Social Quality Compliance Policy Handbook

For external use

Intersnack– October 2016 (Version 2)

Document: 00.002.999

Owner: The Social Compliance Team

Approved by: Arie Endendijk and the Buying into the Future Leaders

Intersnack - Social Compliance Handbook

Table of Contents INTERSNACK’S COMMITMENT TO ETHICAL SOURCING ...................................................................... 2

INTERSNACK’S APPROACH TO SUSTAINABILITY .................................................................................................................... 2 INTERSNACK’S COMMITMENT AND APPROACH TO SOCIAL COMPLIANCE ................................................................................... 2 DEFINING SOCIAL COMPLIANCE CODES ............................................................................................................................. 4 INTERSNACK’S APPROACH TO SOCIAL COMPLIANCE CODES .................................................................................................... 4 INTERSNACK’S MEMBERSHIPS AND THE SCHEMES WE USE ..................................................................................................... 4 ASSESSING OUR CHOICES – BEST PRACTICE IN SOCIAL COMPLIANCE ......................................................................................... 5 CONCLUSION AND CONTINUOUS IMPROVEMENT ................................................................................................................ 6

OUR COMMITMENT IN PRACTICE ...................................................................................................... 7 STAGE 1. RISK ASSESSMENT PROCESS: OVERVIEW OF COUNTRY AND PROCESSOR ........................................................................ 7

Country risk assessment .................................................................................................................................. 7 Requirements for Social Compliance - Processor Questionnaire ..................................................................... 7 Combining Country and Processor assessments to give an overall social risk ................................................. 8 Engagement through Intersnack’s “Requirements for Suppliers” code .......................................................... 8

STAGE 2. MONITORING AND EVALUATION ........................................................................................................................ 8 STAGE 3. CONTINUOUS IMPROVEMENT ........................................................................................................................... 8 APPENDIX 1 - INTERSNACK’S REQUIREMENTS FOR SUPPLIERS .............................................................................................. 10

Introduction ................................................................................................................................................... 10 Intersnack and supplier engagement............................................................................................................. 10 Our Approach to Social Compliance .............................................................................................................. 10 Best practice standards .................................................................................................................................. 10 Overview of Country and Processor Risk assessment process....................................................................... 11 Scope ............................................................................................................................................................. 12 Our approach to compliance ......................................................................................................................... 12 Communication.............................................................................................................................................. 12 Questionnaire ................................................................................................................................................ 12 ETI Independent Audit .................................................................................................................................. 12 Efficiency & equivalence ................................................................................................................................ 13 Transparency & engagement ......................................................................................................................... 14 Continuous Improvement .............................................................................................................................. 14 Our approach to Non-compliance ................................................................................................................. 14 Ethical Business Practices .............................................................................................................................. 15 Governance structure .................................................................................................................................... 15 Reporting and data management .................................................................................................................. 15 Related Documents........................................................................................................................................ 16

DEFINITIONS & ABBREVIATIONS ................................................................................................................................... 17 POLICY OWNERSHIP................................................................................................................................................... 18 CONTACT FOR FURTHER INFORMATION .......................................................................................................................... 19

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Intersnack’s commitment to ethical sourcing

Intersnack’s approach to sustainability

Intersnack has developed an ambitious vision for sustainability based upon core company values and our most important activities.

“Buying into the Future Committed to sustainable sourcing” The Vision has the following fundamental dimensions:

People - along the value chain from farmers, workers and communities in the South to consumers in the North.

Environment - the company’s impact through the value chain (from field to factory). Profit - fair distribution along the chain – respect and strengthen the local economies where

Intersnack operates while creating value for the company.

Buying into the Future emphasises the importance we give to developing enduring and sustainable relationships with suppliers. It focuses on the sustainability of the products we buy and our work to enhance the quality of life of the people we depend on within our supply chains. The vision provides a direction for us to continuously improve our performance.

