PROMOTING LOCAL, SUSTAINABLE, RESPONSIBLE SOURCING

Providing a stable perspectives for thousands of producers

Through its Carrefour Quality Lines and local products dedicated brands, Carrefour provides work for a growing number of SMEs and small producers. These longstanding partnerships offer sustainable opportunities that help small businesses to develop. The Reflets de France range involves 140 companies, with products generating turnover that has increased by 85% over the past 10 years. Since 2006, as part of the Guaranteed Partnership programme, hypermarkets in France make a contractual commitment to purchase volumes upstream of production and before the harvest season, thus providing French producers with a guarantee that their fruit and vegetables will be sold and enabling them to manage production with peace of mind.

Favouring local producers

For its own-brand food products, Carrefour gives priority to local supply sources, enabling SMEs and farmers to take part in the Group’s development. This policy has led to the development of the Carrefour Quality Lines (464 in 2009) and ranges dedicated to locally-produced products in France, Spain, Belgium, Italy and Colombia. The Group contributes to local development in the countries where it does business while cutting CO2 emissions associated with the transport of imported products.

Supporting continuous improvement

Carrefour helps its suppliers to continuously improve their business activities through regular audits measuring their performance in terms of quality, safety, the environment and social responsibility, as well as through the sharing of information and know-how (by organizing forums and supplier clubs, for example). In most countries, Carrefour provides its suppliers with the tools they need, including dedicated websites, to give them easy access to useful information. Carrefour also sets up numerous supplier training sessions. For example, in 2009 it organized quality training for fruit and vegetable suppliers in Poland. A third training seminar on the International Food Standard was also held for suppliers of Carrefour’s own-brand products.

Helping suppliers with regulatory requirements

Carrefour products are of such high quality in part because we are able to anticipate, exchange and share technical and regulatory information. Carrefour Quality teams support suppliers by explaining, teaching and applying new European directives. For example, the Group set up a training programme for over 650 own-brand product suppliers worldwide to help them to understand REACH^* objectives. The aim of this initiative is to give them a better grasp of their obligations and aid them in successfully completing the compliance process. To further help suppliers in dealing with regulatory requirements, the Carrefour Quality teams have also applied the same policy to Europe’s new EUP/ERP (Energy-Using Product/Energy-Related Product) eco-design directives. Training was organized for 170 suppliers in Asia and Europe in order to prepare them for technical developments and to help them design more energy-efficient products as part of the Group’s continuous improvement policy.

_{*Registration, Evaluation and Authorization of Chemical Substances, a regulation that institutes a new European policy on the management of chemical substances.}

Supporting our suppliers’ sustainable-development initiatives

In 2006 Carrefour developed a sustainable-development self-assessment tool in France in conjunction with ADEME and the WWF. The tool is accessible via the Internet and enables suppliers to assess their own sustainable-development practices. They can also compare their results with the sector average and access advisory documents. This tool encourages suppliers, guides them and helps them implement practical actions. Suppliers can perform a self-assessment of their practices based on 49 criteria focusing on four themes: corporate policy and management, social responsibility, environmental responsibility and economic performance. Auditors visit the sites of selected suppliers in order to validate the declared results, identify best practices, provide companies with advice and suggest any improvements to be made. Over 2,200 suppliers of own-brand food products now have access to this tool. Carrefour is also currently working on the integration of non-food suppliers and the deployment of the tool worldwide by the end of 2010.

• Focus on...the Sustainable Development Awards

In 2009, the most committed Carrefour suppliers received awards for the first time for their sustainable-development actions. The aim of these awards was to encourage and reward supplier practices. The prizewinners of the 2009 Carrefour Sustainable Development Awards were chosen on the basis of marks achieved via the self-assessment tool, with results validated through visits from consultants and judged by a panel comprising Carrefour management members and representatives from external organizations (including the WWF, ADEME and LSA).

VERIFYING SUPPLIERS’ WORKING CONDITIONS

The Group has worked with the FIDH (International Federation for Human Rights) over the last 10 years to ensure respect for human rights in the supply chain, and shares the results of social audits based on the French ICS (Social Clause Initiative) benchmark. As part of its policy, the Group has been involved in the GSCP (Global Social Compliance Programme) since 2006 to promote the rights of workers in the global supply chain.

The Social and Ethical Charter for Suppliers: a cornerstone of Group policy

Since 1997, Carrefour has been working side-by-side with the FIDH (International Federation for Human Rights) to control social manufacturing conditions in its supply chain. In 2000, this partnership resulted in the drafting of a social charter based on the provisions of the Universal Declaration of Human Rights and the principles of the ILO. In 2010, a new version of this Charter has been released, including ethical commitments from both Carrefour and its suppliers.

