Responsible Supply Chain Management
Goal and Performance
Charoen Pokphand is committed to responsible supply chain management. Our goal is to ensure transparency, sustainability, and ethical practices throughout our supply chain. By fostering strong partnerships, adhering to rigorous standards, and prioritizing environmental and social considerations, we strive to create a positive impact on the communities we serve and the planet we share.
Significant suppliers are audited on sustainability*
Remark : * In 2023, the scope of audit were expanded to cover business and sustainability risks
Supporting the SDGs
Charoen Pokphand Group's commitment to responsible supply chain management support the achievement of six Sustainable Development Goals
More Details on Sustainable Development Goals Report 2023
Stakeholders Directly Impacted
Charoen Pokphand Group performs stakeholder assessment and prioritization process on an annual basis to evaluate the impacts we have on them and how can they influence our strategies and actions over time. In 2023, the evaluation results showed that our commitment to fostering strong partnerships, adhering to rigorous standards, and prioritizing environmental and social considerations creates impacts on four stakeholder groups.
More Details on Stakeholder Engagement Report 2023
Responsible Supply Chain Management Approach
Charoen Pokphand Group has incorporated sustainability issues into our procurement process and operated under the Responsible Supply Chain Management Framework. We have also encouraged our suppliers to adhere to the Charoen Pokphand Group Code of Conduct to achieve mutual sustainable growth and create added value for the business across the supply chain and for a wide range of stakeholders.
Furthermore, in order to enable rapid implementation and support our businesses worldwide, Charoen Pokphand Group has adopted information technology to develop a sustainability risk assessment tool to identify opportunities for improvement and establish proactive measures that feature the partnership between the Group and our suppliers.
A Five-Step Approach to Responsible Supply Chain Management
Charoen Pokphand Group has developed a five-step approach to responsible supply chain management in accordance with the UN Global Compact’s Responsible Supply Chain Management Framework to serve as an efficient, transparent and verifiable management guideline leading to the creation of long-term shared values and sustainability with stakeholders.
This five-step approach to responsible supply chain management is based on honesty, fairness, transparency, responsibility and accountability, principles on which the conceptual foundation of Charoen Pokphand Group’s executives and employees is cultivated and based. At the same time, the Group has also integrated sustainability issues as part of each activity in the procurement process based on international guidelines such as the Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, and other international guidelines belonging to global sustainability projects where the Group is a member. This approach receives revising on a regular basis to ensure appropriateness.
Charoen Pokphand Group has announced the Sustainable Procurement Policy and Guidelines, the Supplier Business Code of Conduct, strategies, goals, and indicators. Furthermore, the Group has appointed Group-level and business group-level units in charge of responsible supply chain management to oversee, control and monitor the implementation of relevant policies and guidelines, including reporting performance directly to the Sustainability Committee, which is headed by the Chief Executive Officer of Charoen Pokphand Group. Then the performance will be reported to the Board of Directors for acknowledgement and endorsement for specific issues.
Charoen Pokphand Group has organized communication and training on the Code of Conduct, the Sustainable Procurement Policy and Guidelines, and other applicable knowledge for supplier capability enhancement to personnel involved in the processes of the Supplier ESG Program, e.g., procurement, selection, audit and evaluation, including personnel who collaborate with suppliers on projects. The means of communication are chosen based on the target group, content, and objectives following established communication and training plans. Additionally, consultation channels are also available for the clarification of any doubts. Such issues or problems are further used to improve the communication process. Additionally, the Group also aims to encourage our suppliers to abide by the Codes, policies, and standards. However, due to the diversity of businesses, it is essential that the Group define communication formats that suit the content of each business. Thus, the Group has prepared learning and public relations materials in three main languages, namely Thai, English, and Chinese, as well as communicated and trained suppliers through various channels, including online, face-to-face, supplier’s platform, and site visits by the promotion team to directly convey the Group’s requirements and expectations to farmers.
Conducting business with high-risk suppliers may impact business continuity and corporate reputation. Therefore, Charoen Pokphand Group emphasizes supplier management along the supply chain to minimize ESG risks and impacts on the Group’s business operations in the short and long term, starting from new supplier selection based on multi-dimensional criteria, e.g., quality and safety of products and services, capacity in production and delivery of products and services, transportation safety, compliance with rules and regulations, employee care, environmental protection, and preservation. To accommodate suppliers across the globe, the Group has developed the 360 Supplier Due Diligence platform to comprehensively verify supplier data and operations before making business decisions, e.g., company founding data, financial data, involvement with politicians, involvement in wrongdoings, field survey data, and sustainability performance. Only suppliers who “Pass” the criteria will be able to conduct business with the Group. Additionally, this 360 Supplier Due Diligence Platform also allows suppliers to benchmark their performances against peers in the same industry sector. This benchmarking feature promotes continuous improvement and development towards excellence.
