Mondelēz International s Corporate Social Responsibility Program. PROGRESS Program for Responsible Sourcing - PDF

Mondelēz International s Corporate Social Responsibility Program PROGRESS Program for Responsible Sourcing Mondelēz International s Corporate Social Responsibility Program 2 WHAT IS PROGRESS? PROGRESS

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Mondelēz International s Corporate Social Responsibility Program PROGRESS Program for Responsible Sourcing Mondelēz International s Corporate Social Responsibility Program 2 WHAT IS PROGRESS? PROGRESS Program for Responsible Sourcing Responsible sourcing is the process of purchasing goods & services without causing harm to, or exploiting, humans or the natural environment. 3 CORE RESPONSIBLE SOURCING STANDARDS & PRINCIPLES 1.Legal Compliance 2.Forced Labour 3.Wages and Benefits 4.Hours of Work 5.Freedom of Association 6.Child Labor 7.Discrimination 8.Abuse of Labor 9.Health and Safety 10.Environment 11.Bribery and Corruption 4 AIM-PROGRESS Global forum of consumer goods manufacturers and suppliers assembled to enable & promote responsible sourcing practices Sponsored by the Grocery Manufacturers Association (GMA) and the European Brands Association (AIM) 30+ Companies Representing USD$ ½ Trillion annual revenue AIM-PROGRESS OBJECTIVES To promote responsible sourcing through common, or mutually accepted Supply Chain Standards To increase efficiency by sharing data an audit for one is an audit for all Purpose Reduce Audit Fatigue through mutual recognition of assessments Reduce duplicative costs throughout supply chain Align standards and share best practices To seek convergence with other similar initiatives Mondelēz International s Corporate Social Responsibility Program 7 WHY IS RESPONSIBLE SOURCING IMPORTANT? Builds & protects reputation with: Consumers Regulators Investors Increases employee morale and productivity: Improves retention rates Lower overtime Reduces health and safety incidents Reduces quality rejections Is a sustainable foundation for growth Is the right thing to do! The reputation of our brands is hard to build but easy to lose and when lost, the entire supply chain suffers! How do we ensure CSR & Responsible Sourcing are embedded into how we do business?... Mondelēz International s Corporate Social Responsibility Program 10 Mondelēz International s CSR SUPPLIER EXPECTATIONS All Business Partners must agree to the Mondelēz International s CSR Supplier Expectations All Directs (Packaging, Ingredients & Commodities), External Manufacturers and Promotional Goods Supplier Sites must register in SEDEX, complete the self-assessment questionnaire (SAQ), which should be reviewed and updated annually & give access to Mondelēz International Upon request by Procurement, Directs (packaging & ingredients) and Promotional Goods Supplier Sites must obtain (or provide access to an existing) CSR (SMETA) Audit and post the AUDIT to SEDEX and complete any required corrective actions 11 Mondelēz International s Corporate Social Responsibility Program 12 SEDEX Process Flow at Mondelēz International Supplier On-Boarding Buyers engage Suppliers to register in the third party SEDEX database Suppliers link their manufacturing sites to Mondelēz International Cost to the Supplier ~$55 US per site annually Supplier Site SAQ Suppliers complete SAQ: Self Assessment Questionnaire in SEDEX for each manufacturing site supplying to Mondelēz The SAQ provides a foundation awareness for ethical practices and is a pre-audit capability building exercise The Self Assessment Questionnaire (SAQ) covers four areas of CSR: Labor Health and Safety Environmental Business Integrity Risk Assessment The SEDEX system automatically assigns a HIGH/MEDIUM/LOW risk rating to each completed SAQ Assessments are reviewed with the suppliers as necessary to understand factors driving high risk ratings 3 rd party Audits 1.Buyers communicate the audit requirement to Suppliers 2.Suppliers schedule and engage with approved third party auditors 3.Auditors upload results into the SEDEX system 4.Suppliers are to inform Buyers upon completion and share results Suppliers pay for all audits Ave cost: ~$3000 US/audit Corrective Action Suppliers work with Auditors to address identified issues. Re-audits are scheduled by suppliers as needed Unresolved audit nonconformances are addressed by Mondelēz International Buying Teams and Businesses Appendix detailed process description 14 PROGRESS and SEDEX Commitment As Mondelēz International we, along with our major customers, consumers, and investors, expect high standards for corporate social responsibility (CSR) and ethical sourcing. We expect the same level of commitment from our suppliers. Suppliers hear about our expectations related to PROGRESS and SEDEX through several channels including (click links for more detail): Our SQE manual (2013 update) Company website supplier expectations Supplier forums and training events Contractual agreements AIM-PROGRESS website SEDEX website Corporate Responsibility Mondelēz Global contract provides the core commercial terms and also incorporates our corporate responsibility expectations such as legally enforceable provisions on child labor and worker safety among other expectations. To assess the Supplier s Corporate Responsibility, MG partners with other companies in an initiative called PROGRESS. This industry initiative allows a supplier to provide common information to its customers so each customer can independently reach business decisions in accordance with its own corporate responsibility standards. For more information about the broader industry initiative on PROGRESS, visit Under this Program, Suppliers must submit the information and assessments requested to the SEDEX database ( The Suppliers selected to register in PROGESS will receive further