sort of post-trial access for clinical trial participants. I mean it's probably good to mention that in 2021, we were one of the 23 companies that contributed to a study by The Tufts Center for the Study of Drug Development, on increasing diversity in clinical trials, which was delivered at the end of 2021. It was conducted on a global and across industry basis to kind of gather baseline measurements of clinical research staff diversity at investigative sites globally and to identify opportunities to better engage with and enable them in a successful execution of clinical trials. So we are -- we have developed and have diversity measurement tools to kind of build on and including our updated data systems and infrastructure to ensure that we have diversity on ongoing trials to ensure that they represent the alternate patient population. And I don't know, Heather, would you like to add on that?

Yes, sure. I can also add that our R&D folks have really taken a systematic approach to examine our own trials and done an analysis and that they plan to publish our findings later this year. So more to come on that. I think also and I mean, it's really part of the broader health equity issues. And so I think some of our strategy around that really plays into this very important issue and our commitment there. In addition to increasing the diversity of our clinical trial participants, which, by the way, isn't just the right thing to do, it's also the right thing to do for the science, we're also working to increase the diversity of our clinical trial investigators. And I think they really go hand-in-hand in terms of the patient populations that we can recruit, the trust that we can build with those communities and also working to write some of the inequitable access to health care and other issues that disadvantaged populations face. So it's really a part of a broader strategy to hopefully produce better outcomes.

Lovely. Thank you very much. I think that's all we have time for, I'm afraid. Thank you very much for all the questions. The IR team will follow up on anything outstanding. But thank you very much. Pam, did you want to close the call, any -- some final commentary?

Yes, maybe just a quick comment. Thank you very much for the great questions today. And we truly believe that we can progress our sector leadership in sustainability as an organization. And we are clearly leading the way in our ambitious targets and the actions we are taking. So we look forward to partner with the broader sector and beyond to continue to drive this important agenda. Thank you for your support.