Case study: How Huhtamaki promotes responsible sourcing

What are the material issues the company has identified?

In its 2019 Sustainability Report Huhtamaki identified a range of material issues, such as anti-corruption and ethics, materials and product lifecycle, human rights, occupational health and safety. Among these, promoting responsible sourcing stands out as a key material issue for Huhtamaki.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Huhtamaki engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Huhtamaki engaged with its stakeholders through surveys sent to relevant external and internal stakeholders.

What actions were taken by Huhtamaki to promote responsible sourcing?

In its 2019 Sustainability Report Huhtamaki reports that it took the following actions for promoting responsible sourcing:

• Updating the Code of Conduct for Huhtamaki suppliers
• During previous years, Huhtamaki noticed that the content of the Code of Conduct for Huhtamaki Suppliers wasn’t always easy for all suppliers to understand. The document was long and only available in English. For this reason, Huhtamaki updated the Code of Conduct for Huhtamaki Suppliers in 2019, reviewing the requirements to check that all necessary topics were included. Huhtamaki also changed the layout to a more user-friendly format. Finally, Huhtamaki translated the document into those languages most relevant for Huhtamaki and published the documents on its website. The Code of Conduct for Huhtamaki Suppliers sets out what Huhtamaki expects its suppliers to comply with. It covers topics related to business ethics, social responsibility, and environmental responsibility. For key suppliers, monitoring the acknowledgement level is carried out through the NAVEX RiskRate tool. For other suppliers, monitoring is done at the unit level. Huhtamaki’s suppliers are also responsible for their subcontractors’ compliance with the requirements. Huhtamaki also provides suppliers with the opportunity to share their own Code of Conduct with it. If their own Code of Conduct fulfills the requirements of Huhtamaki, it is possible for Huhtamaki to accept it as a substitute. Huhtamaki’s suppliers and workers in the value chains can report any violations of the Code of Conduct for Huhtamaki Suppliers or other Huhtamaki policies via Huhtamaki’s global whistleblowing system, the Huhtamaki Speak Up channel.

• Screening suppliers
• One key element of Huhtamaki’s due diligence processes is the use of the NAVEX RiskRate tool. All key suppliers will be screened in RiskRate against sanction lists, watchlists, Politically Exposed Persons lists and adverse media. The screening continues for as long as the supplier is an active key supplier for Huhtamaki. If there are any matches in the abovementioned lists, RiskRate will automatically alert Huhtamaki with more case details. Based on the suppliers’ initial profile risk level, they will also be sent a questionnaire. All suppliers will be asked to acknowledge compliance with the updated Code of Conduct for Huhtamaki Suppliers. Medium-risk suppliers will also be asked questions that assess the risk of corruption and compliance with law. High-risk suppliers will additionally receive questions about sanctions as well as ethics and compliance. Huhtamaki has defined risk scorings for the questions and, if necessary, each questionnaire answer is checked individually to determine whether further actions or explanations are required from the supplier. Both the screening results and the answers to the questionnaire are combined to the final risk rating of the supplier. This final risk rating again uses a three-level system: low, medium or high risk. Huhtamaki has defined internal processes for the review and approval of the results, which vary depending on the severity of the case.

• Increasing the amount of audited suppliers
• Huhtamaki is a corporate member of Sedex, a non-profit membership organisation and world-leading ethical trade service provider that works to improve ethical performance in global supply chains. In 2019, Huhtamaki collected all individual accounts of its manufacturing units under a common Huhtamäki Oyj account. Focus was especially on learning to use the different tools that Sedex provides. In 2020, Huhtamaki started putting these tools into further use in its supplier monitoring. Huhtamaki conducts audits of its suppliers regularly, focusing especially on quality. Nevertheless, it wants to increase the number of third-party corporate responsibility audits conducted in order to make sure it gains an objective view on suppliers’ ethical, social and environmental performance. Huhtamaki will start identifying the suppliers who should have such audits based on certain attributes, such as their location and supplier category, concentrating first on key suppliers. Currently, Huhtamaki accepts the following audits from suppliers: SMETA 4-pillar audit, Business Social Compliance Initiative (BSCI) audit, SA8000 certification and Aluminium Stewardship Initiative (ASI) certification. The acceptable audits are reviewed regularly to check if new ones are added, or if old ones no longer fulfil Huhtamaki’s requirements. Huhtamaki will monitor the audit results and corrective actions and support suppliers to improve their performance, if needed. Sedex provides many useful training materials that Huhtamaki will use to educate suppliers. Suppliers will also be asked to fill in the Sedex Self-Assessment Questionnaire, which supplements the information gathered from audits.

• Using certified and recycled fiber to ensure sustainable forest management
• Huhtamaki wants to advance sustainable management of all forest types. This is why it uses virgin fiber that comes from sources that are certified by such organisations as the Forest Stewardship Council (FSC®), the Programme for the Endorsement of Forest Certification (PEFC™) and the Sustainable Forest Initiative (SFI®). These certification schemes ensure that forests are not used excessively and new trees are planted for every tree cut, allowing the forests to regenerate. These certification systems also take the social aspect of forest management into account to some extent. In addition to virgin fiber, which is used for packaging with direct food contact, Huhtamaki uses recycled fibers. These recycled fibers are either post-industrial or post-consumer, including cutting waste from Huhtamaki’s own paper cup manufacturing. By the end of the year 2019, more than 98% of the fiber used met these criteria.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 414-1 New suppliers that were screened using social criteria

2) Disclosure 414-2 Negative social impacts in the supply chain and actions taken

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

• Sustainable Development Goal (SDG) 5: Gender Equality
• Targets: 5.2
• Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
• Targets: 8.8
• Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
• Targets: 16.1

Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:

• Sustainable Development Goal (SDG) 5: Gender Equality
• Targets: 5.2
• Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
• Targets: 8.8
• Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
• Targets: 16.1

78% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.

7 GRI sustainability disclosures get you started

Any size business can start taking sustainability action

GRI, IEMA, CPD Certified Sustainability courses (2-5 days): Live Online or Classroom  (venue: London School of Economics)

• Exclusive FBRH template to begin reporting from day one
• Identify your most important impacts on the Environment, Economy and People
• Formulate in group exercises your plan for action. Begin taking solid, focused, all-round sustainability action ASAP. 
• Benchmarking methodology to set you on a path of continuous improvement

See upcoming training dates.
 

References:

1) This case study is based on published information by Huhtamaki, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Huhtamaki: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.