quality Responsible supply chain management As a food company, DLG wants to be in control of the company’s value chain. This involves strengthening the group’s management of risks related to having to deal with an increasingly complex international chain of suppliers. Both in Denmark and abroad, there is intensifying focus on ensuring that companies have a higher degree of control of what takes place in the company’s supply chain and in relation to the company’s suppliers. DLG has also noted this expectation in its interaction with customers and business partners. At the same time, responsible supply chain management is a crucial area of focus for DLG because we are increasingly internationalising our business and, as part of this process, we are experiencing a sharp rise in CSR-related risks in terms of our value chain. Therefore, it is also important to manage our risks. Going forward, our responsible supply chain management activities will primarily be based on establishing a general view of the group’s many suppliers. Concurrent with DLG’s increasing internationalisation, we see a growing need to implement a more systematic approach to DLG’s supplier collaboration. For instance, we purchase a larger share of goods than previously abroad, including in China and the rest of Asia, Eastern Europe and South America, where the challenges in relation to labour rights, environmental impacts and quality assurance may differ from those in Denmark. Our focus on responsible supply chain management is an active way to meet this challenge. Certifications and supply chain management DLG Food works with risk-based supplier selection, certified suppliers, self-assessment forms and supplier audits. The intention in the long term is also to use an improved supplier evaluation process. Purchasing raw materials DLG a.m.b.a.’s policy for raw-materials purchases is that at least 90% of our suppliers must have a certified quality management system in place to cover the goods purchased by DLG, of which as large a share as possible must be GMP-certified (Good Manufacturing Practice). In 2013, DLG succeeded in buying more than 90% of its raw materials for its Danish production from this type of certified supplier. The percentage of GMP-certified goods was around 75%. DLG is responsible for buying roughly half of Denmark’s soy meal, most of which is used as pig feed. Soy meal is an important feed-production ingredient, comprising 15–20%, and constitutes a large share of DLG’s combined production. From 1 January 2013, DLG and a number of other food producers, including Arla, Danish Crown and the Danish Agriculture and Food Council, have undertaken to buy sustainable soy meal that meets a wide range of production requirements, including requirements on environmental sustainability, child labour and the use of pesticides in the production process. In relation to our purchases of soy meal, we also require suppliers to live up to our charter, which comprises a number of points, one of which is accession DLG’s charter for soy suppliers • The supplier must accede to the UN Global Compact; • The supplier does not accept child labour; • The supplier must uphold employees’ freedom of association as regards trade unions; • Raw materials from areas of rainforest felled after 24 July 2006 will not be accepted; • The supplier must have a policy stipulating that the use of pesticides complies with local law as well as with the Stockholm and Rotterdam Conventions. to the United Nations Global Compact. The charter criteria have already been signed by our suppliers for 2014. DLG is a member of the national task force for responsibly produced soy and palm oil set up by the Danish Minister for Food, Agriculture and Fisheries. The purpose of the task force’s work is to find common solutions across sectors and industries for acting responsibly in respect of soy and palm oil imports. A declaration of responsibility for soy and palm imports to Denmark must be prepared before 1 March 2014. As with soy meal, DLG purchases palm oil for use in the production of feed for agriculture. To stay better informed of developments in the palm oil industry in South-east Asia, DLG joined the organisation “Roundtable on Sustainable Palm Oil” (RSPO) in 2012. RSPO gathers interested organisations from different sectors of the palm oil industry to develop and implement global standards for sustainable palm oil. The most important principles on which the certification is based are transparency, labour rights, the use of the best cultivation methods available, environmental protection, protection of the natural environment and long-term financial planning. DLG is also a member of “Roundtable for Responsible Soy” (RTRS), through the sector organisation FEFAC which organises food companies in Europe. The principles and criteria behind the certification are based on five themes: statutory compliance, responsible labour conditions, responsible relationships with adjacent areas, environmental propriety and good agricultural practices. 12
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