20 September | Helen Gilbert
Vendors’ ethical standards pose the greatest supply chain risks, according to drinks giant Diageo.
Launching sustainable and ethical procurement targets to be met by 2011, Diageo said it aimed to ensure that 700 of its "potentially high risk suppliers" were assured through Sedex – the Supplier Ethical Data Exchange.
It is commissioning audits of 50 of the highest risk suppliers, as well as working with them to improve performance. The firm is also launching sustainable agriculture sourcing guidelines.
Diageo, which has a total procurement-managed spend of £3.5 billion, outlined the measures in its Corporate Citizenship Report 2010.
According to the report, Diageo’s highest-profile risks associated with its supply chain are those surrounding non-compliance with social and ethical standards.
“We have focused initially on establishing a structure to monitor these risks and work with suppliers to mitigate them,” the report said.
“However, we recognise that we need to make improvements across the whole scope of ‘sustainable procurement’, so we are extending our focus to the environmental risks associated with our supply chain as well.
“We aim to identify and commence working with the main suppliers who are responsible for the majority of our supply chain’s environmental impact, in order to improve their performance,” it said.