Respect for human rights
The principles of METRO include respect of 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 is manifested in our Principles for Human Rights, which apply to our own employees and to our business partners within our value chain1For 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.. Our goal is to identify and prevent violations of human rights in our own business operations and in the supply chain. We also strive to systematically improve working conditions in our supply chain.
An attitude aligned with similar values is also important to us on the part of our business partners. We formalised this in the METRO Code of Conduct for business partners. It 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 (ILO) 4 core labour standards, provisions for environmental protection and corporate ethics, in particular anti-corruption and anti-bribery, antitrust and competition laws as well as data protection. During the reporting period, the technical conditions were created to define the Code of Conduct as a minimum requirement and thus to integrate it as a mandatory document into the new METRO Supplier Portal. Once the function is live, all suppliers who have a business relationship with METRO will be prompted to read and agree to it. The national subsidiaries will successively be connected to the new portal. The new function will be activated in financial year 2021/22, and thus more and more suppliers will gradually be included. In addition, we have embedded the list of criteria for our social standard process in the food own-brand manual of the purchasing company European Food Sourcing (EFS). When the manual goes into effect on 1 October 2021, all requirements for demonstrating human rights compliance will already be clarified when invitations to tender are issued. The relevant documents and evidence must then be available for the listing. Furthermore, all of our own-brand contracts and framework contracts for brand suppliers 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, internal and external individuals, including stakeholders of our suppliers, can report incidents and violations. It is important for us that our suppliers also provide such a reporting system. Reported incidents affecting our company will be promptly investigated and processed by our experts to take appropriate action, if necessary. We are also committed to working with our suppliers and within the group to remedy the effects of the grievances, utilising joint initiatives and collaborating with stakeholders, and not obstructing access to other legal remedies.
Global labour and social standards in the supply chain
In preparation for the requirements from the German Act on Corporate Due Diligence Obligations in Supply Chains published in July 2021 and in order to contribute to ensuring socially acceptable working conditions within our procurement channels and to prevent potential infringements, the application of social standard systems is a key part of the purchasing process in addition to the contractual manifestation of our requirements. We are aiming to have our producers audited in accordance with the supply chain management standard set out by the amfori BSCI, the Sedex audit according to SMETA or an equivalent social standards system. In line with our risk approach, this applies to all producers of certain typically human rights-critical food categories and industries, and to all producers in defined risk countries (based on the amfori BSCI assessment) in which METRO SOURCING International (MSI) and METRO Food Sourcing (MFS) have imported goods manufactured. It also applies to all above referenced producer which ressresent a risk exposure and who manufacture own brands or own imports for METRO. This risk assessment did not have to be adjusted in connection with the Covid-19 pandemic either, as it is universally applicable. For many years now, we have been working on the basis of a corresponding process for our non-food producers2This 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.. Since 1 June 2019, the same process was established analogously for all food and near-food producers in the own-brand sector. To date, MFS has fully implemented the process. The national subsidiaries in Turkey, Pakistan and Germany as well as our purchasing company Rotterdam Trading Office (RTO) have introduced the first producers to the process. Other purchasing companies and national subsidiaries have started to implement it. Our goal is to include our entire supply chain in this process by 2030, insofar as it is considered as representing a risk in terms of potential human rights violations. The national subsidiaries will be trained and successively integrated into the programme. Due to the disruptive circumstances of the Covid-19 pandemic, particularly with regard to supply chain management, significantly fewer regular on-site audits took place throughout the reporting period. Under normal circumstances, we have them regularly carried out by external auditors in accordance with the audit cycles of the social standards accepted by METRO. Instead, we carried out virtual audits or reviews of written documents, so that compliance with the requirements was checked in at least some cases. As a result of these circumstances, we have temporarily discontinued the suspension of suppliers due to expired audits from mid-March 2020 to mid-October 2021. In light of this fact, we particularly consider responsible sourcing practices as the key to strengthening business relationships, ensuring business continuity and protecting human rights in global value chains.
As of 30 September 2021, 569 of 717 active own-brand non-food producers and 58 of 165 corresponding food/near-food producers had undergone the audit process. Within this group, 100% (569) of non-food producers and 98% (57) of food/near-food producers have passed the audit successfully. Effective 1 January 2019, non-food producers who fail the audit can only be commissioned as METRO contracting parties if they achieve an acceptable audit result. In other words, they have to receive an A, B or C for the amfori BSCI assessment or successfully pass an audit that is acknowledged as equivalent3A METRO company was granted an exemption in August 2020 for the (post-) coronavirus period to continue to use individual producers with D audit results if their D audit results are attributable to coronavirus-based failure. These producers will be granted a 6-month grace period after audits resume in September 2021 to demonstrate a follow-up audit result of A to C. No use was made of the exemption during the reporting period.. Until further notice, all food/near-food suppliers with amfori BSCI D (and in exceptional cases also E) audit results (and corresponding equivalents of other standards recognised by METRO) also qualify to be commissioned by METRO. This procedure realistically reflects the challenging way of re-integrating suppliers into the process and successively working towards ensuring socially acceptable (working) conditions.
The verification of compliance with our requirements is performed via an internal IT-based process management database, which provides an overview of the portfolio management of the affected suppliers and the associated producers. The database is also used to monitor compliance with contractual agreements during the initiation and suspension of business relationships. Misconduct with regard to the deal-breakers specified by METRO in the course of ongoing business relations will trigger suspension of the supplier. Deal-breakers include specific findings in the areas of child labour, forced labour, occupational safety hazards with regard to fire safety and ethical behaviour. If misconduct is discovered at suppliers and their producers concerning one of these areas, they are required by METRO to develop short-term and long-term solutions to remedy the deal-breaker issue. New orders or follow-up orders are suspended until the findings in the deal-breaker process have been resolved.
In order to contribute to the improvement of the social requirements in our production plants and thus to further increase the proportion of valid social audits, MSI, MFS and METRO Turkey work together with our local producers and support them with training courses that serve to teach understanding and compliance with the social standards. By training our suppliers on aspects of hygiene and the implementation of fair labour practices, we are raising their awareness, particularly on issues that became important with the outbreak of the Covid-19 pandemic. This way, we are making up for largely cancelled amfori BSCI and Sedex audits, thus fulfilling our due diligence obligation to give weight to respect for human rights. Special attention was paid to stricter hygiene rules and potential human rights violations as a consequence of the sometimes severe economic losses, such as the risk of unregulated overtime. MSI also conducted an initial survey with approximately 1,000 of its suppliers in July and August 2021 specifically on the topic of living wages4Measurement according to the so-called Anker methodology; data taken from the database of the Global Living Wage Coalition and partly based on the information from the relevant amfori BSCI audits of the producers.. Next, we will implement training sessions focusing on this topic as well.
In addition to the focus on social issues, MSI has started to audit its producers with a self-assessment questionnaire on environmental compliance in financial year 2020/21.
1 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.
2 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.
3 A METRO company was granted an exemption in August 2020 for the (post-) coronavirus period to continue to use individual producers with D audit results if their D audit results are attributable to coronavirus-based failure. These producers will be granted a 6-month grace period after audits resume in September 2021 to demonstrate a follow-up audit result of A to C. No use was made of the exemption during the reporting period.
4 Measurement according to the so-called Anker methodology; data taken from the database of the Global Living Wage Coalition and partly based on the information from the relevant amfori BSCI audits of the producers.