Intersnack’s commitment and approach to Social Compliance

As a business which depends upon sourcing raw material ingredients from across the world, Intersnack recognises that our supply chains have the potential to give rise to ethical and social issues which are of concern to us, our customers and consumers.

There has been increasing focus in recent years, from business customers, NGOs, governments, and consumers, about the environmental, ethical and social issues that arise from global supply chains that can (in some cases) lack transparency and traceability. Several high profile incidents and issues over the last decade such as child labour in sporting goods manufacture, unsafe buildings/working conditions in the garment industry1 and slavery in Thai prawn fishing sector (among many others) have raised consciousness about working conditions, ethical treatment and workers’ rights in international supply chains.

Intersnack has a strong commitment to responsible industry leadership, supply chain and supplier development, and we recognise our responsibility to build upon and expand our existing commitments to ensuring an ethical supply chain.

We express this commitment as “Social Quality Compliance” (ensuring supply chain consistency with our standards for social performance).

1 http://www.forbes.com/sites/clareoconnor/2014/04/26/these-retailers-involved-in-bangladesh-factory-disaster-have-yet-to-compensate-victims/#5de827b357c5

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As part of Intersnack’s Sustainability Strategy Buying into the Future, we have developed the following goal for our ambition in social quality compliance, to:

Embed into our sourcing strategy a clear procedure to guarantee maximum transparency and provide well-defined actions to prevent and/or remediate the violation of human/workers rights in the processing sites of our suppliers. This document presents and explains our approach to delivering our social compliance ambition. The document will be revised as required on an annual basis and is the responsibility of the Intersnack Social Compliance Team. It contains the following components which fit together to represent a clear and structured set of requirements and procedures for assessing risk, supplier compliance, supply chain transparency and our approach to identifying and responding to compliance issues:

• Intersnack’s position on social compliance schemes • Overview of Intersnack’s Country and Company Risk assessment process • Appendix - Intersnack’s Requirements for Suppliers • Definitions & Abbreviations • Contact for further information

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Defining social compliance codes

We define social compliance codes as systems or criteria for assessing and verifying the standards of conduct and practice in our supply chain with reference to social issues.

A variety of social compliance codes exist and are used within supply chains. These are developed and run by a variety of groups and institutions, including those managed by business organisations/alliances and those run by NGOs (Non-Governmental Organisations) and charities. In addition, some are developed and managed by stakeholder coalitions which may include all of the previous groups in addition to governmental and global institutions (e.g. United Nations bodies).

Social issues can refer to a range of subjects. Those schemes generally recognised as credible and meaningful (for genuinely covering the social issues that are relevant and where performance is susceptible to assessment in supply chains) usually reflect or include considerations from a number of International Labor Organisation (ILO) conventions2.

These conventions reflect the following social issues:

• Freedom of association and right to collective bargaining. • Forced labour. • Child labour. • Non-discrimination. • Wages. • Working hours. • Health & Safety. • Employment relationship. • Abuse.

Intersnack’s approach to social compliance codes

Our ambitious approach to sustainability defines our intention to ensure that the codes and standards we apply to our supply chain relationships and product requirements are ‘best-in-class’.

In turn, this has informed our approach to social compliance codes and our use of the Ethical Trade Initiative (ETI).

Intersnack’s memberships and the schemes we use

Developing social quality along our global supply chain is key goal of our Buying into the Future Sustainability Strategy. We appreciate the scale of our ambition and also recognise that different countries have varying laws, cultures and understanding of wellbeing. For this reason, Intersnack

2 “Since 1919, the International Labour Organization has maintained and developed a system of international labour standards aimed at promoting opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and dignity. In today's globalized economy, international labour standards are an essential component in the international framework for ensuring that the growth of the global economy provides benefits to all.” http://www.ilo.org/global/standards/introduction-to-international-labour-standards/lang--en/index.htm

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engages in dialogue with its suppliers to create common ground to jointly champion and guard human and workers’ rights around the globe.

In order to understand and keep up to date with best practice, Intersnack is a member of MVO Nederland (www.mvonederland.nl) the Dutch CSR (Corporate Social Responsibility) initiative.

