GRI 204: Procurement practices
Explanation of the material topic and its boundary
As a global business, we must develop and maintain a strong network of suppliers to respond to increased consumer demand for more sustainable, healthier and differentiated products. We seek to source materials in ways that preserve the environment, stimulate the development and well-being of communities from which we source, and safeguard the environment. We mainly address this topic through our approaches to deforestation, responsible sourcing and traceability.
Natural ecosystems are being replaced by agriculture, energy, and settlement. Resulting deforestation and land degradation put the ecosystems and biodiversity of natural ingredients that we buy at risk. To counter this, we identify raw materials linked to deforestation and collaborate with suppliers and other key partners to halt it and support reforestation along Givaudan’s supply chain.
With responsible sourcing and compliance with high standards in health, safety, social, environmental and business integrity in the way we source, we look to expand relevant initiatives to reduce our environmental and social impact. Working with our suppliers to help them meet our sourcing standards also helps us mitigate the risks inherent in our complex supply chains. Sourcing at Origin initiatives involve the direct sourcing of raw materials by working with local smallholder farmers, intermediate suppliers and partners to secure the long-term supply of these ingredients. These initiatives strengthen the fabric of the local economy by contributing to more stable incomes for thousands of farmers.
Finally, understanding the supply chain and tracing the raw materials we use allows us to assure customers about the provenance of raw materials and their production. It also shows that we adhere to responsible supply chain practices. Mapping our supply chains helps us to understand how they are organised and to collect data on the number of intermediary suppliers involved, their role, importance and geographical location.
Givaudan depends on natural resources and the people that produce them: our sourcing promotes stability for producers and the local environment. We call this Sourcing for Shared Value as it brings new value to those involved in the sourcing of our natural raw materials. It is based on three practices.
Responsible Sourcing means auditing suppliers and assessing supply chains to work with our suppliers on driving compliance and continuous improvements against norms in health and safety, social, environmental and business integrity practices as defined in our Responsible Sourcing Policy.
We continued to work on our target in 2019 and reached 85% direct supplier compliance. By the end of 2019 we had mapped 50 raw material categories and were sourcing 33 raw material categories in a responsible way, respective increases of 18 and 9 over 2018.
After several acquisitions in 2019, we are reviewing individual responsible sourcing programmes and are working on a common approach that will fit all. This will be announced in 2020.
Sourcing at Origin focuses on direct collection networks and partnerships with farmers, distillers and producer groups. It secures the long-term and balanced supply of natural ingredients from fragile ecosystems while boosting the local economy through knowledge transfer and more stable incomes.
Social and environmental projects help build more secure futures for the Communities at Source and their environments. Together, these three practices move us closer and closer towards our goal of sourcing all materials responsibly.
Today, Sourcing for Shared Value covers 40 raw material categories in 26 countries. Through Communities at Source initiatives we run 18 social and environmental projects in 8 countries that touch more than 30,000 beneficiaries as well as their families and communities.
Proportion of spending on local suppliers
It is the Company’s common practice to prefer sourcing from locally based suppliers (defined as suppliers who are based in the same country as the Givaudan ‘facility’). This is reflected in the 86% by value of non-raw material purchased locally in 2019. For raw materials, 25% by value were sourced locally in 2019. Several of the raw materials we buy cannot be sourced in countries other than the ones where they naturally grow.
Operations and supplier assessment