External assurance

Bureau Veritas’ Independent Assurance Statement

To: The Stakeholders of AstraZeneca PLC

INTRODUCTION AND ASSURANCE OBJECTIVES

Bureau Veritas has been engaged for the fifth year by AstraZeneca PLC (AstraZeneca) to provide independent assurance over its Corporate Responsibility (CR) reporting and programme.

As a global, research-based pharmaceutical company, AstraZeneca faces a diverse range of challenges and issues that could potentially have an impact upon its reputation.  These issues include: patient safety, access to medicines, sales and marketing practices, research ethics, outsourcing and externalisation, human rights.  There are also issues that arise from restructuring the business.  In response, AstraZeneca continues to promote a culture of responsibility and accountability across its business operations.

This background has been used to inform the scope of the 2008 assurance conducted by Bureau Veritas.  Building on previous years the assurance process aims to:

• Understand how AstraZeneca identifies its material risks and emerging issues in a rapidly changing environment;
• Provide reassurance to stakeholders on AstraZeneca’s management of these issues;
• Challenge AstraZeneca’s associated CR strategy, performance and reporting;
• Promote performance improvement as the CR strategy moves from value protection to value creation
• Be strategic and forward-looking and consider emerging issues;
• Check the accuracy of the CR information, statements and data reported; and
• Check progress against the recommendations from the previous assurance exercise.

SCOPE OF WORK

The assurance process was conducted in line with the requirements of the AA1000 Assurance Standard (AS 2003).

The scope of work included a review of: i) the provision of CR related information in the ‘Responsibility’ section of the AstraZeneca website, www.astrazeneca.com; ii) specific CR related content within AstraZeneca’s Annual Report and Form 20-F; and, iii) AstraZeneca’s performance against the G3 Global Reporting Initiative (GRI) at the B+ application level.  

The assurance process examined the overall CR programme and how CR is integrated throughout the organisation via interview and audit, including country visits to the US Head Office, China (taking place in March 2009) and MedImmune (in USA). Specific areas of focus for the visits included a review of CR governance processes, alignment with AstraZeneca’s global CR policies (where appropriate) and review of localised CR issues and their management.

The preparation and content of the Annual Report, Form 20F and ‘Responsibility’ website is the sole ownership of the management of AstraZeneca.  Bureau Veritas’ responsibility is to provide assurance over the reliability of the information contained therein and to express an overall opinion as per the scope of assurance.  Further details of the scope, methodology, limitations and exclusions of our work are provided at the end of this statement.

OPINION

In Bureau Veritas’ opinion, based on the work carried out in 2008, the content of the ‘Responsibility’ website and CR content in the Annual Report, Form 20F:

• provides a fair summary of AstraZeneca’s performance in relation to the CR issues identified by the company to be of material interest to stakeholders and demonstrates AstraZeneca’s alignment to the principles of AA1000AS (2003);
• includes position statements that are aligned with corporate policies and objectives;
• provides factual information that can be considered to be accurate and reliable and is reported in a clear and accessible manner;
• presents Key Performance Indicator (KPI) data that accurately reflects information collected at site level and collated by AstraZeneca at corporate level;
• demonstrates further improvement in AstraZeneca’s alignment with the G3 GRI reporting (B+ application level’) -  and
• highlights AstraZeneca’s continued commitment to embedding CR governance, management and responsible business practices across operations.

PROGRESS AND RECOMMENDATIONS AGAINST MATERIAL ISSUES

As part of the previous year’s assurance process, Bureau Veritas identified a number of material issues for further consideration by AstraZeneca.  The section below outlines progress made by AstraZeneca in addressing these, identifies areas for continued emphasis and provides recommendations for improvement:

1. Governance

AstraZeneca has continued to further develop and embed its CR strategy, management and governance in 2008.  This is exemplified in the creation of a Global CR team to coordinate corporate CR management as well as further development of integrated local CR management functions, and significantly, in the inclusion of CR principles into its senior management business performance objectives.  AstraZeneca has also recently undertaken a review of its Priority Action Plan (PAP).

Area for continued emphasis:  AstraZeneca should continue to review and monitor CR governance and management processes in 2009 to ensure they are further integrated, operating effectively and promote performance improvement.  Specifically, AstraZeneca should ensure that any revised PAP takes account of feedback from stakeholders and includes specific, measurable and challenging targets supported by Key Performance Indicators (KPIs) that address its material issues.

2. Stakeholders

AstraZeneca has a variety of mechanisms in place to identify its material issues and has improved the way it incorporates stakeholder concerns into its risk and CR management processes.  One of the main purposes of the Issues Management Council is to ‘horizon scan’ reputational and CR issues of concern to external stakeholders.  It also conducts ongoing stakeholder dialogue on specific issues.

Area for continued emphasis:  The outcomes of stakeholder dialogue sessions and materiality reviews should continue as part of AstraZeneca’s risk identification strategy, KPI development and CR reporting processes.  There is also opportunity for increased transparency on how this is taken into account within the CR Report.  For example, this could include resulting policies/position statements and how these relate to stakeholder feedback, and to any lobbying activities.

