151 Reporting basis and governance of non-financial indicators (continued) Sourcing sustainably Report of the Report of the Financial Sustainability Other Introduction Executive Board Supervisory Board Statements Review Information Heineken N.V. Annual Report 2017 Sustainable agriculture By sourcing raw materials sustainably, we help improve farming practices and enable farmers all overthe world to adopt better environmental and social standards. Our procedures for sourcing sustainably cultivated crops are based on the principles of the Sustainable Agriculture Initiative Platform (SAI), an organisation of multinational food companies working towards a more sustainable food chain. Suppliers allocating sustainably cultivated crops to us are required to follow our procedures and we encourage them to work with farmers who grow their crops sustainably We follow the definition of the Sustainable Agriculture Initiative (SAI): The efficient production of safe, high quality agricultural products, in away that protects and improves the natural environment, the social and economic conditions of farmers, their employees and local communities, and safeguards the health and welfare of all farmed species. Our sustainable sourcing reporting is based on the concept of'mass balance'. This tracks what percentage of a suppliers' materials are produced sustainably and is fully auditable, from farm to brewery of our main agricultural Contracted sustainable volumes (tonnes)/Total contracted volumes (tonnes). raw materials from Sustainable volume any agricultural product in scope of the Sustainable Agriculture programme, that has been: sustainable sources 1. cultivated in accordance with an approved Code of Practice and 2. allocated to HEINEKEN by our supplier in accordance with the mass balance approach Volumes contracted in 2017 for delivery in 2018 are reported in the 2017 Annual Report of agricultural raw Quantity (in tons) of agricultural 'extract' producing raw materials (plus hops) that are cultivated in the Africa and materials locally sourced Middle East region and that are purchased for use in the production of beers, soft drinks, cider, wine and spirits at in Africa our own production facilities in that region Estimated number of Calculation based on the total quantity of agricultural raw materials purchased (tons), divided by the average farm smallholder farms involved size (hectares) and the average yield per crop produced (tons per hectare). This gives the estimated number of smallholderfarms involved Number of different local sourcing initiatives HEINEKEN Supplier Code Supplier Supplier Code four-step procedure HEINEKEN operating companies sourcing any agricultural raw material within the AME Region. Each value chain is counted individually and some involve working with smallholder farmers, while others work with larger scale commercial farmers. As a large buyer of crops, we can have a significant economic impact on local agricultural communities. Our local sourcing PPP projects work with smallholderfarmersand aim to help them raise yields and compete against imported crops. They empowerfarmers and their communities by helping to alleviate poverty and improve local food security. At the same time, HEINEKEN benefits by reducing import-related duties and securing a sustainable supply of raw materials. To achieve more, faster, we support a number of Public-Private Partnerships (PPP) in which HEINEKEN and a public sector donor (e.g. the Dutch Ministry of Foreign Affairs and the German GIZ development agency) jointly fund agricultural development projects. Other partners include the European Cooperative for Rural Development (EUCORD), International Finance Corporation (IFC), International Fertilizer Development Center (IFDC), and Dutch NGOs ICCO and FairMatch Support Much of our impact lies indirectly with our suppliers, so we work with them to embed the right practices. Every supplier is asked to abide by our Supplier Code, which sets out clear guidelines for how we expect them to act in the areas of Integrity and Business Conduct, Human Rights, and the Environment. The Supplier Code procedure is implemented among first tier suppliers, and we expect our suppliers to ensure that their suppliers adhere to the same standards A supplier is an entity: - that delivers goods and/or services on a regular basis, more than once a calendar year, and - is registered in the vendor master database as an active supplier, and of which invoices are registered in the central systems for payment on behalf of Heineken NV. or one of its affiliates, and - with which there has been spend in the 18 months preceding the assessment of the status of the supplier The definition excludes: tax authorities, charities, sponsorships, customer refunds and intercompany suppliers We safeguard compliance through a risk-based step-by-step process: 1. By signing the HEINEKEN Supplier Code, suppliers agree to comply with our principles of integrity, environmental care and human rights. 2. The intensity with which we monitor compliance against our Supplier Code depends on the risk profile of a supplier. Our supplier risk analysis (SRA) tool assesses suppliers based on their type of business and level of supplier-specific risk. All potentially high-risk suppliers are required to go through step three of the programme. 3. We usethe EcoVadis34 sustainability monitoring and scorecard to assess the strength of potentially high- risk suppliers' management systems for ensuring compliance with our Code. Suppliers complete an online questionnaire and provide supporting evidence, which EcoVadis analyses alongside a 360° scan which looks at whether a supplier has been mentioned positively or negatively in the media, by NGOs ortrade unions. They then create a supplier scorecard. Suppliers that are still considered high-risk go on to Step 4 and undergo a site audit. 4. The final step is a site audit by athird party using our Supplier Code as the basic assessment criteria. We usethe SMETA35 four-pillar protocol. It enables us to contribute to and usethe global database of audits held byAIM-Progress,the responsible-sourcing platform used by over 40 of the world's leading fast-moving consumer goods companies. We strive for continuous improvement to ensure ongoing compliance with ourSupplierCode. If acase of non-compliance is found, we discuss corrective actions with the supplier and allow for commitment to correct the non-compliance within a given timeline. If commitment and action is not forthcoming, HEINEKEN will cease to do business with the supplier 34 EcoVadis is a sustainability rating and collaborative platform enabling companies to monitor the sustainability performance of their suppliers, across 150 sectors and 110 countries. The evaluation covers 21 Corporate Social Responsibility (CSR) criteria and is used today by 120 global multinationals. EcoVadis engages approximately 20,000 suppliers a year whereby 70% of suppliers are SMEs (less than 1000 employees). 35 SMETA (Sedex Members Ethical Trade Audit) describes an audit procedure which is a compilation of good practice in ethical audit technique.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2017 | | pagina 152