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.
Goals and Progress
Significant suppliers are audited on sustainability
| Year | Goals |
|---|---|
| 2024 | 91.31% |
| 2023 | 69.81% |
| 2022 | 73.76% |
Supporting the SDGs
Stakeholders Directly Impacted
Key Performance 2024
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 line with the UN Global Compact’s framework to promote honesty, fairness, transparency, responsibility, and accountability across its procurement practices. As part of this approach, the Group regularly reviews purchasing practices to ensure alignment with the Supplier Code of Conduct and to prevent potential conflicts with environmental, social, and governance (ESG) requirements. Sustainability issues are embedded in procurement activities, and supplier assessments are conducted based on international guidelines such as the Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights.
Through this process, suppliers, contractors, and business partners are monitored for compliance, with corrective and improvement actions required where gaps are identified. The Group also engages suppliers through training, communication, and capacity-building programs to strengthen understanding of compliance expectations, including human rights, fair labor practices, anti-discrimination, and anti-harassment standards. Information from monitoring and evaluation is reviewed on a regular basis to ensure the appropriateness of practices, reinforce accountability, and enhance transparency. This comprehensive approach ensures that the Group’s supply chain management contributes to the creation of long-term shared value and sustainability with stakeholders.
Charoen Pokphand Group has announced the Sustainable Procurement Policy and Guidelines, the Supplier 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, as well as report performance directly to the Sustainability Committee, which is chaired by the Chief Executive Officer of Charoen Pokphand Group. The performance and operational plans must then be reported to the Board of Directors.
Charoen Pokphand Group organizes communication and training on the Sustainable Procurement Policy and Guidelines to personnel involved in the Suppliers ESG Program, as well as provides communication and training on the Supplier Code of Conduct to all suppliers through various channels on an annual basis. Suppliers are required to sign acknowledgement of and demonstrate their intention to comply strictly with the Supplier Code of Conduct.
Charoen Pokphand Group has integrated ESG criteria into the new supplier selection and annual supplier assessment processes. The Supplier Code of Conduct is affixed as part of the contract while additional requirements are specified for high-risk suppliers. In order to ensure effective supplier management, the Group has identified Significant Suppliers based on their priority level as follows:
- Suppliers with high purchasing value
- Suppliers of critical components, goods and services
- Supplier of irreplaceable or rare goods and services
In addition to the abovementioned criteria, Charoen Pokphand Group also considers the level of sustainability risks across the supply chain using a two-dimensional evaluation criteria, namely severity and likelihood. The risk factors are derived from reliable sources, including 1. news, 2. past performance, 3. risk factors related to product/industry/country, and 4. potential future risk trends. The risk assessment covers raw materials, packaging, and service providers, and is not limited to Tier 1 Suppliers with whom the Group holds direct trading relationships but also includes other Non-tier 1 Suppliers.
Charoen Pokphand Group annually conducts evaluation of compliance with the 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
Once the evaluation is completed, suppliers identified with non-compliance with the Code of Conduct and other requirements shall submit a correction plan specifying the corrective measures and timelines to the Group for consideration of appropriateness, adequacy and effectiveness. The Group will keep a close eye on the progress of these measures according to the correction plan and offer advice to enhance and align the supplier's operations with the Group's standards.
Charoen Pokphand Group offers a wide range of supplier development programs, e.g., training, training materials, consultations on resolving cases of non-compliance detected during evaluation, and participation in projects to eliminate existing limitations. The Group also hands out awards in recognition of suppliers with outstanding performance. Suppliers identified with non-compliance during the supplier evaluation shall be offered training to enhance their business operations in accordance with Group and international requirements. On the contrary, if any supplier refuses to participate in any form of Supplier ESG Program or fails to address non-conformities according to the measures and timeframe agreed upon, said supplier shall be subject to a fair contract termination process.