3. Restructuring

AstraZeneca has continued to engage its employees in 2008 regarding the impacts of the planned restructuring from both senior and local management level.  In addition, AstraZeneca now conducts its global employee survey (FOCUS) annually.

Area for continued emphasis:  AstraZeneca should continue to engage transparently with employees on the planned restructuring until 2012. Internal and external engagement / communication on the restructuring should also take into account the current global economic downturn, and the fact that there will be increasing focus on large, global organisations (such as AstraZeneca) and how they respond to and conduct restructuring programmes during challenging economic conditions.

4. Outsourcing / Externalisation and Acquisitions

AstraZeneca continues to develop its approach to integrating CR risk management into its procurement and supply chain activities via the CR Principles in Purchasing guidelines in 2008.  In relation to acquisitions, AstraZeneca has integrated CR issues management and reporting (where appropriate) for new members of the organisation.  This approach is seen to be working effectively at MedImmune in the US.

Area for continued emphasis:  AstraZeneca should continue to integrate and implement CR risk management into its supply chain activities.  Given the increasing focus on outsourcing certain business functions, Bureau Veritas would also recommend making this a focus area for future assurance.  AstraZeneca should also ensure that that a formalised process is in place to conduct CR due diligence in future acquisition, and to include related performance information in its CR reporting process.

5. Access to Medicines and Pricing

AstraZeneca’s long-term approach and level of commitment to its community support programmes both in developed markets (e.g. Medicare in USA) and in developing markets (e.g. Red Cross, AMREF, AXIOS) is to be commended.  Its position on the access to medicines debate (which includes Pricing, Intellectual Property, Compulsory Licensing, Community Support and Diseases of the Developing World) continues to develop but is generally an area requiring an increased level of transparency.  AstraZeneca’s expansion into emerging/middle income markets and the impact of the economic downturn on patient’s ability to pay for medicine (e.g. in the US with potential legislative changes), means that the issues of pricing, patents and compulsory licensing are likely to become increasingly important.

Recommendation:  AstraZeneca should increase the level of transparency and type of information provided externally on the access to medicines issue, for example in relation to performance indicators and contextual information on contribution and the role that AstraZeneca plays.  It should also continue to review the applicability of different approaches to this issue in the future, such as the ongoing relevance of emerging markets or applicability of any changes in product portfolio to diseases of the developing world.  

6. Research and Development (R&D)

During 2008, AstraZeneca reviewed and strengthened its Bioethics Policy and has formalised governance and compliance functions regarding its R&D activities.  The development and implementation of the new regional improvement plans for US, Sweden and UK show AstraZeneca’s continued commitment to the 3Rs (replace, reduce and refinement).  Other initiatives, such as the new 3R award, also support this commitment.  AstraZeneca recognises that its entry into biologics means that there is the potential need to increase the use of primates over time with increased reliance of external/partner organisations (CROs).  This is likely to be a focus area for external stakeholders.  

Recommendation:  AstraZeneca should continue to provide clear and transparent justification and explanation for primate use and overall trends in animal use.  AstraZeneca should also continue to review effectiveness of new governance arrangements, and the ongoing regulation and implementation compliance of programmes under development (e.g. new primate welfare standards) by CROs.

7. Assurance & Integrated Reporting

AstraZeneca continues to internally review the recommendations made as part of the assurance process and address key areas for further consideration appropriately.  AstraZeneca has also reviewed feedback from the previous year’s assurance process and from other benchmarking activities (e.g. Dow Jones Sustainability Index).

Recommendation:  AstraZeneca should review the appropriateness of formally responding to the assurance statement and recommendations in the public domain and gain stakeholder feedback on its approach to CR reporting and performance.

ALIGNMENT WITH THE PRINCIPLES OF AA1000AS (2003)

With reference to the AA1000 Assurance Standard (2003), AstraZeneca discloses comprehensive performance information in relation to its main CR impacts and has achieved good completeness in its reporting. It discloses performance information that relates closely to those CR impacts deemed to be of material importance to the organisation and its stakeholders, although not always on the basis of formalised dialogue.  The reported information can be considered to be useful to stakeholders as a reasonable basis for their opinions and decision-making.  Responsiveness is demonstrated via its updated PAP and associated KPIs which have been reviewed during 2008, leading to enhanced reporting of its performance against issues of material concern. Opportunities exist to further quantify progress against the PAP and improve communication of the outcomes of AstraZeneca’s materiality review (as described in points 1 and 2 above).

