Challenge

Studies by human rights organizations regularly come to the conclusion that violations of human rights and/or international labor standards occur in globalized supply chains for a number of reasons. This is one of the reasons that the United Nations developed its Guiding Principles on Business and Human Rights. All member states are called upon to integrate these into their respective political and social frameworks via National Action Plans.

The German government has complied with this request, for example by adopting the Supply Chain Due Diligence Act (“Lieferkettensorgfaltspflichtengesetz” – LkSG) in June 2021. The LkSG came into force on January 1, 2023. It obliges us to fulfil the human rights and environmental due diligence obligations set out in the law in an appropriate manner in order to avoid or minimize human rights or environmental risks or to put an end to violations of human rights or environmental obligations and, if necessary, to take remedial action. At a European level, the European Commission presented the Corporate Sustainability Due Diligence Directive (CSDDD) in February 2022. The aim of the CSDDD is for companies in the EU to implement certain due diligence obligations in order to avoid the negative impact of their business activities on human rights and the environment in their value chains both inside and outside Europe.

Targets and KPIs

Our overarching objective is to ensure the protection of human rights in our company and all our supply and value creation chains at all times and to meet in full our obligations in this regard. We are guided here by the OECD Due Diligence Guidance for Responsible Business, and the National Action Plan on Business and Human Rights, and are committed to the United Nations Universal Declaration of Human Rights, and the ILO Core Labor Standards. The requirements of the LkSG are covered by our comprehensive risk management system.

The highest probability of human rights violations is in our complex and often globally organized supply chains. Our strategies and measures to protect human rights are therefore focused on our purchasing and management processes in the value creation chain. Of central importance here is our Supplier Code of Conduct, in which we set clear requirements for our suppliers and business partners with regard to compliance with human rights and thus create the prerequisites for joint processes with regard to analysis, prevention and, if necessary, remediation. Violations of our Supplier Code of Conduct can ultimately lead to the termination of our cooperation. However, our focus is always on the continuous improvement and empowerment of our suppliers.

In our Global Procurement unit and in some of our operating divisions, we audit our suppliers using the IntegrityNext and Sphera tools. We are currently working on expanding our activities in this field and harmonizing them across the Group.

What we achieved in 2022

• Group-wide uniform implementation of the LkSG requirements, establishment of a comprehensive (risk) management system
• Established an LkSG pilot group with the participation of various operating divisions to ensure the uniform design of legally compliant procurement processes
• Started the abstract risk analysis required by the LkSG for our supply chains at country and product group level
• Established working groups and partnerships in the coffee supply chain, e.g. establishment of the coffee-specific Ear4U whistleblower system coordinated by the German Coffee Association (“Deutscher Kaffeeverband e.V.”)
• Analyzed our own logistics, production and head office locations with regard to LkSG-related risks

What we are currently working on

• Further implementation of the LkSG requirements in all operating divisions, including implementation of the specific risk analysis for prioritized suppliers
• Participation in the initiatives for social standards and social audits SEDEX and amfori BSCI
• Review, revision and publication of all LkSG-relevant policies
• Group-wide training on human rights and LkSG requirements in purchasing departments