Ethical trading and working in partnership
Codes of Practice
We have two formal documents that cover the commitments we make to our suppliers, and the standards we expect of them in return.
We pride ourselves on having good supplier relationships. We were the first supermarket to implement a voluntary code of conduct that went beyond the obligations contained in the previous Supermarkets Code of Practice. We have consistently supported the strengthened and widened Grocery Supply Code of Practice (GSCOP) which came into force in February 2010 following the Competition Commission report into the grocery market. We made significant investments to implement GSCOP throughout our business. Our Supplier Handbook, which is issued to all suppliers, is our legally binding code of commercial practice. It incorporates GSCOP and also our 'Code of Conduct for Socially Responsible Sourcing', which includes the Ethical Trading Initiative (ETI) Base Code. Where there have been disagreements with suppliers about a particular trading practice or decision we have a proven record of effective internal escalation and resolution. We support effective GSCOP enforcement, but we remain of the view that an additional enforcement body is unnecessary, as the strengthened provisions in the GSCOP and the existing enforcement regime are already self sufficient and fully address the areas of concern identified by the Competition Commission.
Ethical trading
Our customers want to be confident that the people who make our products are not being exploited, or exposed to unsafe working conditions. Our Code of Conduct for Socially Responsible Sourcing covers the employment practices we expect from our suppliers, both in the UK and abroad. We work with a number of organisations to ensure that we are able to support our suppliers to meet these requirements. For example, we continue to work closely with the Gangmasters Licensing Authority on the food side of our UK supply chain. They regulate the use of temporary labour, and we are signatories to their Supermarkets and Suppliers’ Protocol, which was published in March 2010.
Our overseas supply chains present different challenges, including the use of homeworkers, ensuring the payment of living wages or ensuring workers donI’t work excessive hours. We are founder members of the Ethical Trading Initiative (ETI) and we are working with them and other partners to address issues like these, and develop collaborative best practice models. The ETI’s Homeworkers Working Group is a good example and is looking at how fair treatment, appropriate pay and decent working conditions can be ensured in a homeworking model. We are also currently working on a pilot project in Bangladesh, which looks at how our suppliers can improve their management, communication and productivity systems and become more efficient. We believe that this should result in an increase in wages for the workers.
We conduct risk assessments on our suppliers to determine how much they need to do to comply with our standards. Lower risk suppliers will self assess against our Code of Conduct and higher-risk suppliers are required to have an independent third party audit.
Supplier training
We recognise our responsibility to support the skills and development of our suppliers to ensure they can continue to operate efficiently and meet our requirements for quality and sustainability. We achieve this through continuous dialogue and knowledge sharing as well as newsletters, supplier conferences and working groups.
In addition, a formal training programme is provided to Sainsbury’s suppliers through our Technical Management Academy (TMA), established in 2006 in partnership with Campden BRI, a leader in food and drink research and training. Our technologists work with suppliers to identify where teams or individuals would benefit from training and the Academy provides a modular approach to tailor this to their needs. In the past year, over 150 additional suppliers have been trained in areas such as packaging, quality management and our key technical requirements. In addition, in 2009/10 we launched the TMA in China, where we trained over 100 suppliers based in Asia.
We have taken all our non-food buyers and technical teams through detailed training in purchasing practices to ensure all our dealings with our suppliers are fair and ethical.
Supplier capability is a key responsibility for our product technologists and they visit suppliers throughout the year to ensure exact quality and ethical requirements are met. Over 1,700 audits and site visits were conducted at Sainsbury’s suppliers last year. In early 2010 our first ethical non-food workshop brought together 60 clothing suppliers in London and we aspire to have all our non-food suppliers included in this by 2011.
Working in partnership
One of the most important ways we are making progress in sourcing is through active collaboration with our suppliers and farmers, both in the UK and overseas. Our Development Groups and new Crop Sustainability Groups are practical working partnerships where we pool our knowledge about supply chains, and work together to develop the skills and resources our suppliers need. It is initiatives like these that set us apart from other retailers, therefore our values make us different.
