Responsible supply chain

We set strict ethical, labour and environmental standards for suppliers, helping them to improve their performance through our supplier management programme and collaborating to raise industry standards

Responsible supply chain – Our approach

We work with our suppliers to help them meet our ethical, health and safety, social and environmental standards and improve their performance through monitoring, assessments and improvement activities.

We spend billions of euros each year with suppliers on network and IT equipment and services that enable us to operate our network, and on products such as mobile phones, SIM cards and other devices that we sell to our customers.

We demand high ethical, health and safety, social and environmental standards of all our suppliers. These are set out in our Code of Ethical Purchasing (pdf, 76 KB) and integrated right from the start of our engagement with suppliers, from the initial qualification process to ongoing supplier performance management. We conduct regular site assessments to ensure compliance and we work directly with our suppliers to help improve their sustainability performance.

To target improvements further down the supply chain, we require our suppliers to demand similar standards of their own suppliers and check this through audits and supplier performance management processes. We also participate in industry initiatives to raise standards across the sector.

Read on to find out more about our approach to this issue. Or go to Performance to read about our progress in 2013/14.

Becoming a Vodafone supplier

Vodafone’s Code of Ethical Purchasing and other supplier policies are based on our Code of Conduct and policies for our own business, extending relevant requirements to suppliers. Sustainability is embedded throughout our procurement process across our global supply chain, including the assessment of new suppliers.

Our Group-wide tendering process (also known as a request for quotation or RFQ) includes criteria for relevant suppliers – identified based on risk – to assess the likelihood of them meeting our standards for operating responsibly. The results are then factored into our decision to work with any given supplier.

Sustainability criteria include labour standards, health and safety, environmental management and prevention of bribery and corruption. These are weighted according to the level of risk associated with the contract. For example, suppliers’ health and safety performance is a key factor for projects involving high-risk activities such as working at height and suppliers that do not meet our minimum requirements are not awarded work (see Health and safety).

We carry out risk assessments to identify new suppliers that are high risk, based on the product or service supplied and the degree of association with our brand and customers. Suppliers identified as high risk are selected for on-site assessments, conducted by our own auditors or independent audit firms, to identify any instances of non-compliance with the Code of Ethical Purchasing (pdf, 76 KB).

Everyone in our supply chain organisation globally, as well as relevant people who work closely with suppliers, are trained on our key policies and ethical conduct requirements. This includes training on how to observe and report non-compliances when visiting supplier sites and how to effectively communicate our expectations on operating responsibly.

Monitoring and improving supplier performance

Suppliers’ performance is regularly assessed to identify areas for improvement. Health and safety and sustainability form two key pillars of our evaluation of suppliers’ performance, alongside others such as delivery, quality, technology and commercial. Performance evaluations enable us to identify and prioritise specific areas for improvement for our suppliers.

Suppliers’ performance on health and safety is rated using a series of criteria, including:

  • Engagement on health and safety, leadership and organisation
  • Effective implementation of safety plans
  • Monitoring and supervision of operations
  • Performance measures, audits and contractor management
  • Incidents and accidents.

Suppliers’ sustainability performance is evaluated using the E-TASC external sustainability assessment platform (powered by EcoVadis), that members of the Global e-Sustainability Initiative (GeSI) use as a common industry tool. This covers a wide range of criteria, including:

  • The policies that they have in place, for example on child and forced labour
  • Public reporting of their performance on social, environmental and health and safety issues
  • Certification of environmental management systems to ISO 14001 or EMAS standards
  • Certification of health and safety management systems to OHSAS 18001 or equivalent
  • Evidence that the supplier manages social, environmental and health and safety issues in its own supply chain
  • Evidence that the supplier manages the risks and opportunities associated with climate change
  • Evidence of steps to manage and prevent bribery and corruption
  • Evidence that a supplier is managing its environmental footprint
  • Evidence that a supplier manages equality, diversity and inclusion
  • Evidence of how suppliers are adding social, ethical and environmental value to society.

Based on suppliers’ responses, the evidence is checked and scored by EcoVadis, giving Vodafone an independent assessment. We then make recommendations for improvements and work with suppliers to address any issues. Follow-up assessments or on-site audits – by Vodafone or through joint industry audits – are used to monitor the performance of high-risk suppliers. Solutions using mobile technology are also being implemented to improve our assessment process by gaining direct input from workers in the supply chain (see case study on using mobile technology to gain direct input from supplier workers to improve conditions in Performance).

For mobile phone suppliers, EcoVadis scores also feed into the rating of their products in our Eco-rating scheme, which enables customers to choose their phone according to sustainability criteria (see Customers and the environment).

We work with suppliers and conduct workshops for high-risk suppliers on specific issues such as health and safety in many of our local markets. However, suppliers that fail to meet our standards are investigated further and if they consistently fail to meet our standards we will not work with them in the future.

We also recognise suppliers that are performing well through our Responsible Supplier of the Year award which is decided based on scoring in our Supplier Performance Management programme.

Most of our supply chain information is consolidated in a central system to provide effective oversight and control. This also allows us to screen existing suppliers and means we are alerted to incidents through recognised third party watch lists and reports.

See Performance to read about supplier assessments and awards in 2013/14.

A consistent industry approach

By participating in industry initiatives such as those led by GeSI, we aim to encourage standardisation across the industry. Using common tools such as EcoVadis reduces the burden of reporting on suppliers and offers consistent independent assessments for the industry.