We are also members of Sedex (http://www.SEDEXglobal.com/), a collaborative supply chain platform for sharing ethical supply chain data. We use Sedex as part of our approach to assessing how our suppliers perform with regard to the ETI.

Since 2008, Intersnack has been asking our suppliers across the globe to be assessed against the ETI (http://www.ethicaltrade.org) Base Code.

Our choice to use the Ethical Trading Initiative was, and is, based on the following considerations:

Credibility: ETI is a platform, founded in 1998, that brings together private companies, NGOs and Trade Unions to work together to improve working conditions in global supply chains. This multi-stakeholder approach is unique and guarantees that key points of view are taken into consideration into the ETI Base Code.

Strategic fit: a key mechanism in the delivery of our sustainability strategy is to support our suppliers in improving the effectiveness of their operations through multi-stakeholder projects aimed to increase social quality and community capacity.

Transparency and efficiency along our supply chain: ETI ‘compliance’ is assessed by auditing bodies through Sedex’s SMETA guidance and methodology (a compilation of good practice in ethical audit approach and technique). Supply chain companies which are members of Sedex can upload their audit reports into the system and grant access to their customers. This eases the burden on suppliers facing multiple audits, questionnaires and certifications, reduces paperwork along the chain and creates general transparency and efficiency.

Knowledge: Intersnack has developed a wealth of knowledge and a solid world-wide network of human-rights and social compliance experts of different backgrounds, which we use to build capacity both internally and externally.

Assessing our choices – best practice in social compliance

As businesses evolve and new challenges require new responses, we constantly monitor trends and approaches to make sure that we deliver our products ethically, responsibly and sustainably to the benefit of Intersnack, our customers, partners, consumers and the wide range of stakeholders we engage within our global supply chains.

We also monitor the performance and quality of other social compliance approaches in order to ensure that our activities deliver against our best in class sustainability ambitions.

We are also regularly asked by customers, NGOs, funding organisations and other stakeholders to disclose our approach to social compliance and our choice and use of compliance standards and initiatives, in particular, our approach/ use of the following:

• Business Social Compliance Initiative (BSCI)

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• Ethical Trading Initiative (ETI) • Fair Labor Association (FLA) • Social Accountability 8000 (SA8000)

We consider that membership and use of the ETI approach represents a best-in-class approach to ensuring high social standards in our supply chain.

More importantly, we also believe that our use of ETI and our Sedex membership allows our performance to be at least equivalent to and/or of a higher standard than if it were based upon alternative approaches.

This belief is reinforced by independent external perspectives. For instance, Made-By (a European not for profit focussed upon the garment sector) conducts regular assessment and benchmarking of social compliance codes against a series of best practice criteria:

• Governance of the code • Frequency of update • Content of the code of conduct • Scope of the code • Type of management system • Type of audit and verification process • Transparency of the code • Type of grievance procedures • Level of capacity building.

Using these criteria, Made-By judged the ETI to be in the top category of approaches (Category A), alongside FLA and SA8000, with BSCI in category B.

For more information on Made-By’s assessment and criteria see their last assessment report.

Conclusion and continuous improvement

While we believe that our choice and use of the ETI in conjunction with Sedex membership represents the best in class approach, our ultimate goal is to bring transparency in our chain and actively foster safe and dignified workplaces wherever Intersnack’s products are processed. For this reason we consider the following approaches to be equivalent in practice with our standards:

• ETI • SA8000 • BSCI • FLA

Therefore a Processor with such compliance in place would be exempt from requiring any additional ETI assessment.

We are committed to continually assessing and developing our approach and will monitor developments and new approaches to social compliance.

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Our commitment in practice In practice, Intersnack’s approach involves a circular, 3 stage process of assessment, monitoring and improvement to identify and mitigate potential ethical issues in our supply chain.

Stage 1, Risk Assessment: the identification of the potential ethical risks which may be associated with supply from a particular country. This assessment is based on desk studies and supplier engagement.