Development groups
Dairy
Our Dairy Development Group was the first to be set up, and dates from 2006 and we invested £15 million to establish the group. In January 2010 we committed a further £40 million for use over the next three years. The aim of the Group is to help our 325 dairy farmers reduce their on-farm costs by improving efficiency, animal health and welfare and reducing their impact on the environment. In exchange for this commitment, we offer them a premium for their milk.
The group focuses on four key areas: herd health and husbandry, environment and energy, collaborative working and business improvement. For example, we have developed a carbon footprinting tool specially designed for dairy farming, which has the potential to reduce farmers’ energy costs and also farmers’ carbon footprint by 10% a year. The tool was developed in partnership with the Carbon Trust and achieved the PAS2050 standard. For herd health and husbandry we use an 'outcome based’ system to ensure we focus on the cow’s health. The Dairy Development Group was extended in September 2009 to include 98 dairy farmers who produce milk made into cheese by Milk Link, the UK’s leading farmer-owned dairy co-operative and the largest producer of British cheese.
“The SDDG has undoubtedly made my farm more profitable, and if more farmers are joining the group, it can only be a good thing for the dairy industry.”
Pork, beef, lamb and eggs
During 2009/10 we extended Sainsbury’s successful Development Group model to beef, pork, poultry, lamb, cheese and egg suppliers. We launched the new Pork Development Group, which is still in development but already includes 60 Taste the Difference farmers.
The Woodland Egg Development Group was also set up in 2009, and includes 180 farmers from all of the UK regions.
The Woodland Trust is working with us to provide Woodland Training days, which will help farmers maintain their trees, and start reducing their carbon footprint.
Crop Sustainability Groups
We launched our Crop Sustainability Groups last year. These are an extension of our well-established Crop Action Groups and use the successful Development Group model to cover Field Crops, Protected Crops and Orchard Crops looking in particular at climate change, carbon reduction through better energy use, water and soil health, pesticide reduction, biodiversity waste management and the welfare of people in our supply chains.
Pesticides
Our Pesticide Policy actively encourages our suppliers to minimise their use of pesticides, and employ Integrated Crop Management techniques. We know how vital soil health is, and we have and will continue to work with our suppliers through the Crop Sustainability Groups to develop best practice in this complex area.
Supplier feedback
Communication and transparency are crucial to our relationships with suppliers and our trading and technical teams are in continuous dialogue with them.
Good communication is a vital aspect of all our supplier relationships, which means honesty and transparency on our part, and a willingness to listen to feed back and then act. In 2009 we brought together around 1,000 supplier representatives at both our Trading and Technical Supplier Conferences. This gave suppliers the chance to share best practice, hear updates on our business strategy and share their own perspectives with our senior management team.
Our technical teams are in constant contact with our suppliers and we have also run quarterly supplier ‘Talkback’ surveys since 2007. In addition there is a confidential and independent whistleblower hotline, Sainsbury’s ‘Right Line’, for colleagues, contractors and suppliers to report issues of concern. We will be launching something similar in some of our key factories in China in 2010.
Supplier Talkback survey
How likely would you be to recommend Sainsbury’s as a retailer to work with (on a scale of 1-10):
- Own brand suppliers: 8.0 (up from 7.4 in 2008)
- Branded suppliers: 7.7 (up from 7.4 in 2008)
November 2009 Ipsos Mori
We also communicate key technical initiatives, product development successes and business developments to our suppliers in our 'Working Together' magazine, issued to own brand suppliers every four months.
Our key commitments
- Being best for British
We will source great tasting British products when in season, wherever these meet our customers' expectations for quality and authenticity
- Being number one supermarket for animal welfare
We will offer the widest range of higher welfare products of any UK retailer
- Sourcing responsibly and ethically
We will be the largest UK retailer of Fairtrade products (by sales value)
Next steps
- We are aiming to increase the number of supplier visits we carry out every year, and open more non-food supply offices in the Far East, which will help us get closer to our suppliers there
- We will continue the roll-out of the Development Groups to more pork, beef, chicken and lamb suppliers
- We will work with informed stakeholders to research and identify best practice in water usage across our supply chain
Our views on the issues that are important to our stakeholders.
