Reporting basis and governance of non-financial indicators (continued)
Average level of compliance
of all operating companies
with four-step Supplier Code
Procedure
O Q,
Heineken N.V. Annual Report 2018
Report of the Executive Board
Report of the Supervisory Board
Financial Statements
Sustainability Review
Other Information
Local sourcing approach
HEINEKEN Supplier Code
Supplier
As a large buyer of crops, we can have a significant economic impact on
local agricultural communities. Our local sourcing Public-Private Partners
(PPP) projects work with smallholder farmers and aim to help them raise
yields and compete against imported crops. They empower farmers 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 PPPs 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
all our 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 N.V. 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
Supplier Code
four-step procedure
We safeguard compliance through a risk-based step-by-step process:
1By 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 use the EcoVadis26 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 or
trade 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 a third party using our Supplier Code as
the basic assessment criteria. We use the SMETA27 four-pillar protocol.
It enables us to contribute to and use the global database of audits
held by AIM-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 our Supplier Code. If a case 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
We calculate compliance as the number of suppliers compliant with all
applicable four-steps of the Supplier Code Procedure divided by the total
number of our suppliers. The calculation method has changed in 2018 as
compared to the previous years
Number of contract
terminations
Number of suppliers with which any commercial relationship
ended, because:
a) they were unwilling to sign our Supplier Code
b) or refused to subscribe to EcoVadis
c) or refused to undergo a site audit
