Addressing supply chain risks
Complex, global supply chains like ours inevitably carry risks. To identify and address those risks, we have robust systems and standards, based on our values, which we expect our suppliers to share. These standards set out our minimum expectations and requirements across a range of areas where risks can occur.
Any business wanting to become a Vodafone supplier must commit to upholding these standards and requirements. Our regular assessment and monitoring ensures these commitments are maintained and appropriate action is taken when they are not complied with.
We have developed robust systems to ensure that our suppliers share our values and strive to meet our mandatory ethical, labour and environmental standards. We expect all our suppliers to follow our Code of Ethical Purchasing and uphold the Business Principles that are integral to our Code of Conduct.
We expect our suppliers to be accountable for managing risk in their operations and understand that we expect them to hold their own suppliers accountable to the same high standards. We want to ensure safe and fair working conditions, along with responsible management of environmental and social issues across our supply chains, through a commitment to continuous improvement shared by all our suppliers.
Our critical standards in our Code of Ethical Purchasing cover clear expectations on topics such as ensuring the safety of people working with us, no child labour, no forced labour, fair payment and working hours, fair disciplinary practices, no discrimination, anti-bribery, responsible sourcing of minerals and the protection of the environment.
Our Slavery and Human Trafficking Statement (below) provides an overview of the measures we take to address the risk of modern-day slavery in our businesses and our supply chain.
Our Conflict Minerals Report (below) provides an overview of Vodafone’s due diligence framework to mitigate any risk that conflict minerals are used in our products.
Qualifying as a Vodafone supplier
To become a Vodafone supplier, a business must confirm that it understands, accepts and commits to comply with the standards and requirements set out in our Code of Ethical Purchasing. This confirmation forms part of the standard terms and conditions included in all of our supplier contracts. These terms and conditions are non-negotiable.
We conduct pre-qualification due diligence on all new suppliers to ensure they meet our requirements. This year, approximately 1,600] companies qualified as Vodafone suppliers.
Our due diligence and qualification process led to four prospective new suppliers being rejected as they did not meet our requirements. This was either due to the locations in which they operated, or that they had working environments or areas of business activity that carried potential ethical, social or environmental risks.
Our risk specialists, which are employed by our Vodafone Procurement Company operation, assess all high-risk suppliers. These specialists operate completely separately from other Vodafone employees who may be involved in the commercial aspects of our relationship with a specific high-risk supplier. This separation ensures that the outcome of the due diligence process we implement remains as objective as possible.
Ensuring suppliers match our standards
Vodafone Code of Conduct & Ethical Purchasing
Contractural commitment to Code of Ethical Purchasing
Contractural commitment to Code of Ethical Purchasing
Based on country, industry and type of activity
Screening for reputational issues
Direct worker feedback
Improvements and capability building
Events and forums
Sharing best practices
Offer further work
Minerals in the supply chain
Vodafone does not directly own or operate factories or production plants, with the exception of a technology operation in Italy that is part of our Vodafone Automotive ‘Internet of Things’ business. We do not directly purchase raw minerals, ores or metals. The majority of the smartphones and tablets that we resell to customers are produced by major companies with internationally recognised brands that report on sustainability efforts in their own right. We also offer our customers a range of smartphones and tablets that carry the Vodafone logo. These devices are designed and manufactured on our behalf by suppliers known as original design manufacturers.
Electronic products contain numerous components that may contain one or more of the 3TG metals (tin, tantalum, tungsten and gold). For example, tin is used often as a soldering material for electronic components. Gold and tantalum are typically used in components such as connectors or capacitors. In addition, some electronic products contain cobalt within the lithium-ion batteries. Smelters and refiners mine and process cobalt. It is then supplied to component manufacturers, assemblers and sellers.
These minerals come from many different smelters and refiners in a complex and often opaque supply chain. Both the smelters and refiners, and the mines from which minerals are sourced, are many steps away from Vodafone in the supply chain. If we can influence the design or manufacture of products, we try to ensure that they do not contain metals and minerals that fund conflict in the Democratic Republic of Congo.