Moreover, the Group has established procurement policies and regulations that determine budget limitation and approval authority to ensure a systematic, effective, transparent process that complies with corporate governance principles as well as fair treatment to suppliers with consideration for mutual benefits. Suppliers who have been selected to conduct business with the Group will receive full, equal and fair communication on the business terms and conditions, especially those related to sustainability. The Supplier Code of Conduct will be affixed as part of the contract while additional requirements are specified for high-risk suppliers. The Group shall revise the purchasing guideline on a regular basis, as well as strictly abide by the contract, while closely monitoring and evaluating compliance.
the Group requires that performance evaluations take place annually following the provisions of the Supplier Code of Conduct and supplier sustainability requirements using appropriate methods including:
- Questionnaire / Self-assessment
- Site inspection by Group auditors
- Site inspection by independent auditors
- Analysis of suppliers’ operational data assessment from reliable service providers
To ensure compliance with correct supplier evaluation practices and value creation for suppliers, Charoen Pokphand Group has developed the supplier sustainability assessment guidelines, consisting of an audit process and audit result analysis for improvement. The recommended guidelines, including ISO Standards 19001, GRI Standards (GRI 308, and GRI 414), SASB, UNGC, and PDCA principles, are reviewed annually for appropriateness. In addition, the Group regularly organizes lectures and practical training programs to strengthen sustainability auditing skills for auditors as well as communications on changing laws, regulations, and requirements. Results from the performance evaluation and audit will be used as one of the consideration factors for future procurements.
In addition to improving the quality of life and strengthening suppliers’ businesses, Charoen Pokphand Group has extended our development efforts towards a paradigm shift that takes into account and combines economic, social and environmental dimensions in a balanced manner using methods suitable to the type and context of each supplier group, such as site visit to provide consultations, organization visit, collaboration on initiatives and training sessions by experts organized annually by the Group. Furthermore, Charoen Pokphand Group has established awards in recognition of suppliers with excellent performance as an incentive and example for other suppliers. These awards are based on transparency, fairness and equitability, which are the principles observed by the Group. Vice versa, suppliers who refuse to participate in the Supplier ESG Program, or not implementing according to the implementation plan within the set timeframe will be subject to a fair contract termination process. In this regard, terminated suppliers who intend to resume business with the Group must pass the consideration criteria according to the new supplier selection process set forth by the Group.
Supplier Assessment
Charoen Pokphand Group is dedicated to upholding the highest levels of accountability and sustainability across our supply chain. Our Supplier Assessment program is crucial to our efforts to guarantee that all of our partners share our values and contribute to our objective of making a good difference in the world. We evaluate our suppliers using a thorough set of criteria that includes environmental, social, and ethical considerations. These criteria are intended to enhance supply chain openness, accountability, and continual improvement.
Environmental Impact
We carefully assess our suppliers' environmental effects to guarantee they share our commitment to environmental preservation. We want partners who are committed to sustainable practices and environmental stewardship, from resource management and energy efficiency to waste reduction and carbon emissions.
Social Responsibility
We place a high value on employee well-being and fair treatment. We perform extensive audits to verify that our suppliers adhere to fair labor practices, prioritize worker safety, and respect human rights. We aggressively promote workplace diversity and inclusivity, providing an environment in which everyone's rights are acknowledged and protected.
Ethical Business Practices
Our supplier partnerships are built on ethical behavior. We carefully analyze potential partners to ensure that their operations adhere to the highest ethical standards. We expect our suppliers to conduct themselves with integrity, honesty, and adherence to all applicable laws and regulations.
Continuous Improvement and Collaboration
Our Supplier Assessment is a continuous path toward excellence, not a one-time event. We collaborate with our suppliers, providing direction and support to help them continuously improve their operations. We establish an environment in which suppliers feel empowered to improve their responsible supply chain initiatives via open communication and collaboration.
Transparency and Accountability
Transparency, we feel, is the key to establishing trust and accountability. We maintain clear and open contact with our partners throughout the Supplier Assessment process, conveying our expectations and requirements. We hold ourselves to the same high standards that we expect from our vendors.