Stage 2, Monitoring & Evaluation: Engagement with Suppliers and Processors for assessment and monitoring, and, where required: • Take prompt action to prevent ethical threats. • Identify and ensure actions to remedy ethical threats. Stage 3, Continuous Improvement: consistent communication and engagement with external and internal stakeholders to improve the quality and the efficiency of Intersnack’s approach to Social Compliance. Responsibility for the development, implementation and continual improvement of this process lies with the Social Compliance Team.

Stage 1. Risk assessment process: overview of country and processor

Intersnack has developed a process for assessing the social and ethical risks of our purchasing which consists of the following two dimensions:

• An analysis of the risks present in the country where the production/processing sites of our suppliers are situated, and:

• An assessment of the processor itself.

These dimensions are assessed as follows:

Country risk assessment Country level risks are assessed through a spreadsheet analysis of evidence (sourced significantly though not exclusively from the MVO CSR risk assessment tool) against each of the 9 ETI Base Code principles.

We assess potential social risks in each country from which we obtain products or raw materials. Assessment is conducted through an analysis of the available evidence for potential issues in each country against each of the ETI principles.

Requirements for Social Compliance - Processor Questionnaire Processor level risk ratings are developed by assessing their responses to a processor questionnaire. The questionnaire contains a series of questions in a number of categories, each of which has an associated score.

Scores of 55 or below should be rated as HIGH Risk. Scores of 56 or above should be rated as LOW Risk.

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Combining Country and Processor assessments to give an overall social risk Intersnack undertakes country risk assessment in order to:

1. Identify, at a high level, where the main social, ethical and environmental risks might be expected (and which kind of risks may be present) and therefore prioritise our focus.

2. Put in place the right procedures to ensure that low risk processors based in high risk countries will comply with our required standards over time.

The separate risk ratings derived from the Country assessment and the Processor assessment are combined to give an overall risk rating – and therefore Processor Social Assessment – which results into an overall traffic light system indicating our approach to the social risk of that processor.

Engagement through Intersnack’s “Requirements for Suppliers” code This document forms the core of Intersnack’s approach to ensuring a transparent and ethical supply chain. It replaces Intersnack’s previous Supplier Code of Conduct. It will be sent out to suppliers for their signature. This document will be updated as required by the Social Compliance Team to integrate changes to codes and reflect/ adopt new codes and approaches as appropriate.

By signing this document, the supplier commits to apply its content to all the production sites (“the Processors”) which supply to Intersnack. Intersnack’s receipt of a signed copy of the document is a mandatory pre-condition for doing business with us.

We appreciate the complexity of our supply chains and therefore understand that this pre-condition might, in some cases, be challenging. For this reason, Intersnack engages in dialogue with its suppliers to jointly champion and protect human and workers’ rights around the globe.

The full Requirements for Suppliers document is included in Appendix 1.

Stage 2. Monitoring and evaluation

All information related to the ethical performance of a Supplier/ Processor is stored in Intersnack’s Vendor Assurance Management Tools.

The system stores all documents and reports submitted both by a Supplier/Processor and by Intersnack’s Social Compliance Team (i.e. visit report). The performance reports of our supplier/processor-base will be reviewed and evaluated by the Social Compliance Team (the Team) on a monthly basis. Should non-conformities arise the Team will immediately engage with the relevant internal and external stakeholders to take prompt and appropriate action.

Stage 3. Continuous improvement

The Social Compliance Team carries out periodic internal checks to guarantee the continuous improvement of our approach to Social Compliance.

Specifically, the Team has responsibility for ensuring the following:

• The Social Compliance Team will meet on a monthly basis to revise Suppliers/Processors’ ethical performance, discuss trends and agree actions for prevention, improvement or remedy.

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• The Risk Assessment methodology, tools and content will be revised and updated annually. By doing so, the Team seek to ensure the quality, the relevance and the efficiency of the approach.

• The “Requirements for Suppliers” document will be revised annually. Should any major changes apply, Suppliers will be asked to sign and conform to the new version.