All suppliers of own-brand products are now required to sign the charter. To ensure that such companies comply with the charter, especially in countries that require particular attention, we conduct social audits outsourced to independent bodies.

Encouraging support for suppliers

Auditors provide suppliers with a rating that ranges from A (compliance with the charter and implementation of best practices) to D (critical situation requiring the implementation of major corrective actions). In the event of non-compliance, suppliers have to implement a corrective action plan. Its effectiveness is then assessed during a follow-up audit. The Group gives priority to assisting suppliers experiencing difficulty in complying with the social commitments of the “Carrefour Social and Ethical Charter for its suppliers”, only removing them from supplier lists if they are in serious breach of those commitments or refuse to apply corrective measures.

Sharing audit results

Very early on, Carrefour was convinced of the need to pool tools and audit results. A decade ago, Carrefour participated in the launch of the Social Clause Initiative, which enabled French retailers to share their databases. Hosted by the FCD (Trade and Retail Federation), this database contains the results of supplier audits carried out at the request of members, all of whom have access to the results, thus avoiding unnecessary repeat audits at shared suppliers and promoting effective follow-up on corrective actions.

Convinced of the value of harmonizing standards and tools at global level, the SCI’s main participants have now joined Carrefour as part of the international GSCP (Global Social Compliance Programme). The prerequisite for healthy global international competition is the definition of common rules that are applicable to all. The fact of clarifying and sharing the concept of social responsibility in the supply chain is a fundamental element in this exercise. Despite the ratification of ILO principles by most nations, they are, at present, not always perfectly applied in practice. Private firms clearly cannot resolve this problem by themselves, but demonstrating our common undertakings should help to raise greater awareness of each player’s responsibilities around the world. This platform, in which we have been joined by several major manufacturers, is aimed at harmonizing the systems used throughout the world and has already helped bring greater transparency and comparability to audit codes and systems.

The scale of this programme requires the participation of such civil-society stakeholders as the UNI and FIDH, which provide an additional perspective and ensure the relevance and validity of the commitments made. The FIDH has supported the Group’s policy on social responsibility in the supply chain from the outset, and in 2001 Carrefour signed a framework agreement with the UNI, undertaking to adhere to ILO principles in stores and head offices. These two historic Carrefour policies have been achieved in a constructive manner, and the fruit of this experience will be brought to bear in the GSCP.

Going further with training

In Bangladesh, a training programme for management and workers on fundamental rights in the workplace, covering all plants operated by Carrefour’s suppliers, was launched in 2006. The programme was designed and organized by a local NGO, Karmojibi Nari, which was selected by the FIDH. These training sessions were intended to establish conditions that would enable the workers themselves to present demands on safety, working hours and salaries. Between 2006 and 2010, following the end of this three-year project, 56 plants had benefited from this process.

• Focus on the 2009 social audit campaign

In 2009, the number of social audits and follow-up audits (39%) increased greatly compared to 2008. In the non-food department, nearly all audits are unscheduled. In the food department, this policy is more recent, and suppliers still need to be prepared for auditors’ inspections. As in previous years, working hours (overtime) and salaries are still the main areas of non-compliance. This observation highlights the limitations of the audit process and the need to support suppliers in their improvement processes. Carrefour has extended its unscheduled audit rule to all suppliers of non-food products in every risk area. This policy is even more important for follow-up audits, which allow the Group to verify that suppliers have made improvements in the noted areas of non-compliance over the long-term.

In Bangladesh, Carrefour and a local NGO continue to train employees and plant managers working for Carrefour. This policy aims to establish favourable social conditions so that workers understand their rights and can express their demands. Initial assessments already show an improvement in labour/management dialogue in these plants. In China, local teams are continuing to raise awareness among suppliers. In 2010, these efforts were continued, and previously implemented procedures were enhanced. Follow-up audits will take place more quickly when non-compliance is detected at suppliers that work with Carrefour. Training initiatives will be expanded, and social responsibility training will be offered to all Indian suppliers during the first half of the year.

Compliance with the Kimberley Process for diamond suppliers

The Carrefour Group ensures that the diamonds sold in its stores are supplied from legal sources, in line with UN resolutions, and are not“blood diamonds.” This commitment to respecting the Kimberley Process^* is included in all contracts signed with suppliers.

_{*Launched in 2000, the Kimberley Process aims to prevent the sale of “blood diamonds” on legal markets. In force since 1 January 2003, it provides an international certification scheme for uncut diamonds.}

>>> FIDH website: http://www.fidh.org.