Emmi is aware of its responsibility towards the society and the environment when procuring goods and services. The company therefore relies on a fair supply chain that respects human rights, minimises the risk of child labour, respects animal welfare and protects natural ecosystems. Accordingly, Emmi has also defined binding social and environmental criteria for its suppliers.
Emmi procures goods and services worth CHF 3 billion every year. In addition to milk and dairy products, this includes other agricultural raw materials, such as sugar, cereals, nuts, fruit, cocoa and coffee as well as semi-finished products, but also packaging materials, logistics services and energy. Through its procurement policy, the Emmi Group influences the social and ecological conditions under which the raw materials, goods and services it requires are manufactured and transported.
In addition to respect for human rights, ensuring fair working conditions and a living wage for people working in raw material production and logistics is particularly relevant from a social perspective. According the Unicef definition, unfair child labour and forced labour are harmful to children’s mental, physical and social development. It denies them an education and keeps them trapped in a cycle of poverty that fosters prejudice and social injustice. The internal risk analysis shows that Emmi’s agricultural value chain (particularly for fruit, cocoa and coffee) is exposed to a high risk of child and forced labour. With clear specifications on supplier qualifications, Emmi can ensure that human rights and further due diligence obligations are upheld in its supply chain, as well as compliance with environmental standards.
The production of agricultural raw materials in particular, which are key to the production of Emmi products, has a significant impact on the environment, biodiversity and climate. Emmi therefore relies on proven, long-standing suppliers and establishing sustainable standards, as shown by the processing of milk produced in this manner in Switzerland. Here, the company contributes to making a sustainable dairy industry the norm, where social and environmental standards as well as animal welfare are promoted (see section “Sustainable dairy”).
Sustainable procurement requires a transparent supply chain with future-oriented suppliers who are motivated to comply with sustainable specifications, laws and standards. Emmi is aware that infringements of the law, human rights violations and environmental pollution in the upstream or downstream supply chain can fall back on the company, damage its reputation, weaken consumer confidence and entail financial risks. Environmental damage that leads to crop failures or changes in the law can also cause supply bottlenecks or price increases.
The Emmi Group strives to live up to its corporate responsibility for sustainable procurement. To this end, the Group-wide internal procurement guideline came into effect in 2020, and contains requirements on ethical business practices in procurement that apply to all strategic procurement areas. Milk procurement in Switzerland is one exception. From the start of 2024, only milk produced in accordance with the “Sustainable Swiss Milk” industry standard has been processed here. Among other things, this industry standard covers animal welfare criteria.
The Group-wide internal Sustainable Procurement Policy specifically describes the standards and procedures for strategic purchasing and defines principles in the following five areas:
The guideline also describes three risk dimensions: risk topics such as child labour, forced labour and GHG emissions, risk countries and risk materials. A key aspect of the policy is the description of the procedures and responsibilities for implementing the Supplier Code of Conduct as well as the requirements for the annual audit in connection with the due diligence obligations resulting from the Swiss Ordinance on Due Diligence and Transparency Obligations regarding Minerals and Metals from Conflict-Affected Areas and Child Labour” (DDTrO).
The 2022 Code of Conduct for Suppliers, which supplements the internal procurement guideline, formulates explicit expectations on the topics of ethics, people and work, health, safety and the environment, product quality as well as governance and management systems. In the area of environmental protection, suppliers are required, among other things, to comply with all local environmental and safety requirements and to ensure continuous improvement.
In the section People and Work, the Code stipulates that every supplier who works with Emmi recognises and supports compliance with fundamental rights and internationally applicable labour standards. The Supplier is expected to take an active position against discrimination, unequal treatment, harassment, inappropriate or unreasonable impairment of work performance, whether based on nationality, race, disability or gender, including gender identity or gender expression, sexual, religious or political orientation, ethnic or social origin. With regard to the observance of human rights, the Code contains provisions on the prevention of forced and child labour, respect for the freedom of assembly and compliance with fair working conditions.
The Code of Conduct generally applies to suppliers of the Emmi Group (excluding newly acquired companies) worldwide with whom Emmi maintains a regular business relationship and who are managed by Strategic Purchasing. The Code of Conduct supplements the contractual conditions agreed in each case.
Since 2022, new suppliers managed by Procurement have had to explicitly recognise the Emmi Supplier Code of Conduct. Emmi’s goal is for all suppliers with whom Emmi entered into a business relationship before 2022 to explicitly accept the Code. To this end, each company sets itself an annual target and prioritises its suppliers. Involving existing suppliers is all the more important because Emmi basically relies on long-term and stable supplier relationships, as the qualification of new suppliers requires considerable effort and major investments, especially in the context of customer-specific machine tools where alliances are concerned. Accordingly, the number of new suppliers is low compared with the established basic level. Important raw materials that Emmi processes, such as milk, must primarily be sourced locally due to their shelf life and existing trade restrictions.
Progress is measured by the proportion of actively managed suppliers who accept the Code of Conduct in relation to all actively managed suppliers.
Newly acquired companies sometimes have their own codes of conduct. These currently include Mademoiselle Desserts (FR); Hochstrasser (CH); Verde Campo (BR); Leeb (AT). When these companies are integrated into the Emmi Group’s buyers’ network, division management determines the time when the Emmi Group’s Code of Conduct is introduced.
