Forest sourcing
As a leading retailer of books and stationery products, paper constitutes a significant part of our business. We are committed to minimising the environmental impact of the paper used in own-brand products, and to do so we work to a continuing objective that all virgin (i.e. non-recycled) material used in our products is from known, legal, well-managed and credibly certified forests.
In order to meet this objective, we work closely with our suppliers to understand their sourcing process and supply chain. All prospective and ongoing suppliers are required to complete a pre-order questionnaire, detailing information on the forest sources intended for own-brand products. Our compliance teams then assess the information to decide whether an order can be placed. Over the year we worked to improve the methodology used when assessing timber and paper sources. We require suppliers to provide information on the tree species and origin, even if the timber or end product is FSC/PEFC certified. We also operate a policy not to accept any species included in the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
Suppliers of own-brand paper and wood based products provide information on products they supplied to us during the previous 12 months. The resulting report enables us to identify the risks in our supply chain, such as timber that might be sourced from contentious areas. The report also highlights suppliers that are making good progress in their own forest sourcing management and who we can work with to introduce new sustainable products.
For our 2010 survey, the volume of material from recycled sources and certified forests2 improved to 72 per cent (2010: 69 per cent). This increase was achieved as a result of our ongoing programme of engagement with suppliers to help them better understand the issues around forest sourcing and the ways in which they can improve. More specifically, we continue to identify those suppliers who are providing products made from lower grade wood and to work with them as they find new sources of a higher grade. Much of our forest sourcing work is carried out behind the scenes with little sign on product packaging to indicate which products are made from wood or paper from recycled sources or certified forests. We are working to address this and, this year, increased the number of products marked with the FSC logo by over 20 per cent, including products ranging from pencils and crayons to the promotional vouchers distributed at the till. In the year ahead, we are targeting a further 30 per cent increase in the number of FSC-labelled products to ensure that we give our customers as much information as we can about the products they are buying.
Ethical trading
We are committed to maintaining good labour standards across our supply chains. We engage with our suppliers to promote good labour standards in their factories. We will only place orders with reputable suppliers and manufacturers who are committed to working towards complying with the conditions set out in our Supplier Code of Conduct and Human Rights policy. We work with our suppliers to bring about incremental change through a process of factory audits and ongoing engagement to agree when improvements are required.
WHSmith is a member of the Ethical Trading Initiative (ETI). The ETI is an alliance of companies, non government organisations and trade unions which promotes and improves the implementation of corporate codes of practice covering supply chains. Our supplier code is based on the ETI’s own base code and we work together with ETI to meet our joint objectives. Specifically, we participate in the ETI China Forum in the UK and the ETI China Corporate Caucus in China which provide forums for members to learn and share experiences.
We have an integrated ethical and technical audit team based in our Hong Kong office. The combination of these two roles enables us to provide our factories with feedback on compliance with our code of conduct. It also ensures consistency in auditing over time as our follow up audits tend to be conducted by the same person. Our process begins before an order is placed with a new supplier, at this time a member of our team will audit each factory to determine product quality, manufacturing processes, health and safety, treatment of workers and environmental conditions. During our ethical audits we meet with the factory management to discuss our findings and recommend necessary improvements. An action plan is agreed, with a specific timetable for completion. We then continue to visit the factory, to ensure compliance and provide support.
We audit all our direct source suppliers in Asia at least every two years. This year, the team carried out audits across China, India and in a number of other countries in Asia. Every two years we undertake an independent benchmarking process to ensure our ethical audits remain in line with industry best practice. Against the background of our audit programme, we continue to focus on engagement with key suppliers to support them as they seek to improve their performance. This engagement is currently focused on two projects, one looking at Occupational Health and Safety, and the other looking at Worker Representation. We have chosen these issues for two reasons: firstly, because they are regularly highlighted in our audits as areas where factories could improve their performance, but secondly, because improved performance in these two areas can also help factory management improve the overall commercial performance of their operation, providing a ‘win-win’ scenario which we hope will engage factory management more in the objectives of the projects. The Worker Representation project, for example, is being well received by our suppliers. Although the project seeks to address a challenging issue – the lack of formal worker representation in China – many factory managers are keen to get involved in the project, seeing it as an opportunity to improve staff morale and consequently improve staff retention rates in a competitive labour market. Our project toolkit, developed in consultation with the ETI, provides advice on how to set up a simple worker representative committee which can, in turn, give workers the feeling that they have a voice on issues which are important to them, for example, the type of food served in the canteen.
During the year, we held workshops for 20 suppliers as part of the Occupational Health and Safety and Worker Representative projects. We are now working with ten factories as they seek to make improvements and use the project toolkits, providing WHSmith with regular updates on progress. In the year ahead, we plan to run similar workshops for suppliers in northern China and broaden the scope of our engagement.