We are members of, and involved in, industry initiatives such as the Responsible Minerals Initiative to improve transparency in supply chains. Vodafone also investigates the potential human rights risks relating to both cobalt and 3TG metals mining in our supply chain. We have focused on identifying products likely to contain these minerals and the locations of suppliers who manufacture or are employed as contractors to manufacture those products.
We expect our suppliers to continuously monitor their compliance with the standards set out in our Code of Ethical Purchasing. Any failures must be immediately addressed. We also require them to report serious breaches to Vodafone immediately so we may ensure that they take corrective action.
The Vodafone approach to monitor compliance with the Code of Ethical Purchasing is determined by the nature of the risks and the kind of activity involved. High-risk suppliers, including those operating in industries, sectors or countries with a history of poor standards, are required to undergo a detailed evaluation process. Other suppliers who work in lower-risk areas may be required to complete self-assessment questionnaires.
Through our Supplier Performance Management Programme, Vodafone monitors our key suppliers’ health and safety and sustainable business performance standards, as well as their commercial, product and service performance. We define key suppliers in terms of the nature of their contribution to our business and the significance of our expenditure with them.
We require suppliers to complete an ethical, labour and environmental risk questionnaire – and provide evidence to validate their responses. Suppliers can use the questionnaire to highlight ways in which they have shared best practice in their own business or their supply chains. This year we evaluated 43 key suppliers through this approach. Our supply chain team then validates and uses the information provided to assign each supplier an overall sustainability score and grade. These scores are also used to grant two Vodafone Supplier Awards, one for health and safety, and the other for sustainability.
We regularly undertake intensive on-site supplier audits, which include an examination of written policies and procedures, site inspections and discussions with managers and employees. These provide us with a detailed insight into how suppliers’ policies translate into action.
Vodafone is one of 17 telecoms operators who belong to the Joint Audit Cooperation (JAC) initiative where we share our on-site assessments, given that our industry peers share the same suppliers and supply chain risks. Through the JAC process, each supplier undergoes a single audit. The results of these audits are shared between JAC members, and one member leads any required follow-up with the supplier.
Between January and December 2018, there were 79 JAC audits, of which 87% were within Vodafone’s supply chain. Of the audits in Vodafone’s supply chain, 24 were Tier 1 direct suppliers, 39 were Tier 2 suppliers, five were Tier 3 suppliers and one was a Tier 4 supplier.
In parallel, we conduct our own on-site assessments for specific Tier 1 and Tier 2 suppliers that we have identified as high risk but not covered by the JAC initiative assessments. This year, we conducted six on-site assessments, four were Tier 1 suppliers and two were Tier 2 suppliers.
Direct employee feedback
While the assessment of working hours and working conditions of our suppliers is important, it can be difficult because supervisors and managers may attempt to falsify timesheets and other workplace records. This year we continued to obtain direct feedback from our suppliers’ employees in order to identify modern-day slavery risks and identify areas for improvement.
We use an independent third-party company to gather confidential and unbiased feedback directly from our suppliers’ employees. Anonymous worker surveys using a simple mobile phone-based worker survey enable employees to reply anonymously to pre-recorded questions in their local language at any time and from any location. We require participating suppliers to allow their employees to respond to questions freely and privately. The responses provide us with important insights into our suppliers’ employees’ working hours and conditions so we can work with suppliers to put in place appropriate remedial measures if required.
During 2019, our approach to using worker surveys was adopted by JAC member companies. This year JAC members collectively surveyed common factories employing 16,800 workers across 12 factories in China and India. Where Vodafone also conducted on-site audits and verification of supplier factories in China and India with the same workforce population, 10% responded to our anonymous survey.
Number of assessments conducted
During 2017, we asked more than 8,000 supplier businesses to cascade our modern slavery e-learning training through their supply chains. The training, which is available in English, Hindi and Mandarin Chinese, is designed to increase workers’ and line managers’ awareness and understanding of modern slavery risk. It also promotes Vodafone’s Speak Up process as a way for workers to raise issues directly with Vodafone.