Our Responsible Sourcing Policy in action
The success of our Responsible Sourcing Policy (RSP) depends on the ability of our suppliers to put its requirements into action in their operations. We’re working closely with suppliers to help them. And the journey does not end with complying with the mandatory requirements. The RSP helps suppliers to seek improvements and progress to good and best practices.
We know that moving up the continuous improvement ladder takes individual effort and will also require systemic and industry change. We’re working directly with suppliers to build skills and develop capabilities across important issues such as eliminating forced labour, avoiding child labour, wages, working hours, management systems, fire safety and the environment. We also run joint projects on responsible sourcing innovation to help more of our suppliers move from the RSP’s mandatory requirements towards its good and best practice levels.
How do we drive compliance with our Responsible Sourcing Policy?
Underpinning our RSP is the process of due diligence and compliance assurance, which includes third-party audits where our suppliers have been assessed as a potential high risk.
Service suppliers that we classify as high risk undergo a desktop auditing assessment, provided by an industry-recognised third-party organisation.
Raw material and finished goods suppliers undergo an on-site audit.
If the audits identify non-conformances to the mandatory requirements of the RSP, the supplier must develop a corrective action plan to remediate the issue. The third-party auditor must assess the effectiveness of the supplier's remediation actions and confirm they are sufficient within a specific timeframe in order to close the non-conformance. A supplier must close all non-conformances to be considered compliant and continue to supply us.
The full process is described in our Human Rights Report 2017 (PDF | 10MB), where we also provide an insight into the work we are doing on our eight salient human rights issues. See our Human Rights 2019 Supplier Audit Update (PDF | 4MB) and Human Rights 2018 Supplier Audit Update (PDF | 4MB) for an analysis of the latest findings from our supplier audits.
New dashboard for faster compliance tracking
To help us track global compliance with the RSP, in 2019 we introduced a new dashboard in an internal data platform, Power BI. This makes it faster for us to track compliance by supplier, region and procurement portfolios, and to track all red flags and key incidents identified in our RSP audits.
While audits are a core part of our process, we’ve learned that we and other companies need to keep refining our overall approach to drive change across the industry.
Our RSP: improving conditions for workers & supporting the SDGs
Our third-party audit process plays a crucial role in driving up standards in our supply chain. We see that as critical to our efforts both to build a stronger business, and to advance human rights and support the Sustainable Development Goals (SDGs).
In 2017, for the first time, our Human Rights Report (PDF | 10MB) contained a detailed breakdown of our audit findings against our eight salient human rights issues. We published an update on this data at the end of 2018 and 2019, drawing on the findings from our Human Rights 2018 Supplier Audit Update (PDF | 4MB) and our Human Rights 2019 Supplier Audit Update (PDF | 4MB).
The findings tell us that 44% of the non-conformances found in 2017 related to health and safety issues. Over 8,500 non-conformances were identified from just under 1,000 sites. The findings from 2018 show that of the 7,869 non-conformances found, 6,341 related to our eight salient issues, and of these, 65% related to health and safety. The next most prevalent issues related to fair wages (15%) and working hours (10%).
When the audits find non-conformances, the result is corrective action, of the kind that has potentially saved lives or prevented human rights abuses. In 2018, our inspections showed that overall 75% of non-conformances are now closed.
Simon Hindley, our Social Accountability Director, explains: “People in my team are passionate about driving up standards for workers in our supply chain. We know that third-party audits of suppliers help identify hugely important issues – such as dangerous working practices, risks of forced labour or discrimination against women. And finding these non-conformances triggers a process that leads to better conditions.
We know that there are even greater challenges on issues that are harder to identify and remediate through audit, such as forced labour. And it’s important to remember that audit, while a vital part of the process, cannot transform our supply chain on its own. But we believe our overall RSP work contributes directly to SDG 8, which is about promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. And it aligns with the individual targets within SDG 8. Addressing equal pay, for example is part of SDG 8.5.
Working to eradicate forced labour is at the heart of SDG 8.7. And protecting labour rights and promoting safe working environments contributes to SDG 8.8. I think Unilever should be proud of this contribution.
At the same time, we’ve learnt that the biggest advances in supply chain standards come from collaborative efforts between us and suppliers, and with peer companies across industries. This insight has helped shape our approach, and we’ll keep refining what we do in the knowledge that these efforts are making a difference to people’s lives every day they go to work.”
This work contributes to the following UN Sustainable Development Goal
Acting on breaches
We expect our suppliers and their employees or contractors to report actual or suspected breaches of our RSP. We will investigate any reported non-conformity reported in good faith and discuss findings with the supplier. If remediation is needed, we will work with the supplier to identify the root causes of the issue and to develop a time-bound corrective action plan to resolve the failure effectively and promptly.
Raising grievances in our extended supply chain
Alongside worker representation, effective grievance mechanisms play an important part in hearing the voices of workers throughout our supply chain.
Fundamental Principle 10 of our Responsible Sourcing Policy
This Principle states that: “All workers have access to fair procedures and remedies”.
The mandatory requirement for suppliers in the RSP is that their workers have access to a confidential grievance mechanism which prohibits retaliation against the worker, ensures the matters are investigated and results in swift, unbiased and fair resolutions.
Over and above a supplier’s own grievance mechanisms, Unilever also provides a hotline that anyone can access to report on responsible sourcing issues. We have also developed a specific grievance procedure for workers in our palm oil supply chain (PDF | 2MB).
Collective action to drive progress on human rights with our suppliers
We know neither we nor our suppliers can solve all the endemic challenges in our supply chain on our own. We also understand the complex demands made on suppliers by their customers, including us. Improving standards within the supply chain requires a common approach and focused, sector-based initiatives involving many participants.Simon Hindley, our Social Accountability Director, Supply Chain
We’re founder members of AIM PROGRESS, a forum of consumer goods manufacturers and suppliers who enable and promote responsible sourcing practices and sustainable production systems. It’s a global initiative, which is supported and sponsored by AIM in Europe and the Grocery Manufacturers Association (GMA) in North America.
Along with four other companies, we’re part of the Leadership Group for Responsible Recruitment (PDF | 645KB), facilitated by the Institute for Human Rights and Business. This promotes ethical recruitment and helps combat the exploitation of migrant workers in global supply chains. It includes the commitment to the ‘employer pays’ principle, meaning that no worker should pay for a job.
We are members of the Consumer Goods Forum (CGF) Social Sustainability Committee, having led the creation of its ambition on the eradication of forced labour and the creation of the Priority Industry Principles. We’re also part of the CGF’s Sustainable Supply Chain Initiative (SSCI), which is working to benchmark and recognise sustainability standards. The SSCI sets a standard for the content and governance of the responsible sourcing audit standards, in order to increase confidence in using mutually recognised standards.
We work through organisations such as the World Business Council for Sustainable Development, the United Nations Global Compact and the World Economic Forum to improve environmental and social sustainability, including human rights, in supply chains.