Buyers and Suppliers Working Together
This section provides practice examples to demonstrate how companies have built their sustainable procurement approaches to better engage with suppliers on topics related to decent work. The inclusion of company names and/or examples in this toolkit is intended strictly for learning purposes and does not constitute an endorsement of the individual companies by the United Nations Global Compact.
UPM Kymmene CorporationEngaging buying staff in communicating responsible sourcing expectations to suppliers
UPM Raflatac, a UPM subsidiary producing self-adhesive label materials, has a supply base of around 5,000 global suppliers. A challenge arising from working with such a large network of partners is how to communicate policies in a meaningful and credible way, so they are understood as a core component of the business relationship. The company also found that internal awareness and understanding of responsible sourcing, as well as an acknowledgement of responsibility for it, was limited to its sustainability team and dedicated Sourcing experts.
Internationally recognized international labour standards, such as the effective abolition of child labour and the elimination of forced labour, form part of the responsible sourcing commitment of UPM Raflatac.
In 2015, the heads of the sourcing and sustainability departments at UPM Raflatac embarked on an innovative awareness-raising project. To communicate responsible sourcing requirements more effectively to suppliers, the company has produced and publicly launched a video. Staff across and beyond the sourcing team appear in the video describing their understanding of responsible sourcing. Decent work requirements for suppliers are highlighted alongside other requirements regarding health & safety and environmental protection. The company deliberately included their own culturally diverse staff across hierarchy levels, who are shown in their everyday work environments and use simple language.
The video has been launched publicly and used in various supplier and customer events.
UPM Raflatac has seen positive outcomes both within their supplier base and internally within the company. While the main goal was to raise awareness among supply chain partners, the video production process itself has initiated an internal, cross-functional dialogue about responsible sourcing. A topic previously associated with the sustainability team has started to find its way into commercial functions, most importantly into the Sourcing team. Thanks to the project, the previous co-existence of the two teams have seen closer integration.
Externally, the company has received positive feedback from suppliers who appreciated the production as a personal way of communicating. The decision to have sourcing staff so publicly and explicitly endorse responsible sourcing values helped raise credibility among suppliers. The described outcomes additionally mark a crucial step in the process of building UPM Raflatac’s internal capability to support decent work.
By using simple language and including their own, culturally diverse staff across hierarchy levels in their everyday work environments, the video successfully resonated with its audience, the suppliers of UPM. The messaging of the video is strengthened through speakers directly addressing suppliers and acknowledging the responsibility of UPM to support them in their efforts.
Moreover, in order to have a successful conversation with suppliers, the internal capability to support decent work needs to be strengthened. By establishing good relations with their counterparts in the sourcing department, sustainability has built a solid foundation to engage in further conversations. Potentially, these could involve more technical aspects related to purchasing practices, decisions and goals in the future.
Engaging buying staff in communicating responsible sourcing expectations to suppliers
Restaurantes TOKSBuilding trust between suppliers and buyers to support the livelihoods of artisanal producers
Restaurantes TOKS is a Mexican restaurant chain with more than 200 locations across the country that employs more than 12,000 staff. Support for artisanal producers came from company leadership and their acknowledgement of the role the company could play in supporting the development of some of the indigenous communities in Mexico. This idea was shaped into a project set up to support inclusive and fair trade with local producers.
Challenges for the company included the building of trusting relationships with potential suppliers and winning internal trust in the quality and freshness of products as well as ensuring that production volumes, delivery times and other commercial requirements are met.
Since 2003, these so-called Productive Projects (“Proyectos Productivos”) engage small producers as suppliers of artisanal products for retail in TOKS restaurants. The goal is to support decent working conditions and communities in securing their livelihoods.
Productive Projects is a truly collabourative project initiated by the CEO of TOKS in collabouration with its Procurement Director and managed by Corporate Responsibility. It is further based on consultation with communities, state and national government and civil society organizations.
To develop the capacity of small producers to meet TOKS standards of freshness and quality of produce as well as delivery times and volumes, the company established a process of continuous engagement and communication which included field visits. There is space assigned for consultation and feedback to suppliers to help them to move towards meeting commercial requirements.
TOKS was able to integrate the trading relationships with small producers into its long-term buying strategy — helped by the fact that they soon turned out to be profitable. It also contributed to positively changing the organizational culture, including through stronger employee identification with and commitment to the company. It also contributed to developing stronger supplier loyalty.
