Suppliers

Business Partner Code

Our expectations of suppliers are set out in our Business Partner Code. This specifies our responsible sourcing requirements on the key areas of health and safety at work, business ethics, labour standards, consumer safety and the environment.

We source the raw materials and packaging for our products from more than 10 000 suppliers, and non-production goods and services from up to 100 000. The task of communicating our expectations and ensuring that suppliers adhere to them is a huge one. It is also one to which we assign high importance as a significant proportion of our purchasing is from developing countries, where the potential risk of non-compliance is highest. 

Since the publication of the Business Partner Code in 2004, we have completed the process of its communication to all of our current 'first-tier' suppliers of raw materials and packaging. We have also conducted preliminary risk assessments in order to highlight areas of potential risk. This work was followed by a programme of more in-depth assessments in order to confirm gaps in the operational standards of suppliers within these areas.

Supplier audit programme

In 2008 we conducted a programme of supplier audits to identify areas for improvement. Within this sample, we found no critical non-compliance with our Business Partner Code, such as under-age working. However, we did find a significant number of areas of non-compliance, principally related to excessive working hours and health and safety standards. We are now monitoring the corrective action plans of these suppliers.

The assurance process for our Business Partner Code is now embedded within our procurement function and is being implemented incrementally with our suppliers. As a priority we are focusing primarily on developing countries. We are using the methodology and systems provided by the Supplier Ethical Data Exchange (SEDEX), together with other peer companies participating in an industry initiative called AIM-PROGRESS to promote responsible sourcing.

This initiative allows a group of customers to use common methods to assess and audit supplier sites, and enables suppliers to share their assessments with multiple customers. It eliminates duplication and delivers greater efficiencies for both parties.

By the end of 2009, Unilever will have invited more than 1 000 suppliers to register with SEDEX. Many more of our suppliers will be among the 22 000 suppliers already using SEDEX or will be invited to register by our peers.

Working with others

It is clear that building management capacity within the supply chain will require a common approach and focused, sector-based initiatives involving many participants. Moreover, suppliers of all types are encountering difficulties with the multiplicity of information requests from companies like us. In 2007, together with some of our peer companies, we established a global Programme for Responsible Sourcing (PROGRESS).

Now constituted as a task force within the European Brand Association (AIM), AIM-PROGRESS currently has 21 members, including companies like Coca-Cola, Nestlé, Danone, Diageo, PepsiCo, Cadbury and Procter & Gamble. AIM-PROGRESS is also supported by the Grocery Manufacturers of America (GMA), giving the initiative a global scope. Unilever's Global Supplier Assurance Director is Chair of the AIM-PROGRESS programme, with Diageo's Director of Procurement Risk and Governance as Vice-Chair.

The main mission of this task force is to develop common methods to evaluate the social and environmental performance of suppliers across specific groups of goods and services, and thereby enable the mutual recognition of the audit standards deployed by AIM-PROGRESS members. This will further facilitate a process whereby suppliers can confidently share their audit reports on the principle that 'an audit for one is an audit for all', thus reducing unnecessary duplication and complexity. In turn, this will accelerate the process of assessing suppliers and free up resources to focus on implementing improvements within the supply chain.

SEDEX

A significant number of PROGRESS members have since joined the Supplier Ethical Data Exchange (SEDEX) system in order to use its well-established evaluation methodologies and database to share supplier assessments and audit reports.

SEDEX is a not-for-profit organisation founded in 2004 by a group of major UK retailers who recognised the need to collaborate on ethical supply chain assessment. Like AIM-PROGRESS, its two goals were to ease the burden on suppliers and drive improvements in labour standards at production sites. SEDEX now has full global reach, with more than 250 retailers and branded goods manufacturers using the system. The sites of approximately 22 000 suppliers are registered within the database.

During 2008, Unilever started to invite its suppliers to register with SEDEX in order to complete the social and environmental assessment of their sites. We are now scaling up this programme and extending this request more widely across our global supply chain.

Supply chain collaboration

In October 2007, along with other leading companies, we became founding members of the Carbon Disclosure Project's Supply Chain Leadership Collaboration. This aims to increase disclosure of carbon impacts among suppliers and thereby encourage reductions in their carbon emissions. This complements our existing approach and we have started work with a selection of our suppliers, by asking them to standardise the information they provide in order to explore how they are managing their carbon emissions.

Embedding our approach

Alongside this effort we are embedding the procedures for supplier assurance against our Business Partner Code within routine supplier management processes. Purchasing departments are being trained so that these considerations are taken on board when supplier approvals are being made.

We are also working with our Sustainable Agriculture Programme team, who are proceeding with an in-depth assessment of suppliers of fruit and vegetables against their Good Agricultural Practice Guidelines.