There is no systematic review of compliance with the provisions of the Code of Conduct. If there are grounds for suspicion, a survey will be initiated and the supplier reviewed dependent on the situation. If a supplier partially or completely rejects the provisions of the Code of Conduct, the internal committee of experts will decide on the next steps. The same applies if a breach of the Code of Conduct is identified. Priority is given to improving the supplier’s situation, developing it and reducing the risk for Emmi. This includes, for example, formulating specific objectives in combination with more regular supplier audits. In the event of persistent difficulties or a lack of willingness to cooperate on the part of the supplier, the business relationship may be terminated.
According to the SBTi FLAG (Forest, Land and Agriculture) guideline, there is an increased risk in food production in general and, accordingly, at Emmi, that raw materials are processed which have originated from cultivation areas that have been extracted through deforestation. In particular, this risk can result from the cultivation of soya for animal feed as well as from coffee, cocoa, palm oil or plant fibres used in the production of packaging materials (cardboard and corrugated board). In order to actively counteract the risk of sourcing such raw materials or materials from areas that have been deforested after 2020, Emmi procures raw materials and materials with quality labels such as the Rainforest Alliance (RFA), Forest Stewardship Council (FSC) or Roundtable for Sustainable Palm Oil (RSPO) wherever possible. If raw materials or other materials with corresponding certifications are not available or only in insufficient quantities, the requirements in accordance with the standards of the Association of Food Industry (“AFI Standards”) are set out contractually and qualified evidence is required from the supplier (such as ESG report, results of audits, process documentation).
In accordance with the requirements of the Swiss Ordinance on Due Diligence and Transparency Obligations regarding Minerals and Metals from Conflict-Affected Areas and Child Labour (DDTrO), the Emmi Group annually reviews the supplier base of its subsidiaries for the risk of child labour. The review covers all suppliers who have invoiced Emmi at least once a year over the last two years. The review revealed that Emmi sources some of its raw materials and semi-finished products from countries that, according to UNICEF’s Children’s Rights and Business Atlas, are at an increased or high risk of child labour. A total of four suppliers with an obvious risk of child labour were identified. These suppliers were subjected to in-depth internet and social media research using defined keywords and the names of the suppliers. If any suspicions were confirmed during the course of the research, Emmi would contact the supplier directly. If necessary, Emmi would initiate an audit with a clearly defined risk mitigation objective. The audit would in turn be followed by subsequent checks to review the agreed measures. During the year under review, none of the four suspected cases (neither the suspicion of human rights violations in general nor of child labour in particular) could be substantiated during the research. Emmi has defined the detailed procedure for risk assessment and research in its internal Sustainable Procurement Policy.
Emmi does not import or process minerals or metals. Emmi is therefore exempted from its duty of care and reporting obligations with regard to conflict minerals and metals from conflict areas.
The internal procurement policy includes a whistleblowing hotline for reporting violations by and conflicts with suppliers. These reports are handled by the internal “Experts Committee”. The Experts Committee consists of representatives from Purchasing, Sustainability, Quality and Legal Services.
In February 2024, the goal of all milk suppliers from Emmi Switzerland producing milk in accordance with the “Sustainable Swiss Milk” industry standard was reached (see section “Sustainable dairy”).
A strategic review has shown that the way in which these issues are dealt with needs to be specifically clarified. As part of a pilot project at Emmi Switzerland, the internal policy for sustainable procurement was expanded to cover non-dairy raw materials and packaging during the year under review. This includes defining sustainability risk management in purchasing (dealing with risk topics, critical origin, critical materials and product groups), determining the due diligence requirements as well as defining options for securing and promoting sustainability in the supply chain. Whether and when the extended guideline will be rolled out to the other companies will be determined from the regular Emmi strategy review.
Emmi Switzerland has prepared for the implementation of the European Deforestation Regulation (EUDR). The Regulation concerns cocoa, coffee, palm oil, rubber, cattle, soya and wood and products derived from them. From the date of application of the Regulation, these raw materials and products will only be placed on the EU market or exported from the EU if they have not been produced on land that has been deforested after 2020 or is generally not associated with forest degradation.
Emmi Switzerland’s strategic buyers (14 employees) were once again trained in the topic of sustainability (including labels, sustainability in purchasing guidelines, anti-corruption) in the year under review.
During the eight supplier audits carried out by Emmi in the year under review, no incidents or violations were identified at eight suppliers.
Of the total of 1,100 suppliers who currently have a business relationship with Emmi and are managed by Strategic Purchasing, the Code is explicitly binding for more than 750 suppliers (68%). Compared to the previous year, the number of suppliers who accept the Supplier Code of Conduct more than doubled.
Emmi will continue to develop its Sustainable Procurement Strategy in close coordination with the overarching sustainability strategy. A key component of this revision is the update of the Sustainable Procurement Guidelines and associated practices.
One focus is to achieve a deforestation-free supply chain (zero deforestation) in accordance with the SBTi FLAG guideline. The topic will be explored in more detail in targeted training sessions for purchasers.
In addition, there will be a continuous evaluation on whether compliance with new legal requirements requires adjustments to existing internal policies and processes.