• Continuous monitoring and maintenance of the IT tools used. • The Team will organise annual training on ethical sourcing and social auditing for Intersnack

Procurement staff. • The Team will periodically bench-mark Intersnack’s approach with industry and civil society

(NGOs) trends and standard-setting activities.

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Appendix 1 - Intersnack’s Requirements for Suppliers

Introduction This document forms the core of Intersnack’s approach to ensuring a transparent and ethical supply chain. It replaces Intersnack’s previous Supplier Code of Conduct. It will be sent out to suppliers for their signature. This document will be updated as required by the Social Compliance Team to integrate changes to codes, new codes and approaches.

Intersnack and supplier engagement The Intersnack Group (‘Intersnack’) is Europe’s leading savoury snack manufacturer, owning many household name brands as well as being a private label supplier to Europe’s biggest supermarkets. Annually, Intersnack produces around 500,000 tonnes of snacks including: potato chips, nuts, baked products and specialty snacks.

Intersnack is a privately owned company with core values of responsibility, entrepreneurship, and intent to grow together. Its philosophy is based on integrity, efficient actions and responsibility towards consumers, the environment, the people who work with it and society at large.

As a food company Intersnack recognises the fundamental importance of understanding where its ingredients come from and how they are supplied. Through its Sustainability strategy Buying into the Future, Intersnack acknowledges the importance of developing long term and sustainable relationships with suppliers to secure the integrity of its products together with the quality of life of the people it depends on within its supply chains.

Intersnack’s approach to its global and complex supply chain is based on transparency and the commitment to respect the worker and human rights of the people involved in the chain, with a special focus on the most vulnerable groups such as migrant labourers and women.

For this reason Intersnack engages with suppliers who manage and operate their facilities in a manner that represents clear and verifiable best practices in social responsibility. This includes their approach and performance in labour issues and workers’ rights, ensuring environmental efficiency and the use of best available commercially viable technologies with full compliance with local legal expectations.

By signing this document the supplier commits to apply its content to all the production sites (“the Processors”) which supply to Intersnack. Intersnack’s receipt of a signed copy of the document is a mandatory pre-condition for doing business with us.

However, we appreciate the great complexity of our supply chains and that this pre-condition might, in some cases, be challenging. For this reason Intersnack engages in dialogue with its suppliers to create common ground to jointly champion and guard human and workers’ rights around the globe.

Our Approach to Social Compliance Best practice standards Intersnack appreciates that different countries have different laws, customs and cultures which impact business practices. To create common understanding about best labour practices Intersnack asks all suppliers to comply with the Ethical Trade Initiative (ETI) Base Code [see section 3 below for Intersnack’s approach to “equivalent” codes], a code of conduct initiated in the UK by the ETI; an

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alliance of private companies, non-governmental organizations (NGOs) and trade union organizations who wanted to ensure that working conditions of workers around the world meet or exceed international labour standards.

The ETI Base Code consists of 9 Principles, derived from the conventions of the International Labour Organisation (ILO). It also reflects the most relevant international standards with respect to labour standards such as the UN Universal Declaration of Human Rights, Guidelines for Multinational enterprises developed by the Organization for Economic Co-operation and Development (OECD) and the UN Convention on the Rights of the Child.

The 9 Principles are as follows:

• Employment is freely chosen • Freedom of association and the right to collective bargaining are respected • Working conditions are safe and hygienic • Child labour shall not be used • Living wages are paid • Working hours are not excessive • No discrimination is practiced • Regular employment is provided • No harsh or inhumane treatment is allowed

Intersnack considers that compliance with the ETI Base Code is a minimum rather than a maximum standard. This means that it actively seeks relationships with suppliers whose approach builds upon the 9 Principles. Suppliers must observe all applicable laws and regulations of their country, including laws related to employment, discrimination, the environment, safety and health, and other fields. For Intersnack’s approach to equivalent social responsibility standards see the text in Section 3 below.

