Responsible Investment and Sustainable Supply Chain are transversal areas that impact our management decisions that guide how we invest and how we, together with our business’ suppliers, design and develop processes, products and services, following the principles of efficiency and circularity.
Our businesses are actively working to strengthen their supplier management programs and processes at different stages of interaction with their business partners. While we seek to manage the ESG risk associated with our supply chain, we encourage our suppliers to develop best environmental and social practices, and in turn, influence their own suppliers, which ultimately leads to the creation of responsible and sustainable supply chains.
For instance, for the assessment phase, MC has developed the “‘Footprint MC”’ platform, which allows to work directly with suppliers in measuring and reducing the carbon and water footprints of their products. The success of the project resulted in the measurement of more than 290 footprints and the involvement of more than 70 suppliers.
The teams that are directly involved in engagement with supplier, have the right skills and receive not only on-the-job training, but also theoretical training on new developments and other relevant ESG-related topics, such as MC’s new packaging manual, sessions on circularity in the case of Zeitreel, among others.
Regarding the engagement with suppliers, our management and relationship procedures cover several stages that intend to regulate the level of risk of suppliers both at the time of selection and of regular monitorization. The procedures include (i) supplier selection processes taking into account social and environmental criteria such as labour practices and human rights; (ii) the collection and evaluation of necessary documentation and information, such as environmental (e.g. ISO 14001), social (e.g. OSHAS 18001, SA 8000) and other specific certifications accordingly to the suppliers’ business; and (iii) the assessment of exposure of the value chain to ESG risks, in particular the risk analysis of the country of origin and carrying out audits, based on internationally recognized standards, to assess in loco the first stages of evaluation.
Audits are carried out regularly, together with our local partners and with external support when need-ed, in order to ensure best practices and compliance with ESG criteria related to quality, supply ethics, environment and hygiene and safety, human rights, labor rights, among others, and instigating the identification of the same criteria throughout the supply chain.
If non-conformities are verified, a development plan is implemented accordingly to the level of criticality, with the definition of a maximum resolution period and the implementation of the respective improvements. If the minimum ESG requirements are not met systematically, the end of the relationship with the supplier is evaluated, always in a responsible manner taking into account the best business, ethical, environmental and social responsible practices.
Additionally, if a supplier is identified with a significant risk of incidents of forced or compulsory labour, and/or of child labour, the supplier is placed on stand-by and only re-enters after an SA8000 audit on Social Responsibility Management, per accredited entity and attesting the absence of practices or risks in these matters.
Finally, a confirming protocol was developed that incorporates ESG criteria, as a way to financially recognize best practices and create more advantageous conditions for suppliers with better performance in ESG indicators. In this context, the evaluation of the suppliers performance is independently guaranteed with the support of an external partner, EcoVadis. The supplier submits to the EcoVadis evaluation, and when it obtains a positive assessment, this results in a bonus of the rate applicable to the confirming operations.
At Sonae we are committed to developing partnership relationships that ensure socially and environ-mentally responsible supply chains and create the future we all want and need.