GLOBAL REPORTING INITIATIVE - G3 GUIDELINES

Bureau Veritas has undertaken a formal review and gap analysis of AstraZeneca’s CR disclosures against the requirements of the G3 GRI application level B+.  This requires specific disclosure on strategy, risks and opportunities, governance and management approach to economic, environment, human rights, labour, society and product responsibility issues.  To gain the B+ application level an organisation must meet certain minimum disclosure requirements and report upon 20 KPIs (with at least one from each issue listed above) and have this information assured,

AstraZeneca exceeds these requirements.  It has further developed its GRI related reporting in 2008 to include new disclosure areas and 49 Indicators.  Further, AstraZeneca has increased its reporting on information relating to labour issues and human rights.  This demonstrates further improvement on its GRI B+ reporting in 2007.  Please see the GRI Index for further details.    

Bureau Veritas encourages the use of the GRI as one of the tools that can be used to consider which KPIs can help measure CR related performance in an organisation.  Bureau Veritas also believes that the focus must be upon the development and monitoring of material KPIs that are meaningful to both AstraZeneca’s business and its stakeholders and help drive performance improvement.  New systems and mechanisms are being implemented for a number of material issues (e.g. sales & marketing, animal welfare) across AstraZeneca and as part of the PAP.  The 2009 PAP should take account of feedback from stakeholders and include specific, measurable and challenging targets supported by material KPIs (as described in point 1 above).

This opinion has been formed on the basis of, and is subject to, the inherent limitations.  The assurance work was planned and carried out to provide reasonable, rather than absolute, assurance and we believe it provides a firm foundation for our conclusion.

OBJECTIVES OF ASSURANCE

The objectives were to:

1. Provide assurance over the AstraZeneca CR Report and programme.  This includes the content of the Annual Report and Accounts and CR information on its website for the reporting period 1st January to 31st December 2008.  Any web pages assured by Bureau Veritas include a reference at the bottom of the page providing the date of verification (e.g. ‘Content verified by Bureau Veritas February, 2009’). Pages may be updated and new content verified throughout 2009.  This mainly relates to information contained within the ‘Responsibility’ Section;
2. Evaluate the Report against the main principles of the AA1000 Assurance Standard 2003:
   • Completeness
   • Materiality
   • Responsiveness
3. Review AstraZeneca’s reporting against the requirements of the G3 Global Reporting Initiative (GRI) and assess its improvement since 2007 in terms of increasing alignment with the B+ application level;

Bureau Veritas  recognises the need for a robust, transparent assurance process to ensure credibility and to act as a tool to drive performance improvement of AstraZeneca’s CR programme.  This is achieved by providing an impartial commentary on the reporting process and, where appropriate, propose recommendations for further development that are elaborated in a separate Management Letter to the management of AstraZeneca.

SCOPE OF ASSURANCE

The scope of our work was determined through discussions with AstraZeneca and included provision of assurance over:

• AstraZeneca’s CR programme and management and governance structure, supporting policies, and related management and implementation systems;
• CR programme implementation in the US, China and at MedImmune;
• Factual information relating to CR issues, initiatives, systems and supporting data including key performance indicators;
• Progress over the reporting period

METHODOLOGY

Factual statements and supporting data were verified through a series of interviews, document review, data sampling and interrogation of supporting databases and associated management and reporting systems. This involved challenging and substantiating the content of the material presented in the Report. This process was used to assess the quality of reporting and underlying systems that support CR performance.  We have ensured, as a minimum, that the data has been accurately transposed into the report.

• We have interviewed more than 40 personnel at all levels throughout the organisation, including senior level, research and supervisory staff;
• We conducted site visits and interviews at AstraZeneca’s corporate offices in London and Alderley, UK and conducted telephone interviews with the national companies in the UK, US and Sweden, AstraZeneca’s three main business centres;
• Undertake a review of governance and compliance structures and CR implementation at the local level. In the 2008, visits were made to the US Head Office in Wilmington and MedImmune (Gaithersburg, USA)
• Information on the China visit will be provided as an update to this statement in March 2009

Our work should not be relied upon to detect all errors, omissions or misinterpretations.

LIMITATIONS AND EXCLUSIONS

Excluded from the scope of our work is information relating to:

• Activities outside the defined reporting period;
• Company position statements (including any expression of opinion, belief, aspiration, expectation, aim or future intention provided by AstraZeneca);  
• Financial data which is taken from AstraZeneca’s Annual Report and Form 20-F Information, audited by an external financial auditor.

STATEMENT BY BUREAU VERITAS OF INDEPENDENCE, IMPARTIALITY AND COMPETENCE

Bureau Veritas is an independent professional services company that specialises in quality, environmental, health, safety and social accountability with over 180 years history in providing independent assurance services, and an annual turnover in 2008 of €2.55 billion.

Our assurance team does not have any involvement in any other Bureau Veritas projects with AstraZeneca (none of which are CR related) and there is no conflict between the other services provided by Bureau Veritas and that of our assurance team.  

Bureau Veritas has implemented a Code of Ethics across its business which is intended to ensure that all our staff maintains high ethical standards in their day to day business activities.

Competence: Our assurance team has extensive experience in conducting assurance over environmental, social, ethical and health and safety information, systems and processes in accordance with best practice.

London, February 2009