Advancing human rights with suppliers & business partners
From the fields and factories from which we source our raw materials to the many businesses that provide services to us or contribute to our distribution network, our value chain is long and complex. By connecting us with millions of people, it gives us one of our most important opportunities to advance human rights and address risks – and helps us build the trust that is vital to our business success.
A supply & distribution network with purpose
Our business success is intertwined with the integrity, strength and sustainability of the many thousands of business partners in our value chain.
We believe that by working with and supporting our suppliers, distributors and other business partners and their workers, we can create a socially and environmentally sustainable value chain. Advancing human rights in our supply chain gives us the opportunity to make a positive difference to the lives of many hundreds of thousands of people and to contribute to the Sustainable Development Goals. It also provides a lasting foundation for our growth.
As the pace of business change accelerates, and we need to move faster and with more agility, we do not want to sacrifice doing things the right way. This is the responsibility of everyone who works for or with our business.Alan Jope, our Chief Executive Officer
Our spend on goods and services in 2018
Our aim is to drive profit and growth while using our scale to create positive change. Accessing the skills of around 67,000 suppliers in over 160 countries, our supply chain plays a vital role in delivering our ambitions. See our Supply Chain Overview Spend Analysis (PDF | 834KB) for details of our supply base.
At the heart of our ambition: our Responsible Sourcing Policy & Responsible Business Partner Policy
Our Responsible Sourcing Policy (PDF | 9MB) (RSP) and Responsible Business Partner Policy (PDF | 3MB)(RBPP) embody our commitment to conduct business with integrity, openness and respect for universal human rights and core labour principles.
The RSP applies to our suppliers, while the RBPP applies to the business partners who deliver our products to consumers.
While the Responsible Sourcing Policy is our overarching policy and code, we also assess specific commodity suppliers against the Unilever Sustainable Agriculture Code, our Sustainable Paper and Board Packaging Policy or the Unilever Sustainable Palm Oil Sourcing Policy.
Introduced in 2014 and updated in 2017, our RSP sets mandatory requirements on human and labour rights for suppliers who have a business relationship with Unilever. It sets out our 12 Fundamental Principles and defines the mandatory requirements that suppliers must achieve to do business with us.
The RSP also gives guidance and tips on how suppliers can progress up the ‘continuous improvement ladder’ that we use to engage suppliers in working towards leading practices. We expect suppliers to work with us and to make progress over time from the mandatory requirements towards good and best practices. We review and update our guidance regularly, working with suppliers and external experts to share examples of best practice to ensure the guidance continues to set a benchmark that the industry can aspire to. We’re committed to applying our RSP across our entire supply chain.
Our Responsible Sourcing Policy is crucial to creating change at scale
Marc Engel, our Chief Supply Chain Officer and member of the Unilever Leadership Executive.
“As a company operating in over 190 countries, with tens of thousands of suppliers and communities all over the world touched by our value chain, the Responsible Sourcing Policy shapes how we operate. We expect the highest standards of behaviour from ourselves and this extends to all our suppliers, their workers and those with whom we do business.
We have a responsibility and opportunity through the Responsible Sourcing Policy to create fundamental, positive change at scale.”
We introduced our Responsible Business Partner Policy in 2015. It applies to our many business partners in the networks that deliver our products to consumers.
We aligned the RBPP with the RSP in 2017. The two now set out common values and principles at the mandatory requirements level, and use similar self-assessment questionnaires and risk evaluation methodologies. The RBPP shares the same principles as the RSP, grouped as:
- conducting business lawfully and with integrity
- respecting terms of employment and human rights, and
- a commitment to sustainability (which includes the need to respect the land rights of communities).
Why a responsible business needs responsible partners
Ritva Sotamaa, our Chief Legal Officer, explains why we need a Responsible Sourcing Policy and a Responsible Business Partner Policy.
“From sourcing raw materials into our factories to the way consumers access and use our products, Unilever’s global reach gives us a unique opportunity to lead the way in championing ethical business practices. We want business integrity to be business as usual across our entire operational footprint.
Breaches of human rights ruin lives and livelihoods. The cost of corruption is a powerful obstacle to sustainable economic growth. Doing business with integrity is a non-negotiable for Unilever: we are committed to working with others who share our values and seek to operate to the same standards as we do. Collective action is key to successfully upholding human rights and fighting corruption in all its forms.”