When establishing these innovative commercial relationships, the company was first faced with scepticism from the producers who did not seem to have faith in the company’s commitment to them. The key for TOKS was to allow sufficient time — over a year — for the relationships to grow and foster.
One of the main lessons learned is to understand that trust between communities and the company is fundamental for the success of a project. To develop a win-win relationship, trust is often gained in stages by translating words and agreements into actions.
Building trust between suppliers and buyers to support the livelihoods of artisanal producers
Assent ComplianceFostering a culture of supplier data sharing by aligning procurement and decent work evaluation metrics and rewarding high performing suppliers
Assent Compliance, a supply chain data management solution provider, faces the same challenges as its customers in monitoring and understanding its supplier practices and procedures and the human rights risks related to its workforce and industry and country of origin, among other things. There are significant barriers to acquiring sufficient, high-quality and insightful data from their supply chains and implementing systems to improve and influence sustainable practices.
To overcome these barriers, it is critical to secure active supplier participation and buy-in on the data gathering process. Assent has considerable expertise in meaningful and supportive supplier engagement and optimizing and automating workflows with industry-leading technology tools. Success factors underpinning this engagement are identified by Assent as:
- Implementing data exchange standards
- Educating suppliers
- Speaking the right language
- Providing support
- Keeping it simple
- Starting early
Assent engages and influences suppliers through its Preferred Supplier Program which awards greater business volume to suppliers with strong corporate social responsibility (CSR) practices. The programme was established by a team of regulatory and supplier engagement experts at Assent who devised an annual survey that includes human rights criteria to assess supplier progress in ethical operations and drive continuous improvement. To facilitate supplier participation in this programme and effectively manage the process, Assent leverages the same supplier engagement platform used by its clients.
The Preferred Supplier Program has been piloted among a smaller set of suppliers and will be rolled out to Assent’s broader business operations in the future. The company successfully managed to “expand the scope of how the buyers at Assent select suppliers based on established CSR criteria.”
Assent sees the programme’s cross-functional nature as a significant success factor in obtaining buy-in from multiple departments and working groups. To accomplish this, the assessment process integrates traditional procurement indicators such as ease of doing business, on-time delivery and quality with social responsibility metrics including decent work in supply chains. It has also been established jointly by the sustainability and procurement teams at Assent, thereby ensuring it is embedded into core business processes.
Fostering a culture of supplier data sharing by aligning procurement and decent work evaluation metrics and rewarding high performing suppliers
DaimlerPromoting dialogue and good practice sharing with supplier workshops
In the area of service providers, Daimler wanted to share their expectation level on human rights and decent work with selected suppliers and learn about their perspective and potential challenges in daily business operations.
Daimler set up a cross-functional team of procurement compliance, human rights experts and local buyers to meet with selected logistics providers in Romania for the first so-called “Good Practice Sharing Workshop.” The objective of the workshop was to create a constructive and dialogue-oriented atmosphere for an open exchange instead of an audit-like setting.
In an initial step, the Daimler cross-functional team demystified the complex concept of human rights and explained the Daimler approach of the “Human Rights Respect System.” In what followed, the aspect of potential risks was narrowed down to specific logistics questions and detailed the different areas where human rights can be impacted. Thereby, special attention was paid to the operational level of these risks, for example, specific labour conditions in a given context. In the subsequent discussion, the invited suppliers were encouraged to share their views and practices and discuss specific suggestions with regards to the collaboration with Daimler.
Daimler emphasized throughout the workshop that their aim was to encourage and support their tier one suppliers to establish adequate measures to ensure human rights requirements in their collaboration and potential sub supply chains. It was also clearly stated that the workshop results would not lead to contractual consequences in any way.
From an operational perspective, several specific levers to improve working conditions were identified and the implementation of measures agreed upon by both sides.
The pilot workshop in Romania provided an eye-opening experience for both the Daimler team and the logistics suppliers. Before, both groups were eager to work on the improvement of human rights and decent work conditions, each from their specific perspective. The constructive dialogue enabled one group to learn about operational challenges in the implementation of a human rights strategy and the other group to understand the importance of even small measures in their work. Feedback from all participants was very positive and established the foundation for future discussion.