communication from MG detailing the actions that must be taken. Our approach to CSR continues to involve the SEDEX process as a industry standard for assessments and ethical trade audits. One major benefit of the SEDEX process is one audit for all versus custom audits for each group which requests. SELF-ASSESSMENT & DATA EXCHANGE SEDEX Members Online tool that enables global suppliers to share assessments and audits on ethical and responsible practices with their customers and avoid duplication Common tools to enable companies to analyse and assess risks: SAQ self assessment questionnaire SMETA Sedex Members Ethical Trade Audit Non-SEDEX Members Company Protocols Benchmarked against each other and SMETA For Instance, The Coca-Cola Company uses The Supplier Guiding Principles (SGP) Sedex does not set policy pass, fail, certify, or score suppliers conduct social audits issue certificates promote suppliers RESPONSIBLE SOURCING CONTINUUM Step 1: Suppliers Engaged by A-P Company Step 2: Supplier Self Assessment (if applicable) Step 3: 3 rd Party Assessment Step 4: Corrective Action Plan Independent Activity Common Activity Common Activity Independent Activity Creates synergies: data can be shared among various customers, since AIM- PROGRESS members mutually recognize 3rd Party Assessment to avoid duplication SUPPLIER SELF-ASSESSMENT Step 2: Supplier Self Assessment A self-assessment questionnaire is a useful tool to help suppliers and buyers assess overall capabilities and ensure processes are in place to manage. If applicable, the Sedex self-assessment covers the following: Site Profile Labor Policy & Standards Health & Safety, Hygienic Assessment Business Integrity (anti-corruption) Environmental Stewardship ASSESSMENT OVERVIEW 4 PILLARS Labor Standards Health & Safety Environment Business Integrity LABOR COMPLIANCE Common Assessment Topics: Forced Labor Wages & Benefits Child Labor Abuse of Labor Hours of Work Freedom of Association Discrimination Examples of Common Findings: Workers do not receive rest days Excessive overtime hours worked exceed legal limits Insufficient overtime pay 20 HEALTH & SAFETY Common Assessment Topics: H&S Training Blocked Aisles/Exits Licenses/Certificates Emergency Preparedness Chemical Handling PPE /First Aid Electrical Safety Examples of Common Findings: Exit doors and aisles are blocked or locked No fire alarm system or system is inadequate Personal Protective Equipment (PPE) not provided or not used No emergency lighting Inadequate safety training Machines do not have safety guards Unmarked emergency exits Fire extinguisher issues 21 ENVIRONMENT Common Assessment Topics: Air Emissions Waste & Waste Water Trtmt Examples of Common Findings Improper waste management Permits/Licenses not available Hazardous Material Inspections BUSINESS INTEGRITY Common Assessment Topics: Evidence of Bribes Grievance Procedure Evidence of Fraud Policies/Procedures Examples Finding: Bribe offered to auditor or local authority 22 3 rd PARTY ASSESSMENTS Who conducts the audits? Audits are conducted by independent, accredited professionals (examples include Intertek, UL, SGS, BV, Level Works) Step 3: 3 rd Party Assessment Common Method What is the role of the auditor? Auditors are independent and impartial professionals trained to evaluate compliance to laws and responsible sourcing standards. Who pays for and owns the audit? Suppliers pay for the audits as this allows them to own the data and share the reports with multiple customers through AIM-PROGRESS Does an audit adhere to Privacy Protection laws? Process and protocols are in place to ensure no personally identified information leaves the facility. Goal of assessment is to protect employees not infringe on privacy Are other standards acceptable (ISO, SQF, SA8000, etc)? There is no comprehensive standard (yet) that covers all the 4 Pillars Standards that are relevant to an individual pillar e.g. OHSAS 18001, would be taken into account during the audit process Other audit protocols e.g. SA8000, may be acceptable if conducted by an independent 3rd party auditor and within a reasonable timeframe. Check with your customer for specifics 23 3 rd PARTY ASSESSMENTS How long does the audit take? Assessment duration varies depending on size of facility and scope of production. In general, two auditors spend one day in a facility, but can take up to 4 person days Time Assessment Process Key Staff Step 3: 3 rd Party Assessment Common Method 45 Min Opening Meeting Explanation of the audit scope, deliverables and process Review of your self-assessment information off SEDEX Review of the document request list Identification of documentation to be prepared for review Site Manager, HR and EHS Manager 1 hour Site Inspection: Understanding site areas Site & EHS Manager 2 hours Document Review Review of management documentation Review of employee personnel files Review of wages and payroll related information HR Manager Payroll Clerk EHS Manager 3 hours Interviews with production employees Floor Staff only 30 min Secondary Site Inspection/Misc None 30 min Preparation of Onsite Report None 30 min Presentation of Onsite Report to Management Site, HR, EHS Manager CORRECTIVE ACTION PLAN Non-compliances identified must be addressed through Corrective Action Plans Step 4: Corrective Action Plan Timeframe and follow-up methods depend on the type of issue and the severity Desk based verification vs. follow-up visit Critical, Major, Minor categorization of issues Individual buying companies determine the corrective action plans CONCLUSION Responsible Sourcing is a growing movement and is critical to maintaining a positive reputation and meeting customers demands. This as an opportunity to grow our business together with our suppliers in a sustainable and responsible manner.
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