Our Responsible Sourcing Policy - a source of growth & trust
We've set high ambitions for our RSP. We’re convinced of the moral and business case for working only with suppliers who commit to transparency, providing remedy of shortcoming and driving continuous improvement. We want our supply chain to be a trusted foundation for our growth, and a force for good on human rights – this requires a continuous review and adaptation of our approach to achieve the most impact.
Impact at pace through our Responsible Sourcing Policy
We're reaching more of our suppliers than ever through our Responsible Sourcing Policy.
And as we extend its reach we're also focusing on impact. When we introduced our RSP in 2014, replacing a previous Supplier Code, we focused on our production item suppliers (suppliers of the raw materials that go into the products we make) and a select number of other strategic suppliers. By the end of 2016, around 5,500 suppliers had made a commitment to the RSP - and they represented about two-thirds of our total procurement spend, and more than 90% of procurement spend from production item suppliers.
But we knew that the remainder of our spend represented roughly 90% of the total number of our suppliers, spread across thousands of small service providers. So in 2017 we extended the RSP programme significantly, bringing into scope all our production item suppliers and all our indirect procurement suppliers (suppliers of services such as marketing, workplace or professional services).
At the same time, we simplified our processes for registration, including our self-assessment questionnaire. We refined our approach to risk evaluation, and increased due diligence by providing new guidelines for our teams on how to mitigate and escalate any instances of bribery and corruption. Finally, we strengthened how we calculate and report compliance.
By the end of 2017, more than 27,000 suppliers (largely indirect procurement suppliers) had made a positive commitment to comply with the principles of the RSP through signing an RSP Pledge - an important first step. This brought the total number of suppliers in our programme to over 33,000. Throughout this process, we worked to fully on-board these suppliers and improve our due diligence so we could evaluate their compliance with the RSP, prioritising suppliers through risk evaluation.
In 2018 over 20,000 suppliers completed the next step in the process - to become fully registered in our system. This now includes all suppliers evaluated as representing higher risks. In 2019 we aim to complete the registration of suppliers representing medium and low risk, covering all the suppliers in our supply chain. We will also strengthen the governance of the RSP by launching a programme where we will only source from suppliers that are compliant with the RSP’s mandatory requirements.
Collaborating to improve human rights
We recognise that addressing endemic issues often depends on working closely with suppliers and others in our industry. While we will not compromise on the principles of our RSP, we collaborate with others in the industry and listen to our suppliers’ experience of working with us, so we and our suppliers can have the biggest impact.
Extending our reach
Until June 2017, we only recognised our own audit protocol, the Understanding Responsible Sourcing Audit (URSA) (XLSX | 2MB), as a means of evaluating compliance. Since 2017, we've built on two ways to make advancing human rights in our supply chain more impactful and efficient, for us and our partners: through the concept of mutual recognition and the use of trusted monitoring systems.
We extended the concept of ‘mutual recognition’ to more suppliers
‘Mutual recognition’ means recognising those suppliers who have their own mature, comprehensive compliance and responsible sourcing programmes in place, and agreeing that they meet our RSP requirements through the implementation and governance of their own programme.
We only do this after an evaluation to check that their programme aligns with the RSP and appropriately addresses risks. We also check that the supplier has an effective remediation process.
This arrangement can only apply to a relatively small number of large, trusted suppliers. But it brings huge advantages, because it allows them to focus on improvements, eliminating duplicate audits, and allows us to focus our resources and efforts on other parts of our supply chain that are potentially higher risk.
Using trusted monitoring systems
We started to accept SMETA audits
We introduced Ecovadis for indirect procurement suppliers
We also work with external monitoring systems where we are confident they meet our goals and standards. This allows suppliers to demonstrate compliance to multiple customers using the same system. It helps limit unnecessary duplication and audit fatigue, while freeing resources and cost to make improvements when needed.
By June 2017 Sedex (the largest collaborative platform for sharing responsible sourcing data on supply chains) had updated and extended its Sedex Members Ethical Trade Audit, known as SMETA. This update incorporated critical elements of our RSP and our URSA (XLSX | 2MB) audit protocol.
We now accept SMETA audits as a means of verifying compliance to the RSP, as long as the audit is performed by one of the eight audit companies that we recognise.