The transparent setting allowed very open and constructive discussions, leading to specific and implementable measures that were accepted by all participants. The setting was also very much appreciated by the suppliers as it was understood as an offer for support and a sign of recognition by Daimler. Furthermore, the preparation and conduction of the workshop were very lean and effective for all involved parties.
Based on this experience, Daimler decided to conduct further pilots on “Good Practice Sharing Workshops” in different high-risk locations and commodities.
Promoting dialogue and good practice sharing with supplier workshops
PVH CorpLaunching an Interactive Responsible Business Practices Training Based on a Forecast Accuracy Case Study
For companies with extensive global operations, it is challenging to foster a culture of accountability for human rights abuses that occur throughout the supply chain. Employees at the buyer-level are often far removed from supplier and subsidiary activities and the human rights implications of irresponsible business practice.
To tackle this issue, fashion and lifestyle brand PVH sought to raise awareness of the links between buyer and supplier activities and how all employees can help promote ethical working conditions at the factory level and beyond.
In spring 2019, PVH staff from the supply, merchandising, operations and sales functions participated in an interactive Responsible Business Practices Workshop. They were asked to think critically about the root causes of unethical and unsafe working conditions and the industry tools that could be used to evaluate areas for continued improvement.
After mapping possible scenarios, participants carried out case investigations to illustrate the outcomes of various business practices for suppliers. They worked collaboratively to assess real case studies that had been previously developed by the corporate responsibility team in partnership with one of the strategic suppliers of PVH. Employees had access to supporting information in the form of email correspondence between different parties that simulated the exchanges in the case.
One scenario involved assessing the implications of inaccurate and delayed forecasting, which can prevent suppliers from being able to plan production accurately. This can lead to unauthorized subcontracting and labour standards violations such as excessive overtime, underpaid wages and an absence of formal legal protection for workers.
The cross-functional groups then conducted a root cause analysis of every risky business practice and explored different cause and effect scenarios to understand the outcomes of operational decisions for all actors involved. They then discussed how changing business practices at the buyer level could mitigate human rights risks along the supply chain.
The workshop facilitated greater dialogue and understanding amongst business partners around the collective responsibility to maintain high labour standards. It also heightened awareness of the changes individuals can make to their everyday business actions across functions to prevent infringements of human rights and damage to supplier relationships.
The workshop at PVH demonstrates the importance of linking specific buyer-level practices to human rights outcomes to better understand the root causes of abuse. By using real case studies and documented resources to facilitate open and honest communication, staff can address systemic irresponsible business practices by making changes to their behaviour.
Moreover, it reveals the interdependence of buyer-supplier activities and the necessity to involve employees from all functions and seniority levels when mapping various operational scenarios and implications. This will help them appreciate how all business functions relate and highlight to senior staff the importance of promoting a working culture of accountability and collaboration.
Launching an Interactive Responsible Business Practices Training Based on a Forecast Accuracy Case Study
SAPRural Sourcing Management and Barry Callebaut – Supporting cocoa smallholder farmers and build sustainable supply chains through sustainable data management
Barry Callebaut, a manufacturer of chocolate and cocoa products, has a plan to make sustainable chocolate the norm by 2025. For this, the Group required a better mapping of the cocoa farmers in their supply chain — they work with thousands of smallholder cocoa farmers — to develop customized solutions to lift cocoa farmers out of poverty.
Barry Callebaut partnered with SAP in 2016 to develop a data management app that is now being used by farm coaches on the ground, enabling them to capture all kinds of data about the cocoa farmers and their farms. The data which is captured includes cocoa farm mapping, combined with farmer census inter-views, providing the Group with key insights into the geographical location, farm size, crops grown as well as the household composition and income of thousands of cocoa farmers and their farms. The app enables Barry Callebaut to know the farmers’ reality — their needs and challenges at farm and community levels — so that they can offer them tailor-made solutions on the road to increasing their livelihoods and helping them to make cocoa farming a profitable and professional business. It is also being used to combat child labour by capturing data such as the number of children in the family, distance to the closest school and how many children are enrolled.
The app that has been developed by SAP is part of SAP Rural Sourcing Management, a mobile business solution connecting smallholder farmers and suppliers in rural areas with the supply chain of global agribusinesses and consumer products companies.
