Suppliers

Business Partner Code & supplier assessment

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

We source raw materials and packaging for our products from more than 10 000 suppliers across the world. We also buy non-production goods and services from a further 100 000 plus suppliers. 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. 

There is growing scrutiny of how companies like ours are managing the risk of social and environmental malpractice within the supply chain. Not only NGOs but investors too are increasingly interested. In addition, many of our global retail customers are also assessing the performance of suppliers like us. We need to demonstrate that we have a rigorous process in place that meets their requirements.

Supplier policy

To help us better manage our activity in this area, we have formalised a supplier assurance policy to accompany the Business Partner Code. The responsibility of driving the supplier assurance programme lies within the procurement function and the policy ensures that we have a consistent approach to supplier assessments across all our business areas. The policy defines how the assessments will be done, by whom, and where the responsibility lies to ensure compliance.

Supplier training

Supply managers are formally trained on the specific requirements of the Business Partner Code as part of regional and global supply management training workshops. Training courses are held in each region: Europe, the Americas and Asia, Africa and Central and Eastern Europe. This raises the overall awareness of the specific aspects of the Code, eg employment standards, health and safety, environment and business integrity. It also introduces managers to new assessment protocols.

Supplier assessment & audit

Since the Business Partner Code was first published in 2004, the communication and assessment programme for our suppliers has developed through various stages. These include a widespread communication programme to all our direct suppliers of raw materials and packaging items and the piloting of in-depth assessment and audit protocols.

At the end of 2008 we decided to adopt a standardised approach and joined the Supplier Ethical Data Exchange (SEDEX), together with many of our industry peer companies. We are working with these peers to help to make this a common practice within our respective supply sectors and to create a common approach to supplier assessment.

It is policy to formally request that all our suppliers respect the principles of our Business Partner Code and adopt practices that are consistent with it. We recognise that although this is a necessary step, it may not be sufficient in all cases and that more in-depth assessments may be required. We have therefore adopted two approaches to monitor the conformance of suppliers to our Business Partner Code and the Unilever Sustainable Agriculture Code (SAC).

The first approach requires suppliers to become members of SEDEX and to register their site self-assessments using the SEDEX questionnaires for labour standards, health and safety, environmental management and business integrity. Suppliers may then be requested to provide a further verification in the form of a site audit conducted by a specialist third party, using the SEDEX standard audit protocol, SMETA, with additional elements to address areas of environmental practices and business integrity.

This programme was successfully launched during 2009 within our Americas and Europe regions and is now being rapidly being rolled out to the remainder of our direct suppliers globally.

The second approach has focused on suppliers of agricultural produce and involves these suppliers and their primary producers verifying operating practices in line with Unilever's Good Agricultural Practice Guidelines. The now re-named Sustainable Agriculture Code aligns with our Business Partner Code and the SEDEX assessment questionnaire in the areas of labour standards and involves additional, specific requirements for sustainable agricultural farming practices. The SAC programme is being rolled to many of our key crop producers. 

Extending our approach

In order to facilitate a consistent approach to supplier assessments and avoid unnecessary duplication of work, we are working within an industry task force, AIM-PROGRESS, to promote mutual recognition of assessment methods and audit report sharing by suppliers, and in general, to support the more widespread adoption of SEDEX.

This initiative allows us and our peer companies to use common methods to assess and audit suppliers' sites, and enables suppliers to share their assessments with us. It delivers greater efficiencies for both parties.

By the end of 2009, approximately 1 000 suppliers to Unilever had been invited to register with SEDEX, with many more being among the 27 000 already registered with SEDEX or invited to do so by our peers.

See Industry collaboration for more information.

Addressing non-compliance

Our preferred position is to take a continuous improvement approach. If cases of non-compliance are found, we seek to work with suppliers to improve practices rather than cut ties with them altogether, provided we receive from them a commitment to corrective actions within a specified timeframe.

However, if there is a lack of action, commitment and improvement over time, we will as a final resort terminate contracts.

We recently decided to suspend future purchases of palm oil from an Indonesian supplier until it can provide verifiable proof that none of its palm oil plantations are contributing to the destruction of 'high conservation value' forests or expanding onto peat lands.