In 2018, we introduced the use of the EcoVadis assessment to evaluate indirect procurement suppliers. EcoVadis is an online rating and scorecard platform that evaluates suppliers across 21 criteria covering environment, fair labour and human rights, ethics and sustainable procurement. The desktop EcoVadis assessment suits small and medium indirect procurement companies which are often office-based. EcoVadis is a tool used by other industry peer companies for indirect procurement suppliers.
Using a common tool allows us to align our approaches and increase the impact with industry peer companies, while reducing costs and audit fatigue for our suppliers. We continue to use the URSA (XLSX | 2MB) and SMETA protocols for production item suppliers which typically have manufacturing facilities needing on-site assessment.
Our RSP’s Audit Requirements (PDF | 251KB) set out the details of what we accept.
Our Responsible Sourcing Policy: 12 Fundamental Principles
Our RSP contains 12 Fundamental Principles based on internationally recognised standards, including the UN Guiding Principles on Business and Human Rights. It includes guidelines and tips designed to assist our suppliers to improve their practices relating to all the Policy’s Fundamental Principles.
1. Business is conducted lawfully and with integrity
This addresses the issues of compliance with laws, bribery, conflicts of interest, gifts and hospitality, confidential and competitor information and financial records. It also addresses money laundering and insider trading, safeguarding information and property, product quality and responsible innovation, prohibition of any and all forms of facilitation of tax evasion, reporting concerns and non-retaliation.
2. Work is conducted on the basis of freely agreed and documented terms of employment
All workers, both permanent and casual, are provided with employment documents that are freely agreed and which respect their legal and contractual rights.
3. All workers are treated equally and with respect and dignity
All workers are treated with respect and dignity. No worker is subject to any physical, sexual, psychological or verbal harassment, abuse or other form of intimidation. There is no discrimination in employment, including hiring, compensation, advancement, discipline, termination or retirement. Discrimination based on race, ethnicity, age, role, gender, gender identity, colour, religion, country of origin, sexual orientation, marital status, pregnancy, dependants, disability, social class, union membership or political views is prevented. In particular, attention is paid to the rights of workers most vulnerable to discrimination.
4. Work is conducted on a voluntary basis
Under no circumstances will a supplier use forced labour, whether in the form of compulsory or trafficked labour, indentured labour, bonded labour or other forms. Mental and physical coercion, slavery and human trafficking are prohibited.
5. All workers are of an appropriate age
Under no circumstances will a supplier employ individuals under the age of 15 or under the local legal minimum age for work or mandatory schooling, whichever is higher. When young workers are employed they must not do work that is mentally, physically, socially or morally dangerous or harmful or interferes with their schooling by depriving them of the opportunity to attend school.
6. All workers are paid fair wages
All workers are provided with a total compensation package that includes wages, overtime pay, benefits and paid leave which meets or exceeds the legal minimum standards or appropriate prevailing industry standards, whichever is higher, and compensation terms established by legally binding collective bargaining agreements are implemented and adhered to.
7. Working hours for all workers are reasonable
Workers are not required to work more than the regular and overtime hours allowed by the law of the country where the workers are employed. All overtime work by workers is on a voluntary basis.
8. All workers are free to exercise their right to form and/or join trade unions or to refrain from doing so and to bargain collectively
The rights of workers to freedom of association and collective bargaining are recognised and respected. Workers are not intimidated or harassed in the exercise of their right to join or refrain from joining any organisation.
9. All workers’ health and safety are protected at work
A healthy and safe workplace is provided to prevent accidents and injury arising out of, linked with, or occurring in the course of work or as a result of the employer’s operations.
10. All workers have access to fair procedures and remedies
All workers are provided with transparent, fair and confidential procedures that result in swift, unbiased and fair resolution of difficulties which may arise as part of their working relationship.
11. Land rights of communities, including indigenous peoples, will be protected and promoted
The rights and title to property and land of the individual, indigenous people and local communities are respected. All negotiations with regard to their property or land, including the use of and transfers of it, adhere to the principles of free, prior and informed consent, contract transparency and disclosure.
12. Business is conducted in a manner which embraces sustainability and reduces environmental impact
Operations, sourcing, manufacture, distribution of products and the supply of services are conducted with the aim of protecting and preserving the environment.