SAP Rural Sourcing Management is specifically designed to increase productivity and improve communities' livelihoods by providing full transparency on the supply chain and their participants and full traceability of agricultural products.
The development and implementation of the data management app have changed the way Barry Callebaut implements sustainability programmes at the farm level. Instead of the previous one-size-fits-all approach of sustainability methodologies, they now have a better understanding of their supply chain and can customize solutions to what is needed in that region, in that community and on that farm.
The data allows the Group to evaluate and respond to specific needs. They can make now recommendations in the form of a Farm Business Plan that is specifically relevant to that farmer.
By using an app, it is also no longer needed to use paper for data collection. This has reduced the time required to get the data to the office for analysis and the possibility of losing the data collection papers in transit. Data collection itself is also much faster on a phone app than on paper, saving the coaches a lot of time so they can focus on working directly with farmers. Using an app also impacts data quality. The logic built into the surveys ensures that the right type of data is entered, which means that you get more useable data, which leads to more meaningful programming.
- Barry Callebaut is now better able to gauge the quality of our data through the digital collection of data. For example, they ensure sure that source materials such as cocoa are not coming from protected forest areas by comparing the delivered volume against the hectares of cocoa the farmer is cultivating.
- Thanks to the digitization and direct availability of survey data, Barry Callebaut can ask much more complex questions to cocoa farmer, allowing them to understand which farmers live under what circumstances.
- Capturing the data of their child labour surveys in the data management app empowers Barry Callebaut to better analyze which farms are at risk of children helping on the farm instead of attending school, allowing them to take appropriate action to prevent or remediate.
Rural Sourcing Management and Barry Callebaut – Supporting cocoa smallholder farmers and build sustainable supply chains through sustainable data management
NestléBuilding and implementing the Child Labour Monitoring and Remediation System (CLMRS) in cocoa supply chain
According to a 2013/2014 study conducted by Tulane University (commissioned by the U.S. Department of Labour), an estimated two million children are engaged in hazardous work in Côte d’Ivoire’s and Ghana’s cocoa industries.
With cocoa being a key ingredient for many Nestlé brands, how the company sources cocoa is strongly linked to both its business success and impact on society. For Nestlé, high-quality, sustainable cocoa sourcing must include a robust approach to tackling the problem of child labour.
In 2012, Nestlé, in partnership with the International Cocoa Initiative (ICI), established a Child Labour Monitoring and Remediation System (CLMRS) in Côte d’Ivoire to identify children at risk of carrying out hazardous tasks and to take remediation measures. This was the first program of its kind in the cocoa sector and was extended to Ghana in 2016.
The Nestlé CLMRS is fully aligned with the UN Guiding Principles on Business and Human Rights (UNGPs) and in particular Principles 17 to 21 on human rights due diligence.
It takes a community-driven approach and is embedded in the heart of Nestlé’s cocoa supply chain. It starts with Community Liaison People (CLPs) chosen by the community visiting the households and farms of all the cooperative members to raise awareness of child labour and conduct surveys.
If a CLP identifies a child at risk of doing hazardous work, this information is entered into a database via a mobile application. The situation is discussed between the family and the CLP, who explains what children are not allowed to do and why. Help, in the form of remediation activities, is provided to the child, family or community as appropriate. The CLP visits the family regularly to see if the child has stopped doing hazardous work.
Remediation activities are at the heart of efforts at Nestlé to tackle child labour. Remediation is about supporting children, their families and communities to remove children from a situation of risk. The purpose is twofold: to try and prevent children from doing hazardous work in the first place, and to help children who are engaged in hazardous work to stop. The majority of remediation activities to date have focused on education, activities to improve family income and assistance with farm-related work.
The effectiveness of the system is continuously measured and progress and challenges are regularly reported on. Two comprehensive reports on the progress, impact and challenges of the CLMRS were published in 2017 and 2019, in addition to annual reporting on Key Performance Indicators as part of the Nestlé in Society report.
The following is based on data collected through since 2012 and includes all children who have ever been monitored, as of 1 September 2019 in Côte d’Ivoire. You can read more in the 2019 Nestlé Tackling Child Labour report.
