Procurement Practices | 103-1, 103-2, 103-3

Management Approach

Effective management of ecological and social effects along the entire supply chain is the key to securing high-quality raw materials, to providing sustainable products to our discerning customers as well as to ensuring ethical business practices. Our long-term goal is to source all our raw materials from sustainable and responsible sources and to do this in agreement with the sustainable development goals put forward by the UN. Given the high level of complexity resulting from the numerous material flows within our portfolio of raw materials, our operations face numerous challenges that have to be met in order to achieve our procurement goals. For example, these challenges include closing any information gaps regarding the origin of the raw materials as well as providing details relevant to the sustainability of producing and processing raw materials. This information is essential to being able to analyze performance in the area of sustainability.

By employing systematic supplier management and adhering to our sustainable sourcing policy, we ensure that suppliers are also maintaining our comprehensive standards on sustainability. This means that new suppliers must provide information about their sustainability program and the acceptance of ecological and social responsibilities along their supply chain. They also need to identify their ethics standards.

We require the safeguarding of general human rights, an undertaking not to make use of child labor or forced labor of any form, and compliance with statutory health and safety at work requirements. Furthermore, we expect our suppliers to allow their employees the right to freedom of assembly and collective bargaining, to observe at least the statutory provisions on working times and pay, and to make a clear commitment against discrimination and abuse.

We also require our suppliers to conserve resources, to reduce and prevent atmospheric emissions, soil emissions or effluents, to be involved in the preservation and sustainable use of biodiversity and to effectively avoid environmental risks.

These standards constitute part of our Group-wide risk management system. As part of this, we carry out systematic risk and performance assessments of all suppliers on the basis of economic, ecological and social aspects.

We assess the sustainability performance criteria of raw materials and products by using a sustainability scorecard system developed specifically for this purpose. This scorecard system offers internal and external stakeholders better guidance when making decisions about improved sustainability. At the same time, we are working with multistakeholder initiatives, such as SEDEX and the Sustainable Agriculture Initiative, so that we are able to affect sustainability performance along the supply chain more directly. This also applies to our backward integration approach. With regard to important core competences, we have deliberately chosen locations for our international production facilities where the raw materials primarily used are available locally. We not only purchase our raw materials there but are also integrated in the local economy, produce there and create value there. This approach allows us to support local socioeconomic structures and maximizes our ability to monitor and improve compliance with our ethical and ecological principles (see also management approaches for Supplier Environmental Assessment, Child Labor, Forced or Compulsory Labor, Human Rights Assessment and Supplier Social Assessment).