Human Rights and Responsible Procurement

Human Rights and Responsible Procurement

 

 

Danone is committed to protecting human rights in its own operations and in its supply chain.

In 2001, Danone formalized its seven fundamental social Principles, based on the standards defined by the International Labor Organization (ILO): abolition of child labor, abolition of forced labor, non-discrimination, freedom of association and right to collective bargaining, workplace health and safety, working hours and compensation.

In 2016, Danone joined the Consumer Goods Forum (CGF) initiative aimed at eliminating forced labor in global supply chains. In that context, Danone updated its Fundamental Social Principles in 2017 to include the CGF Priority Principles: every worker should have freedom of movement, no worker should pay for a job and no worker should be indebted or coerced to work.

 

 

Danone is committed to protecting human rights in its own operations and in its supply chain.

In 2001, Danone formalized its seven fundamental social Principles, based on the standards defined by the International Labor Organization (ILO): abolition of child labor, abolition of forced labor, non-discrimination, freedom of association and right to collective bargaining, workplace health and safety, working hours and compensation.

In 2016, Danone joined the Consumer Goods Forum (CGF) initiative aimed at eliminating forced labor in global supply chains. In that context, Danone updated its Fundamental Social Principles in 2017 to include the CGF Priority Principles: every worker should have freedom of movement, no worker should pay for a job and no worker should be indebted or coerced to work.

RESPECT

Danone sustainable procurement’s program, RESPECT, covers all purchasing categories of first tier suppliers except for raw milk, which is addressed through a dedicated program.

Implemented since 2005, RESPECT is based on three social, environmental and ethical pillars:

  • Fundamental Social Principles (see above).
  • Environmental Principles: introduced in 2009, they cover resource preservation, use of chemicals, climate change and greenhouse gas emissions, environment management and animal welfare.
  • Business Ethics Principles: they were added in order to guarantee equity and legality of transactions. They were updated in 2017 to reflect the Code of Conduct for Business Partners.

Together, these pillars form Danone’s Sustainability Principles for Business Partners, which are written into supplier contracts as a ‘sustainability clause.’ By signing a contract with Danone, suppliers pledge that Fundamental Social and Business Ethics Principles are already respected not only within their own organizations but by agents, suppliers and sub-contractors. They also commit to striving towards implementation of Environmental Principles.

 

In 2017, Danone launched a process to upgrade RESPECT and evolve towards a due diligence approach, covering its upstream supply chain and focusing in particular on human rights. This process is inspired by the UN Guiding Principles on Business and Human Rights (UNGP) and contributes to the development of a vigilance plan, as required by the 2017 French Corporate Duty of Vigilance Law. To learn more about responsible procurement due diligence, please refer to Danone’s 2017 registration document.

 

First tier supplier evaluation was the focus of the RESPECT process as implemented until 2017. RESPECT requires suppliers to submit self-evaluations of their CSR (Corporate Social Responsibility) performance via the Sedex platform (Supplier Ethical Data Exchange), combined with risk analysis conducted by Sedex. Following registration on the platform, suppliers identified by Sedex as high-risk are audited by certified third party organizations. Danone’s procurement teams follow up on the implementation of the remediation plans resulting from the audits.

Supplier registration on Sedex Platform

 

The registration rate increased from 91% to 92%.

At the end of 2017, 4,082 tier 1 supplier sites had been registered on the SEDEX platform, versus 4,282 in 2016. This decrease is due to changes in the reporting perimeter both from divestments and centralization of procurement.

SMETA audits on potentially high-risk suppliers

In accordance with the RESPECT program, the tier 1 suppliers identified as high-risk undergo SMETA audits (Sedex Members Ethical Trade Audit) by a certified third-party organization. Through the AIM Progress consortium for responsible sourcing, Danone has also access to audits commissioned by its peers on common suppliers, thus reducing the burden of multiple audits. In 2017, 195 SMETA audits were conducted on Danone tier 1 suppliers, commissioned either by Danone or by peers.

Compliance with Danone remediation standards

Since 2017, Danone has been piloting a key performance indicator focusing on audits launched and action plans closed within an appropriate time frame in cases of critical non-compliance. These processes are managed by Danone’s central and local procurement teams.

54

Number of cases requiring action to be completed in an appropriate timeframe as of December 2017 (either audit launched or action plan closed in cases of critical non-compliance).

100%

of cases considered compliant with Danone remediation standards for centrally managed suppliers.

32%

 of cases considered compliant with Danone remediation standards for locally managed suppliers​​ (with a remediation plan in place for 2018).

 

As of December 2017, compliance is at 100% for centrally managed suppliers and at 32% for locally managed ones. This latter figure corresponds to 19 cases not matching Danone’s remediation standards. Half of them concern a single purchasing category in one country and are due to an organizational challenge which has been identified and is currently being remediated.

 

Our aim is to close all non-compliances and improve suppliers’ sustainability and ethical performance. Nevertheless, in some cases we see no alternative but to terminate relationships with suppliers who don’t collaborate.

 

Danone is aware of the fact that notwithstanding its willingness to conduct business in an ethical way, human rights infringements are common in complex supply chains. The company is determined to identify its areas of progress and commits to address them.