Compliance with social matters within our own company, especially within the supply chain, is a complex challenge that may affect internal and external perception as well as the performance of our supply chain, and thus of our own company, both positively and negatively. With the procurement of the products that we offer our customers in terms of availability, quality and sustainability, especially with regard to social matters, we are dependent on this very efficiency of the supply chain. Simultaneously, we have influence on it through direct contact with our suppliers as producers and manufacturers. We have been committed to accepting this responsibility for many years.
Respect for human rights
Respect for human rights is one of the fundamental values of METRO, as formalised in our Policy for Human Rights. We pledge to respect all human rights, as set out in the United Nations’ Universal Declaration of Human Rights, the International Bill of Human Rights, the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO). This obligation applies to our own employees (see chapter 2.5 employees – human rights and employer-employee relationships) and to our business partners within our value chain2For the METRO AG holding company, the aspect of human rights in the supply chain is not essential because of its business orientation, but rather only in relation to its own employees..
Since we expect our business partners to adopt and honour similar values, the METRO Code of Conduct for Business Partners is an integral part of every business relationship. This code of conduct includes compliance with human rights according to the International Bill of Human Rights, the OECD Guidelines for Multinational Enterprises, UN and ILO standards, occupational and social matters based on the principles of the International Labour Organization’s 4 core labour standards, environmental protection and corporate ethics, in particular anti-corruption and anti-bribery, antitrust and competition laws as well as data protection. Furthermore, all of our own-brand contracts contain a social standards clause that gives us legal means to enforce our requirements.
In case of violations of our basic human rights principles, our employees can contact their supervisors or the company’s compliance officers. Using a tool that is publicly accessible via the METRO compliance page, every internal and external individual, including stakeholders of our suppliers, can report situations that do not comply with the values and guidelines of METRO or with statutory provisions. We also expect our suppliers to establish a grievance channel and to convey the same expectation to their own suppliers. The reported incidents will be promptly investigated and processed by our experts to take appropriate action, if necessary. We are also committed to working with our suppliers to remedy impacts and not obstructing access to other legal remedies. We believe that collaborating with other initiatives and stakeholders to deal with reported incidents is more successful than working alone.
Global labour and social standards in the supply chain and supplier development
We aim to contribute to ensuring socially acceptable working conditions within our sourcing channels. Therefore, in addition to a contractual manifestation of our requirements, the application of social standards systems is an integral part of the listing process as well as an important tool. Social standards systems enable us to take effective action against any potential violations. Irresponsible practices within the supply chain can damage the confidence in our conduct and, consequently, also our business. We will therefore require our producers to be audited in accordance with the supply chain management standard set out by the Amfori Business Social Compliance Initiative (Amfori BSCI), the Sedex audit according to SMETA or an equivalent social standards system. This applies to all producers in defined risk countries (based on the Amfori BSCI assessment) in which METRO SOURCING and METRO Food Sourcing have imported goods manufactured. It also applies to all other producers who manufacture own brands or imports for our sales lines. For many years now, a corresponding process has been worked on for our non-food producers3This includes merchandise producers (non-food own-brand products and own non-food imports) in high-risk countries that carry out the final value-creating production step, for example produce the final item of clothing.. With effect from 1 June 2019, these requirements were established analogously for all food and near-food producers in the own-brand sector. To this end, all national subsidiaries are requested to develop country-specific development plans in the coming financial year, if possible, so that METRO can reach the goal of ensuring social compliance for all own-brand suppliers by 2030.
As of 30 September 2019, 1,077 non-food producers were audited, with 99% (1,071 producers) passing the audit. Effective 1 January 2019, non-food producers who fail the audit cannot be commissioned until they achieve an acceptable audit result. In other words, they have to receive an A, B or C for the Amfori BSCI assessment or an audit that is acknowledged as equivalent.42 METRO Wholesale companies were granted the exception until the end of the financial year to continue using individual producers with D audit results. These producers were trained by special training units in order to arrive at an acceptable audit result.
The verification of compliance with our requirements is performed via an internal IT-based process management database, which is synchronised with the audit results in the Amfori BSCI database. By working with our database, the responsible employees of our METRO national subsidiaries carry out the portfolio management of the affected suppliers and the associated producers and strive to integrate the procedures for compliance with social standards and human rights into their daily work routines. On the other hand, the process management is automated, for example, to warn our suppliers of expiring audits and to initiate the individual review of Amfori BSCI D or Amfori BSCI E audits or equivalent audits by METRO and to effect improvements. The database is also used as a contract compliance mechanism during initial negotiations or suspension of ongoing business, since the required documents are uploaded and reviewed before conclusion of the contract or suspension of the supplier is triggered in case of misconduct by deal-breakers specified by METRO. This includes findings in the areas of child labour, forced labour, occupational safety hazards with regard to fire safety and ethical behaviour. If there is a misconduct discovered at suppliers and their producers concerning one of these areas, they are required by METRO to develop short-term and long-term solutions. New orders or follow-up orders are suspended until the findings in the deal-breaker process have been resolved.
Supplier development was also identified as a material topic for the business activities of our operational business. By training small and medium-sized suppliers on aspects of food safety, hygiene, processing and implementation of fair working conditions, we enable them to meet relevant standards and thus help them merchandise their goods. This increases their revenue and simultaneously secures our product range.5Due to the company alignment, the aspect of supplier development is not significant for the holding company, METRO AG.
In order to not only ensure the social requirements of our suppliers, but also contribute to improving them and thereby further increasing the proportion of valid social audits, METRO SOURCING works with our local non-food producers and supports them through training courses designed to understand and comply with social standards. In financial year 2017/18, METRO Turkey and METRO Pakistan piloted a 1-day training course for employees in key positions, which was then completed at METRO Ukraine and METRO Bulgaria in the reporting year. The intention is to reintroduce the importance of the topic into our organisation and to empower our employees to identify, process and prevent potential and/or actual forced labour incidents in the supply chain. The development and execution of the training is carried out in collaboration with the Amfori Business Social Compliance Initiative (BSCI). By 30 September 2020, all METRO Wholesale national subsidiaries are expected to have completed this training.
2 For the METRO AG holding company, the aspect of human rights in the supply chain is not essential because of its business orientation, but rather only in relation to its own employees.
3 This includes merchandise producers (non-food own-brand products and own non-food imports) in high-risk countries that carry out the final value-creating production step, for example produce the final item of clothing.
4 2 METRO Wholesale companies were granted the exception until the end of the financial year to continue using individual producers with D audit results. These producers were trained by special training units in order to arrive at an acceptable audit result.
5 Due to the company alignment, the aspect of supplier development is not significant for the holding company, METRO AG.