Respect for human rights
The principles of METRO include respect of 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 is manifested in our Declaration of Values on Human Rights and Environmental Concerns, which applies to our own employees and to our business partners within our supply chain. An attitude with similar values is also important to us on the part of our business partners. Our goal is to identify and prevent violations of human rights in our own business operations and in our supply chain. We also strive to systematically improve working conditions in our supply chain. In the reporting period, we reviewed our management approach with regard to respecting human rights and began the implementation of the requirements of the Act on Corporate Due Diligence Obligations in Supply Chains (LkSG), which entered into force in Germany in January 2023, for the METRO companies that are directly affected by the LkSG. This includes, among other things, the social compliance risk management system for supplier relationships with a differentiated risk analysis.
To align with the requirements of the LkSG, METRO Deutschland revised the content of its Code of Conduct and made it a part of the contractual relationship with relevant suppliers. Furthermore, all of our own-brand and framework agreements for brand suppliers and the international standard logistics contracts contain a clause on the social standards. Service provider contracts contain corresponding obligations related to labour, company and safety laws. As a responsible company, we have implemented corresponding processes and measures that help us to enforce our requirements accordingly.
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 are familiar with the METRO complaint mechanism and provide information about it along the rest of the supply chain. Corresponding measures to ensure that this is also implemented by our suppliers have not been established. 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. Therefore, we have developed a catalogue of preventive measures and remedies aligned with the requirements of the LkSG. Depending on the application, it will need to be posted and tracked during risk classification of a supplier or, at the latest, when a confirmed incident is reported.
Global labour and social standards in the supply chain
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 in our own-brand supply chain is a key part of the purchasing process. We pursue the approach of requiring our producers to be audited by a third party, for example in accordance with the supply chain management set out by the amfori BSCI, the Sedex audit according to SMETA or equivalent social-standard systems. These audits may be initiated by us, or we access audits initiated by other companies that are released to us for our evaluation. 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 risky producers who manufacture own brands or own imports for METRO. This risk assessment did not have to be adjusted in connection with the Russian war in Ukraine, as it is universally applicable. Under normal circumstances, we have audits regularly carried out on-site by external auditors in accordance with the audit cycles of the social standards accepted by METRO. For many years now, we have been working on the basis of a corresponding process for our non-food producers1. We are gradually establishing this process analogously for all food and near-food producers in the own-brand sector. To date, MFS and the national subsidiaries METRO Deutschland and METRO France have fully implemented the process. The national subsidiary METRO Turkey continuously expands its producer portfolio in the food and near-food process, and our purchasing company Rotterdam Trading Office (RTO) has begun introducing the process for its meat suppliers. Other purchasing companies and national subsidiaries are preparing for implementation. Our goal is to include our entire own-brand supply chain in this process by 2030, insofar as it is considered risky in terms of potential human rights violations. The national subsidiaries are trained and gradually integrated into the programme. During the reporting period, 8 national subsidiaries refreshed their proficiency of the programme and/or trained new colleagues via online training sessions. The Covid-19 pandemic and the war in Ukraine had or are having an effect on our supply chain. Taking the experience gained from these supply chain disruptions into account, we particularly consider responsible procurement practices as the key to strengthening business relationships, ensuring business continuity and protecting human rights in global value chains.
As of 30 September 2023, 454 of 492 reported active risky own-brand non-food producers2 and 118 of 186 corresponding food/near-food producers3 had undergone the audit process4. Within this group, 100% (454) of non-food producers and 98% (116) 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 equivalent. 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.
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 so-called 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 the production facilities of our own brands 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 own-brand suppliers on the implementation of fair labour conditions, we sensitise them to comply with conditions and to avoid violations.
1 This includes producers of commercial goods (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.
2 High-risk non-food producers are assessed using the following criteria, among others: inherent risk (producers located in a high-risk country according to amfori BSCI) as well as fact-based risk (critical incidents).
3 High-risk near-food producers are assessed using the following criteria, among others: inherent risk (producers located in a high-risk country according to amfori BSCI) as well as fact-based risk (critical incidents). High-risk food producers are assessed using the following criteria, among others: I. inherent risk: a) producers located in a high-risk country, b) producers that make products from certain high-risk categories of goods and/or sectors/industries, regardless of the risk status of the production country or c) governance and organisational structures: staff made up primarily of women or migrant workers or seasonal/temporary workers, or workers without fixed or regular contracts or II. fact-based risk (critical incidents).
4 Due to the availability of data and changes to the consolidation group, among other factors, the auditing process of the key figure does not include the following METRO subsidiaries and countries: Belgium, India, Japan, Portugal, Russia and Ukraine.