Empowering Positive Change
We hope to create a good ripple effect throughout the industry by engaging with responsible suppliers. Our Supplier Assessment program not only ensures compliance, but also aims to make a positive influence and promote sustainable practices in the supply chain community.
C.P. Group remains committed to responsible supply chain management through our dedication to supplier assessment. We think that by partnering with organizations that share our goal for sustainability and ethical practices, we can collectively create a brighter, more sustainable future for the globe.
Weighting for ESG
New and existing suppliers must be evaluated on a regular basis. Charoen Pokphand Group has established particular evaluation criteria for both new and existing vendors. Product and service quality, pricing, delivery, and sustainability are important considerations for new suppliers. Weighting is assigned to each criterion to ensure that the best product and service are delivered to the Group, and hence to our customers and consumers.
Because the Group places a high value on sustainable practices and encourages our suppliers to do the same, the weighting for sustainability criteria contributes to up to 30% of the total assessment score. Simultaneously, existing vendors must undergo a yearly assessment to check their capabilities and performance against contract and Supplier Codes of Conduct standards. The weighting for sustainability criteria, like the weighting for new supplier assessment, accounts for up to 30% of the total assessment score.
Supplier Audit Results and RIsk Management Measures
Charoen Pokphand Group’s supply chain is diverse and highly challenging in terms of the diversity of industries. Therefore, establishing auditing standards is a pivotal mission that needs to be expedited in a systematic manner. For this reason, the Group has organized the CAPACITY BUILDING PROGRAM - CPG Cooperated Sustainability.
Thus far, Charoen Pokphand Group has collaborated with independent third parties to conduct supplier sustainability audits based on the Group’s Supplier Code of Conduct and related regulations.
Suppliers identified with risks or non-compliance shall be offered advice to develop consistent operational guidelines. The Group will also keep a close eye on their progress in improving and resolving identified inconsistencies in order to reduce, alleviate and eradicate all dimensions of risks.
The assessment results will be incorporated as part of the annual supplier performance evaluation. Suppliers whose assessment results fall below the criteria shall not be considered for future tasks or may be subject to termination of contract.
| Dimension | Example of Issues Identified in Sustainability Audits | |
|---|---|---|
| Risk Issues | Risk Management Measures | |
Environmental |
Industrial waste and general waste separation | Develop, communicate and implement standards for industrial waste and general waste separation |
| Pollution control | Develop relevant pollution control plans and follow up at appropriate intervals | |
Social |
Employment contract | Draft employment contracts that specify working conditions in writing using languages comprehensible to employees |
| Occupational safety handbook, hazard warning and communications | Create handbooks, standards, and communications in languages comprehensible to employees | |
Corporate Governance |
Establishment of welfare committee and meetings | Establish a welfare committee and hold meetings every three months |
| Appointment of advanced technical-level safety officers | Comply with the Ministerial Regulation Regarding Arrangement of Safety Officers in the Workplace B.E. 2565 (2022) | |
Suppliers’ Gender Assessment
At C.P. Group, we believe that empowering all genders is not just a moral imperative but also a strategic advantage. By integrating gender assessment into our supply chain management, we aim to create a positive impact on the lives of our employees, suppliers, and communities while contributing to a more inclusive and sustainable world.
Result from assessment, with ESG, gender, and compliance
Example of Potential Findings from Sustainability Assessment |
|
|---|---|
Risk Issues |
Risk Management Measures |
| Environmental Dimension | |
| Environment impact assessment | Establish aspects and impacts identification process including measure determination |
| Pollution control | Set up a pollution control plan for the related aspect and monitor at appropriate intervals. |
| Sewage management according to the Ministry of Industry announcements | Notification of registration to the Ministry of Industry and license application according to the announcement of the Ministry of Industry |
| Social Dimension | |
| Employment contract | Prepare a written employment contract in a language comprehendible by employees |
| Employee health checks based on risk factors | Establish health monitoring guidelines according to risk factors and perform employee health checks |
| Registration of personnel in charge of SHE at the management level, supervisory level, etc | Appoint personnel at various levels and provide them with training prior to registration notification with the Office of Labor Protection and Welfare |
| Governance Dimension | |
| Training provision according to relevance regulations ex. firefighting, fire drills, and chemical spills | Organize an annual training plan and compile a training report summary |
| Revise legal changes associated with business operations | Appoint responsible person and prepare legal registration and review changes in various laws |
| Personal Data protection | Set up the structure and systematic process with communication with all relevant stakeholders |
