Case study: How Smurfit Kappa promotes responsible sourcing
Smurfit Kappa is one of the largest integrated manufacturers of paper-based packaging solutions globally, operating across 35 countries with around 46,000 employees in over 350 production sites. Sourcing materials, goods and services represents the single largest cost item for Smurfit Kappa. Accordingly, Sustainable and Responsible Sourcing is an integral part of Smurfit Kappa’s sustainability vision and strategy. Tweet This!
This case study is based on the 2020 Sustainable Development Report by Smurfit Kappa, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Smurfit Kappa seeks to make sure that its materials, goods and services not only have the right quality and cost but are also sourced securely in a sustainable and responsible way, as described in its Sustainable and Responsible Sourcing Policy and in alignment with the objectives of the 2030 UN SDGs. In order to promote responsible sourcing Smurfit Kappa took action to:
- promote compliance
- audit suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) Smurfit Kappa has identified;
- How Smurfit Kappa proceeded with stakeholder engagement, and
- What actions were taken by Smurfit Kappa to promote responsible sourcing
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What are the material issues the company has identified?
In its 2020 Sustainable Development Report Smurfit Kappa identified a range of material issues, such as climate change awareness, energy use and emissions, responsible forestry, high-quality and sustainable products, health and safety. Among these, promoting responsible sourcing stands out as a key material issue for Smurfit Kappa.
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:
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 Smurfit Kappa engages with:
| Stakeholder Group | Method of engagement |
| Customers | · Regular business meetings at Smurfit Kappa’s Experience Centres · Customer conferences · WBCSD membership · Awards and competitions run by customers · Collaboration through the full packaging value chain in the 4evergreen initiative, in collaboration with large FMCG companies |
| Investors | · Investor days and conferences · One-to-one meetings · ESG ratings by rating agencies · Feedback from sustainability analysts · Queries directly from investors |
| Employees | · MyVoice engagement surveys · Global, regional and local learning and development programmes · Works Councils · Social committees · Support to employees through the Employee Assistance Programme · Enable reporting of any possible wrongdoing through the Speak Up service |
| Communities
| · Initiation of and participation in local social activities by members of Smurfit Kappa’s workforce · Supporting social investment projects by local Smurfit Kappa companies and Smurfit Kappa Foundations · Supporting various local COVID-19 focused projects by local Smurfit Kappa operations |
| Suppliers
| · Supplier sustainability audits · Participating in the development of Forest Certification as members of the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC) · WBCSD membership |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Smurfit Kappa interviewed external stakeholders (customers, investors and suppliers) and offered an online survey to its own employees.
What actions were taken by Smurfit Kappa to promote responsible sourcing?
In its 2020 Sustainable Development Report Smurfit Kappa reports that it took the following actions for promoting responsible sourcing:
- Promoting compliance
- To meet the requirements of its vision and strategy, Smurfit Kappa’s suppliers must adhere to the Smurfit Kappa Suppliers’ Code of Conduct. Those who do not sign up to it must be committed to a compatible code in compliance with the UN Declaration of Human Rights and the ILO Principles and Rights at Work covering: freedom of association, prohibiting child labour and forced labour, treating employees humanely, working times in accordance with internationally recognised standards, respecting employee contributions, fair compensation with no wage deduction as disciplinary measure, encouragement of continuous training and development, Health and Safety at work, non-discrimination, prohibit harassment, bullying, other unfair practices and promoting community involvement. They will recruit, hire and train without regard to race, colour, gender, sexual orientation, age, religion, creed, national origin, disability or any other legally protected status in the countries where they do business. Smurfit Kappa’s suppliers are also required to follow its Sustainable and Responsible Sourcing Policy, and all other relevant policies which also cover the safeguarding of the natural environment and respecting indigenous peoples and traditional livelihoods. Smurfit Kappa’s suppliers are required to sign a declaration for compliance with its Sustainable and Responsible Sourcing Policy, its Suppliers’ Code of Conduct, its Modern Slavery Act Statement and a Statement on controversial sources of Raw Materials, Goods and Services. These standards should be extended upstream in the suppliers’ supply chain. This declaration is signed every three years and Smurfit Kappa monitors its suppliers’ compliance through its Sustainable and Responsible Sourcing audit programme. 251 suppliers have signed this declaration and 67% of Smurfit Kappa’s suppliers of key materials, representing 77% of the relevant sourcing spend.
- Auditing suppliers
- Since launching its Sustainable and Responsible Sourcing programme in 2010, Smurfit Kappa has been auditing 354 of its suppliers to make sure they meet its standards. Smurfit Kappa also monitors whether suppliers are a member of SEDEX or are assessed on their ethical practices by EcoVadis. Smurfit Kappa believes on-site audits increase competence and commitment in its supplier base, while training and enhancing mutual understanding of key requirements. Based on their scoring at the audit, follow-up programmes are designed on a supplier-by-supplier basis. This includes further strengthening their understanding of, and compliance to, Smurfit Kappa’s Sustainable and Responsible Sourcing principles and indicators. Since 2010, Smurfit Kappa has reduced unsatisfactory scores of strategic suppliers by 75% through improvement plans and follow up. Audits result in a rating against each of the seven sections of Smurfit Kappa’s Sustainable and Responsible Sourcing programme. If the result is below ‘acceptable’ (scoring less than 40%), an obligatory improvement programme is devised. Major non-conformities need to be addressed within two weeks and resolved within six months. Minor non-conformities need to be solved within 12 months during a surveillance audit. Failure to commit to the improvement action list may, ultimately, lead to termination of the business relationship. The supplier assessment is repeated every three years through a re-approval audit process. Smurfit Kappa’s risk mapping, combined with supplier audit results, showed that 81% of its suppliers of key materials audited in 2020 carried moderate to low risk. A total of 94% of all suppliers audited during 2020 scored at least mark ‘acceptable’ (2019: 87%), and the remaining will pass the audit once they complete improvement plans.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
3) Disclosure 414-1 New suppliers that were screened using social criteria
4) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
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
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References:
This case study is based on published information by Smurfit Kappa, 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 following link:
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