Overview of Country and Processor Risk assessment process Intersnack assesses the social and ethical risks of its purchasing at two distinct levels. Firstly through a focus upon the types of social and environmental risk that may occur within countries. Secondly, at the level of the specific processors used.

Intersnack recognises that there may be concerns about social and ethical conditions in parts of the world and works to ensure that it understands what to look out for. However, the key focus is on our suppliers and their processors, in order to ensure that they meet internationally recognised standards, wherever in the world they are located.

Intersnack has adopted a defined assessment process to identify both country and processor level risks through external analysis, the use of public information and evaluation which is combined with its own assessment through a detailed questionnaire and scoring system.

Depending upon the results of this risk assessment, processors are classified as either “Red”, “Amber” or “Green”. Red and Amber processors are managed by the Social Compliance Team with a higher degree of scrutiny than Green processors, actively engaging with them in order to address risks and potential non-compliance.

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Scope This document applies to all production sites supplying to Intersnack (suppliers and their processing sites with the last step of production or processing in the supply chain).

In the context of social compliance, ‘the last step of production or processing in the supply chain’ consists of the place in the chain where the characteristics of the product are altered and where packing or repacking is performed before supply to Intersnack entities.

If a Supplier hires a subcontractor in connection with providing goods to Intersnack, the Supplier shall cause the subcontractor to comply with these “Requirements for Suppliers” as if Intersnack had entered into an agreement with the subcontractor directly.

Our approach to compliance

To further substantiate compliance to the principles as defined in the ETI Base Code, each site is expected to be audited by a SAAS (Social Accountability Accreditation Services) accredited independent auditing/ assurance body (e.g. SGS, Intertek etc).

Intersnack recognises that, as the application of its social compliance standards might present unique challenges, it needs to work together with suppliers to achieve full compliance. The following stepping-stones approach forms the basis of our social compliance program.

Communication Suppliers are responsible for notifying Intersnack of all sites used for the production of Intersnack ingredients.

Suppliers must also promptly notify Intersnack when they stop using a processing facility for any reason and have no intention of using it within 12 months. At Intersnack’s request, suppliers must provide Intersnack with an updated list of processing facilities. Questionnaire Intersnack requires all processors to fill in an on-line questionnaire for each processing site supplying to Intersnack. This allows us to clearly understand their approach and commitments to sustainability and to identify areas of potential ethical, environmental and social risk.

The questionnaire requests information on a number of areas and also serves to provide Processors with a clear understanding of Intersnack’s social compliance requirements and indicates the areas where they may need to work with Intersnack in order to minimize the risks identified.

The filled-in questionnaire will be returned to the responsible Intersnack Social Compliance Team.

ETI Independent Audit 3 Intersnack has a policy of requiring all processing, packing and storing facilities in which our ingredients are processed to be ETI assessed. The frequency of assessments that may be required is determined by our overall risk categorization as follows:

3 An ethical audit is a thorough formal examination of the labour practices of a particular workplace or company. It is a verifiable process to understand, measure, report on, and help improve an organisation’s social and environmental performance.

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Existing Processors If a processor is classed by our risk assessment as “Red”, assessment should be conducted at least every two years and the assessment report must be shared with Intersnack, preferably via Sedex. If a processor is classed “Amber”, assessment should be conducted at least every three years, and the assessment report must be shared with Intersnack, preferably via Sedex.

Finally, for processors classed as “Green”; assessment should be conducted at least every four years and the assessment report must be shared with Intersnack, preferably via Sedex.

New Processors As a requirement of engagement with Intersnack, new processors should either have an assessment which has been conducted within two years prior to the signing of the first purchasing contract or have an assessment conducted within 1 year from the date of signing. The frequency of follow up audits required shall depend on the recommendations included in the first audit report, but will conform to the frequency of assessment noted above for existing processors (at least every two years for “Red”, at least every three years for “Amber” and at least every four years for “Green”).