The Nestlé Child Labour Monitoring and Remediation System has scale. Today our CLMRS covers all the Nestlé Cocoa Plan cooperatives Nestlé sources from in Côte d’Ivoire (87). This represents a total of 1751 cocoa-growing communities in Nestlé’s supply chain and 1640 Community Liaison People monitoring 78,580 children in these communities.
At scale, the Nestlé CLMRS is effective in identifying children carrying out hazardous tasks. The system seems to be working as effectively at scale as it did during its development phase (2012-2017). The CLMRS is successful in identifying children involved in child labour. Of the 78,580 children currently being monitored, 18,283 children were found doing unacceptable work. This is a rate of 23 percent.
At scale, the Nestlé CLMRS is having an impact by effectively removing children from child labour. The Nestlé CLMRS has also produced a meaningful impact in removing children from child labour situations. 2019 data demonstrates that 55 per cent of children were no longer doing unacceptable work at their most recent follow-up visit.
Improving access to education, a key part of the remediation activities, has proven successful in reducing child labour. A child who receives remediation support in addition to awareness-raising is more likely to stop participating in unacceptable work. The majority of remediation activities have demonstrated a fairly similar rate of success for all children on average. However, education, for both children and parents, is particularly effective in preventing and reducing child labour.
Each child’s situation is different and some cases are harder to solve. Each case of child labour is unique and there is no “one-size-fits-all” approach that can be applied to all. The effectiveness of the system is linked to the tailor remediation that is provided to children identified as performing unacceptable tasks and their families. Over two-thirds of the children who were helped with remediation support receive three or more different types of remediation activity.
The system’s efficiency can still be improved based on learnings. Nestlé, together with its partners, will continue to innovate and experiment to continuously improve the efficiency of the CLMRS. Since education is particularly effective in preventing and reducing child labour, improving access to quality education will continue to be a key focus.
Building and implementing the Child Labour Monitoring and Remediation System (CLMRS) in cocoa supply chain
TotalMaking a CSR mapping a useful tool for buyers to engage with their internal and external stakeholders
As one of the world’s largest energy companies, Total operates in more than 130 countries and has over 100,000 suppliers worldwide. For such an extensive company that covers the entire oil and gas supply chain, effectively mapping and addressing its global human rights impacts presents a major challenge.
Since 2012, Total has mapped its human rights risks and identified both high-risk countries and product and services categories in its supply chain. The Sustainable Procurement Teams and Procurement Management Teams at Total hoped to use these results to direct and prioritize follow up action, but a lack of internal buy-in from the broader procurement function limited progress, particularly with regards to supplier social auditing.
In 2019, Total engaged with external experts to develop a new methodology for its procurement sustainability mapping. The Sustainable Procurement Team initially reached out to a specialist service provider to analyze the specific potential human rights risks related to each procurement category.
The Sustainable Procurement Team at Total engaged a wider range of procurement staff on the topic of decent work and human rights by organizing a series of workshops. Launched in 2019, the workshops aimed to remind the procurement staff of the importance of the risk mapping exercise as well as the direct links between everyday sourcing and purchasing activities and decent work for employees along its supply chains.
The Sustainable Procurement Team also developed a sustainable procurement mapping tool that will allow procurement teams to access a summary of the raw risks related to each category. This summary can then be shared with internal stakeholders and suppliers. The tool also takes into account the mitigation measures that exist and are being implemented to calculate the residual risk as required by the French Law on the Duty of Vigilance.
Finally, the tool provides a list of recommendations that can be implemented in addition to the mitigation measures that already exist in order to further mitigate the risks. For high risk categories, specific action plans will be defined in early 2020 based on this list of recommendation.
The Sustainable Procurement Team has observed positive engagement from the procurement teams when discussing the human rights issues related to their field during the workshops and many have since shared the results of the human rights risks mapping exercise with internal stakeholders. Overall, this signals a greater awareness not only among procurement staff but throughout Total’s wider supply network, which is crucial to embedding human rights risk mitigation into their procurement processes.
By putting procurement teams at the heart of the Total’s human rights risk-mapping process, the company has raised awareness and accountability for sustainable procurement practices. The workshops and procurement tool - and the practical recommendations they offer — provide concrete examples of the ways in which a global company can drive a better understanding of the human rights risks in procurement while encouraging cooperation between internal and external stakeholders.
Making a CSR mapping a useful tool for buyers to engage with their internal and external stakeholders