Responsible supply chain

We set strict ethical, labour and environmental standards for suppliers, helping them to improve their performance 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 engagement.

We spend billions of pounds each year on 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, 74 KB) and integrated from the initial qualification process all the way through to managing our suppliers’ performance. We conduct regular site assessments to ensure compliance with the Code 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 performance management processes. We 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 2014/15.

Becoming a Vodafone supplier

Vodafone’s Code of Ethical Purchasing and other supplier policies are based on our Code of Conduct and our 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 on the basis of degree of risk to the business – to assess the impact and likelihood of failure to meet our standards for operating ethically and responsibly. The results are 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. 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 our Code of Ethical Purchasing (pdf, 74 KB).

Everyone in our global supply chain organisation, as well as relevant people who work closely with suppliers, is trained on our key policies and ethical conduct requirements. We do this training regularly to ensure our people are updated with any changes in policy. This includes training on how to identify and report any non-compliance when visiting supplier sites and how to effectively communicate our expectations to suppliers.

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, alongside other commercial factors such as delivery and quality.

Assessing health and safety performance

Our suppliers’ health and safety performance 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
  • number and type of incidents and accidents.

Assessing sustainability performance

Our suppliers’ sustainability performance is evaluated using the external sustainability assessment platform provided by EcoVadis. This common industry tool covers a wide range of criteria, including:

  • the policies that a supplier has in place, for example on child and forced labour
  • public reporting of its performance on social, environmental and health and safety issues
  • environmental management systems
  • health and safety management systems
  • 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.

Suppliers’ responses are checked and scored by EcoVadis, giving Vodafone an independent assessment. For mobile phone suppliers, EcoVadis scores feed into the rating of their products in our Eco Rating, which enables customers to make an informed choice about which mobile phone they buy (see Empowering sustainable choices).

Following up

Performance evaluations enable us to identify and prioritise specific areas of improvement for our suppliers. We 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. We are also using mobile technology to gain direct input from workers in the supply chain (see case study in Performance).

We engage with high-risk suppliers to help them address issues, but 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, based on scoring in our Supplier Performance Management programme.

See Performance to read about supplier assessments and awards in 2014/15.

A consistent industry approach

By participating in common industry initiatives we aim to encourage a standardised approach across the industry. Using common tools such as EcoVadis reduces the burden of reporting on suppliers and offers consistent independent assessments for the industry.

We invest significant time and resources into collaborating with other telecoms operators to assess and improve the social and environmental performance of common suppliers through the Joint Audit Cooperation (JAC) initiative. JAC has established guidelines and a set of standard criteria (pdf, 178 KB) to assess suppliers’ performance.

Joint audits are conducted by independent specialists based on internationally recognised social and environmental standards. These include the SA 8000 social accountability standard and the ISO 14001 environmental management standard. 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 saves time and money for both suppliers and customers by removing the need for multiple audits and follow-up processes.

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

See Performance for more on our participation in industry initiatives in 2014/15.

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, usually 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 tantalum, tin, tungsten and gold respectively (often referred to collectively as 3TG). These metals are used by many industries including in components for electronic products, such as mobile phones.

Several of the 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, 184 KB) sets out our position on this issue.

The industry is making considerable progress in improving the transparency of the mineral supply chain and tackling human rights abuses connected with the mining of conflict minerals through initiatives such as the Conflict-Free Sourcing Initiative (CFSI). However, it will take time to establish these systems across the whole industry to be able to determine the conflict-free status of all products.

We recognise that ceasing to source 3TG metals 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. 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 making this possible.

Our approach

Vodafone does not manufacture any products itself and does not purchase 3TG metals directly. This means we must work with suppliers and our industry 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, 327 KB) in line with US legislation (see below).

Our direct (Tier 1) suppliers do not source these minerals straight from the smelters so they must conduct due diligence processes with their own suppliers, further down the supply chain, to determine the smelter from which minerals are sourced. Industry initiatives have established systems to verify smelters as conflict-free (see below).

Industry collaboration

The CFSI works to audit smelters’ and refiners’ due diligence activities. It offers a variety of tools and resources to support companies in making informed decisions about conflict minerals in their supply chain. Vodafone is a member of the CFSI and participated in the development and pilot of its Conflict Minerals Reporting Template. We use this template 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.

Regulatory requirements

Vodafone is required by the US Security and Exchange Commission to disclose whether 3TG 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, 327 KB).