Efficiency & equivalence In order to ensure efficiency in its chains, Intersnack accepts standards which are equivalent to the ETI standard. This means that if suppliers’ facilities have been assessed by a suitably skilled/ accredited independent third party assurer or certification body against a code which includes the 7 focus areas noted below, the site does not need to be ETI assessed:

• Forced, bonded, indentured and prison labour • Child labour • Freedom of association and effective recognition of the right to collective bargaining • Discrimination, harassment and abuse • Health and safety • Wages, benefits and terms of employment • Working hours

Our approach to equivalent standards

Intersnack uses the ETI Base Code as the basis of its approach to social compliance. However, we also recognise that there are a variety of approaches and codes in use.

We treat other codes as equivalent if they are clearly based upon the ILO and other International Conventions and are capable of being independently assessed/ certified by a recognised and appropriate independent assurance provider (see also section above – “Our approach to compliance”).

Subject to the availability of such independent verification/ assurance, we accept that compliance to the following standards (with an audit report no older than 1 year) as equivalent to the ETI Base Code:

• BSCI (Business Social Compliance Initiative). • SA8000 (Social Accountability) Standard. • FLA (Fair Labor Association) Code of Conduct.

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Therefore, a Processor with such compliance in place would be exempt from requiring any additional ETI assessment. They should ensure that they maintain the levels of independent verification/ assurance required by the standards that they have in place and make these available to Intersnack on request.

Transparency & engagement Each of our suppliers is expected to communicate and address promptly any social issues which may seriously affect the welfare of workers in their processing sites and/ or is likely to receive media attention. Intersnack seeks, where appropriate, to actively support suppliers’ initiatives aimed to remedy key non-conformities and is prepared to leverage knowledge and resources to find long term solutions through a multi-stakeholder approach. Intersnack encourages and values prompt communication and openness as opportunity to prevent escalation and find joint solutions where possible.

Continuous Improvement Intersnack views compliance as an issue requiring a focus upon continuous improvement and expects suppliers to be aware of and responsive to changes in compliance requirements.

Our approach to Non-compliance Where a processor does not rectify critical non-compliance/ non-conformance issues within an agreed time frame and/or does not take the agreed actions, then any such processor will be suspended (i.e. Intersnack reserves the right to refuse to receive product from this processor until provided with proof of changes which address the non-conformance).

The supplier will be held accountable for addressing non-conformance. If conformance is not achieved Intersnack will engage with that supplier to explore the reasons for a lack of action, which may result in the supplier being suspended.

Any critical non-conformances will be reported internally to the Social Compliance Team who will thoroughly analyse the case. A potential supplier suspension will then be suggested for final decision to Intersnack Procurement Board.

We consider the following to be critical non-conformances (guided by the categorisation defined by SMETA):

• A severe breach of a code item or local law resulting in an issue which presents imminent risk to workers safety/risk to life and limb or constitutes a significant breach of workers’ human rights.

• A significant breach of a code item or local law which represents a major non-compliance that has not been addressed or for which no significant improvement has been made by the time of a follow up audit, despite the supplier’s commitment to resolve the issue.

• An attempt to pervert the course of the audit through fraud, coercion, deception or interference.

The following issues are considered critical and may be among those which would form the basis for delisting a supplier:

• Child labour. • Forced labour.

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• Critical safety issues, SEDEX lists the following as the most common non-compliances against this issue:

• Incomplete health and safety policies. • Inadequate training of workers on health and safety.

• Poor internal monitoring that leads to health and safety issues recurring. • Not communicating health and safety requirements to suppliers. • Failure to identify regulatory requirements for health and safety that apply to the

business.

• Conflict of interest - SEDEX follows the Transparency international definition of conflicts of interest which describes them as a “situation where an individual or the entity for which they work, whether a government, business, media outlet or civil society organization, is confronted with choosing between the duties and demands of their position and their own private interests.”

Ethical Business Practices In managing its suppliers, Intersnack seeks to act professionally and ethically. We expect our suppliers to:

• Comply with all local legal requirements and not engage in any form of corruption or fraud. • Notify Intersnack as soon as any form of conflict of interest becomes apparent. • Refrain from offering gifts when engaging with our employees in order to receive benefits.