Through the Joint Audit Cooperation (JAC) initiative, we collaborate with other telecoms operators to assess and improve the social and environmental performance of common suppliers. JAC has established a set of standard criteria (pdf, 173 KB) to assess performance. Joint audits are conducted by independent specialists based on internationally recognised social and environmental standards including the social accountability standard SA 8000 and the environmental management standard ISO 14001. Results are shared between JAC member companies and one member leads the follow-up with regular updates to the other JAC companies. As well as establishing common standards and helping to improve performance, collaborating on audits also saves time and money for both suppliers and customers by removing the need for duplicate audits and duplicate follow-up processes.

We also encourage suppliers to report their climate impacts and targets through the CDP Supply Chain Programme.

See Performance for more on our participation in industry initiatives in 2013/14.

Tackling conflict minerals further down our supply chain

The issue

‘Conflict minerals’ are minerals from mines that directly or indirectly finance or benefit armed groups in conflict regions, generally referring to the eastern provinces of the Democratic Republic of Congo (DRC).

Conflict minerals generally refer to columbite-tantalite (coltan), cassiterite, wolframite and gold. These minerals are refined at smelters or refiners to produce metals – tantalum, tin, tungsten and gold respectively (often referred to collectively as ‘3TG’) – which are used by many industries including in components for electronic products, such as mobile phones.

Several of the numerous components in the mobile phones, SIM cards and other electronic devices that Vodafone sells contain one or more of the 3TG metals which may come from many different smelters. Both the smelters and the mines from which the minerals are originally sourced are several steps away from Vodafone in the supply chain.

Vodafone’s view

We believe mining activities that fuel conflict are unacceptable. Our global Conflict Minerals Policy (pdf, 179 KB) sets out our position on this issue.

We are optimistic that industry efforts will help to improve supply chain transparency across the industry and tackle the human rights abuses connected with mining of conflict minerals. However, it is likely to take time to establish effective systems to determine the conflict-free status of products.

We recognise that ceasing to source minerals from legitimate mines, as well as those funding armed groups, is likely to have a negative impact on economic development and people’s livelihoods in the region. Therefore, we want our suppliers to be able to source validated conflict-free minerals from the DRC and adjoining countries and we support industry initiatives that are putting systems in place to make this possible.

Our approach

Vodafone does not manufacture any products itself and does not purchase 3TG metals directly. We must therefore work with suppliers to ensure that conflict minerals originating in the DRC or adjoining countries do not end up in the products we sell or the electronic equipment that we buy and use in our own operations.

Our Conflict Minerals Policy sets out our requirements for suppliers of electronic products. For products where we influence the design and manufacture, we conduct due diligence activities to determine the sources of the 3TG metals they contain, and disclose the results in our Conflict Minerals Report (pdf, 298 KB)in line with US legislation (see below).

Our direct (Tier 1) suppliers do not source these minerals straight from the smelters and must therefore conduct due diligence processes with their own suppliers to determine the smelter from which minerals are sourced. Industry initiatives have also established systems to verify smelters as ‘conflict-free’ (see below).

Industry collaboration

As part of our efforts to tackle the issue of conflict minerals, we participate in industry initiatives led by the Global e-Sustainability Initiative (GeSI) and the Electronic Industry Citizenship Coalition (EICC). Vodafone is a long-standing member of GeSI and participated in the GeSI/EICC Extractives Working Group which led to the development of the Conflict Free Smelter Initiative (CFSI), in which we still participate. The CFSI works to validate smelters and refiners as conflict-free and offers a variety of tools and resources to support companies in making informed decisions about conflict minerals in their supply chain.

GeSI and the EICC support improved transparency and traceability of mineral sourcing from the final product back to the smelter and, from there, all the way back to the mine. Programmes include:

  • From product to smelter: Vodafone participated in the development and pilot of the CFSI’s Conflict Minerals Reporting Template in 2011 and we now use this as part of our due diligence process to find out from suppliers which smelters 3TG metals are sourced from
  • To certify conflict-free smelters: The CFSI validates smelters and refiners that source conflict-free minerals and publishes the names of certified smelters on its website
  • From mine to smelter: GeSI supports the Public Private Alliance (PPA) for Responsible Minerals Trade which is developing systems to validate, certify and trace minerals from conflict-free mines in the region to address concerns about conflict minerals while benefiting those involved in responsible trade in the region.

Regulatory requirements

As a company with shares listed on the NASDAQ in the US that uses 3TG in our manufactured products, from 2014 Vodafone is required under Section 1502 of The Dodd-Frank Wall Street Reform and Consumer Protection Act and the Security and Exchange Commission’s (SEC) related Final Rule to disclose whether metals in products where we influence the manufacturing and design originated in the DRC or adjoining countries. These products make up a very small proportion of our total spend with suppliers.

A product is considered to be ‘DRC conflict-free’ when it does not contain metals from minerals that directly or indirectly finance or benefit armed groups in the DRC or an adjoining country. This means that metals can be sourced from mines in countries outside the DRC or adjoining countries, or mines within the DRC or adjoining countries if the appropriate certification and traceability is in place.

See more on our due diligence process and findings in Performance and in our Conflict Minerals Report (pdf, 298 KB).

Looking beyond conflict minerals

Sourcing of minerals (beyond 3TG from the DRC and adjoining countries) remains a concern for the electronics industry. Through the due diligence activities we are developing to target conflict minerals usage from the DRC and adjoining countries, we aim to build a strong foundation of information and systems that promote traceability for the future which can be used to help ensure minerals in our products are from responsible sources.