116 2021 ESG Report Transparency Appendices Responsible supply chain Product impact Climate change Introduction Healthy workforce and communities Where the risk occurs in the value chain Upstream Risk type Market Climate-related driver Increased cost of raw materials Potential financial impact Increased direct costs Time horizon Short-term Likelihood About as likely as not Magnitude of impact Medium Description BD has more than 900 critical-to-healthcare suppliers that provide many different types of raw materials and components, including plastics, glass, metals, textiles, paper products, agricultural products, electronic and mechanical subassemblies, and various biological, chemical and petrochemical product. Our results of operations could be negatively impacted by volatility in the cost of raw materials, components, freight and energy, which, in turn, increases the costs of producing and distributing our products. New laws or regulations adopted in response to climate change could also increase energy and transportation costs, as well as costs of certain raw materials and components. In particular, we purchase supplies of resins, which are oil-based components used in the manufacture of certain products, and any significant increases in resin costs could adversely impact future operating results. Increases in oil prices can also increase our packaging and transportation costs. We may not be able to offset increases in these costs through other cost reductions. Our response This is managed through procurement and engineering expertise. BD’s strategic sourcing teams continuously assess our sole-sourced raw materials and maintain business continuity plans with our suppliers. BD’s continuity plans may include securing secondary supply with alternative suppliers, qualification of alternative manufacturing facilities, maintaining contingency stock, internal development of supply and establishment of technology escrow accounts. We also strive to increase our material efficiency through design and ongoing sustained engineering efforts. Sustaining engineering teams work on material reduction, packaging reduction and product improvements in order to mitigate our exposure to these risks. In 2016, we refined our approach to supplier risk profiling by adding reputational risks into our Enterprise Supplier Risk Management process, for direct suppliers. An initial set of risks were identified, and mitigation plans are in progress. We will continue to refine our risk model and adjust our top risks accordingly. As part of our 2030+ Product Impact commitment, we have to set a goal to work to address the impact of plastics through existing and new strategic partnerships that work across the value chain . T his includes our membership in the Healthcare Plastic Recycling Council, www.HPRC.org .