Governance structure Intersnack’s Social Compliance Team lies within the Procurement Unit of the Group. It is based in Netherlands, reports directly to the company Board and is responsible for:

• Developing and maintaining Intersnack’s social compliance policy. • Liaising with key stakeholders both internal and external (including Purchasing Managers and

regulatory bodies). • Independent oversight and advice to Intersnack’s decision makers on issues such as: decisions to

exit relationships, acceptance of standards equivalent to ETI, testing compliance with this policy. • The day-to-day operation of the social quality compliance policy.

Reporting and data management Processors are required to share their ETI (or equivalent) audit report with Intersnack Social Compliance Team, who will:

• Screen the audit report prior to placement of any purchase orders. • Make sure that processors are ETI assessed within one year from the first purchasing order unless

they have an assessment which has been conducted within two years (processors assessed as “Red”), three years (processors assessed as “Amber”) or four years (processors assessed as “Green”) previous to the signing of the first purchasing contract.

• Review the ETI audit report and provide feed-back to processors/suppliers. • Make sure that processors are re-audited according Intersnack rules reported on the “ETI

Independent audit” paragraph. • Ensure that rectification plans are regularly monitored and updated. • Engage with suppliers and key stakeholders when remedy actions are required.

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Intersnack is a member of SEDEX. Suppliers are encouraged to join the platform to bring efficiency, optimize resources and contribute to the overall transparency of our value chain.

Related Documents • Ethical Trading Initiative Base Code. • (SMETA) Best Practice Guidance. • Sedex Members Ethical Trade Audit. • (SMETA) Measurement Criteria. • ETI information on Migrant Labour.

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Definitions & Abbreviations

Term Definition

Intersnack companies

All Intersnack Operating Companies within Intersnack Group.

Social Compliance Policy – Requirements for Processors

Detailed requirements specifying the circumstances and requirements by which a processor can deliver material to Intersnack.

ETI Ethical Trading Initiative (http://www.ethicaltrade.org/).

SAI Social Accountability International – SAI is a non-governmental, international, multi-stakeholder organization dedicated to improving workplaces and communities by developing and implementing socially responsible standards: http://sa-intl.org/

FLA Fair Labor Association - a collaborative initiative of socially responsible companies, colleges and universities, and civil society organizations. FLA creates lasting solutions to abusive labor practices by offering tools and resources to companies: http://www.fairlabor.org/

Migrant Worker

A person who migrates or who has migrated from one country to another with a view to being employed other than on his/her own account.

MVO CSR Netherlands (MVO) is the Centre of Excellence for Dutch companies that are striving towards corporate social responsibility: http://mvonederland.nl/csr-netherlands

Processor The processor is ‘the last step of production or processing in the supply chain’ - the place in the chain where the characteristics of the product are altered and where packing or repacking is performed before supply to Intersnack entities.

Risk The probability or threat of an adverse effect and the severity of that effect, with consequences for social compliance.

SEDEX Supplier Ethical Data Exchange, a collaborative platform for sharing ethical supply chain data (http://www.SEDEXglobal.com/about-SEDEX/).

Severe violations

Ignoring or contravening ethical principles as defined in agreed standards.

SMETA The Sedex Members Ethical Trade Audit (SMETA): http://www.SEDEXglobal.com/ethical-audits/smeta/

Supplier The supplier is the legal contract partner of Intersnack (the entity which signs purchase contracts).

Validation Evidence that the elements of an agreed plan (e.g. controls and critical limits) are capable of being effective in ensuring compliance.

Verification A process by which compliance with an agreed standard or plan is assessed.

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Contact for further information

We are very happy to discuss and explain our position and decisions on this issue with any of our stakeholders.

Please do not hesitate to contact your Intersnack representative.

Intersnack Procurement B.V.

Havenstraat 62, NL-7005 AG Doetinchem

Office: +31 (0)314370200

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