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 that provides a lasting foundation for our growth. By advancing human rights in our supply chain and elsewhere, we also have the opportunity to make a positive difference to the lives of many thousands of people and to contribute to the Sustainable Development Goals.
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.
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 Unilever.
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 achieving leading practices. We expect suppliers to work with us and to make progress over time from the ‘mandatory requirements’ onward to ‘good’ and ‘best practices’. We review and update this guidance regularly, working with suppliers and external experts to share examples of best practice to ensure that the guidance continues to set a benchmark that the industry can aspire to. We are committed to applying our RSP to our entire supply chain.
Similarly, 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.
In 2017, we aligned the RBPP with the RSP so 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.”
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.
Our Responsible Sourcing Policy - a source of growth and trust
We've set high ambitions for our RSP. That's because 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 - which means growing and adapting our approach so it has the most impact.
Refreshing our Responsible Sourcing Policy
2017 was a big year for the RSP as we extended the programme significantly. We did this by bringing into scope all our suppliers of ‘production items’ (the raw materials that go into the products we make) and of ‘indirect procurement items’ (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 we increased due diligence for anti-bribery and corruption, providing new guidelines for our own teams on how to mitigate and escalate any instances of bribery and corruption. Finally, we strengthened how we calculate and report compliance.
It was a considerable step up in the programme - and one we took with our suppliers’ input and feedback as we reviewed the successes and challenges of earlier phases. In 2014, we’d begun the RSP programme by focusing on our production item suppliers and a select number of other strategic suppliers. This approach meant we could make rapid progress, so that by 2016, around 6,000 suppliers had made a commitment to the RSP. These suppliers represented 67% of our procurement spend – and more than 90% of our total spend on raw material procurement.
Although this was good progress, the remainder of our spend represented roughly 90% of our total number of suppliers. And it was spread across thousands of small service providers. So we knew we had a way to go to meet our target to source 100% of our procurement spend in line with the RSP by 2020.
As a result of bringing our entire supplier base into scope, by the end of 2017 another 25,000 suppliers (largely indirect procurement suppliers) had made a positive commitment to comply with the RSP. This commitment is the first step, and we’re now focusing our efforts on ensuring suppliers meet the RSP mandatory requirements.
In 2017, we also strengthened our reporting by including the outcome of our due diligence processes. This means we included the suppliers we count as meeting the RSP’s mandatory requirements. While we’ve always audited our suppliers, for the first time our reporting could include the results of 2,500 audits that took place in 2017. We choose supplier sites for audit on the basis of our risk assessment protocols.
Our audit process requires that first, suppliers put in place corrective actions to remediate any issues found during initial audits. And second, that independent auditors confirm that these actions have sufficiently remediated any non-compliances. Using this strengthened protocol, we could report that in 2017 55%†* of our procurement spend was through suppliers meeting RSP requirements.
*Note: This result is not comparable with the results for prior years due to the change in our reporting protocol.
Learning from suppliers & increasing impacts
Our Responsible Sourcing Policy encompasses the fundamental rights and working conditions required to be a Unilever supplier. While we will not compromise on its principles, we recognise that success often depends on working closely with the suppliers who join the programme and addressing endemic issues. 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.
In 2017, we built on two key ways to make advancing human rights in our supply chain more impactful and more efficient for us and our partners.
We extended the concept of ‘mutual recognition’ to more suppliers
The first is through ‘mutual recognition’. This means acknowledging suppliers who have mature, comprehensive compliance and responsible sourcing programmes in place, and agreeing that they meet our RSP requirements.
We only do this after an evaluation to check that their progamme aligns with the RSP, appropriately addresses the risks and that the supplier has an effective remedial process in place. 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 further on improvements and allows us to focus on other parts of our supply chain that are potentially higher risk.
The second is by working with other monitoring systems where we are confident they meet our goals and standards. A good example is Sedex, the online platform for sharing responsible sourcing data on supply chains and its Sedex Members Ethical Trade Audit (SMETA) procedure.
In June 2017 Sedex updated and extended its SMETA compliance process and auditing tool, incorporating critical elements of our RSP audit (which we call the Unilever Responsible Sourcing Audit - or URSA). We now recognise SMETA audits, which means that many suppliers will be audited and focused on remediation effectively providing the outcomes of this process to multiple customers using the same system. This helps limit unnecessary duplication and audit fatigue, while freeing resources and cost to make improvements when needed. Our RSP’s Audit Requirements (PDF | 244KB) set out the detail.
The simplification of our own processes in 2017 is also designed to help suppliers, and us, focus effort more effectively. It includes our registration process, now significantly streamlined with additional supplementary questions included only where they are relevant. So far we’ve found the new registration process provides more, rather than less, relevant information.
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.