Note 7: Responsible procurement

Mural of healthcare workers in front of a hospital in Bolivia (photo)

Our Coral paint brand was used to create a mural in front of a hospital in Bolivia to honor all the personnel who have been on the front line in the fight against COVID-19. Initiated by Citizens Volunteers in Action, the artwork is called Guardians of Life and was painted at the Viedma Hospital in Cochabamba.

We continue to support our suppliers’ pursuit of continuous improvement and operational excellence.

We work together closely to identify and minimize supply chain risks, creating value through continuous improvement and collaboration opportunities for a sustainable supply.

Business Partner Code of Conduct

Our business partners are expected to follow our core values of safety, integrity and sustainability, as specified by our . Suppliers sign the code to confirm their compliance with environmental, social, human rights and governance requirements. Signatories cover 98% of the product related (PR) spend and 89% of the non-product related (NPR) spend.

Supplier risk management

We’ve continued to assess and improve our suppliers’ sustainability practices using programs provided by Together for Sustainability (TfS), of which we have been an active member since 2013.

In 2019, we extended the scope of our multi-year supplier sustainability risk program by lowering our spend threshold to €250,000 and including country and industry risk. In 2020, we increased the number of suppliers participating in the program to 75%, and those meeting our expectation to 51%. These increases were achieved by performing 166 initial or reassessments. To meet our expectations, suppliers have to reach an EcoVadis total assessment score of 45 and a labor and human rights sub-scheme score of 50. Together with EcoVadis, we organized online trainings to help suppliers improve, with 107 attending across all regions.

Suppliers in sustainability program

in %

Suppliers in sustainability program (bar chart)

Baseline of 885 suppliers (2019: 982). Reduction of baseline due to supplier consolidation and improvement of our risk criteria.

Most of our developmental suppliers are small or medium sized companies based in risk regions. They typically require multiple assessments to reach the target score. Suppliers who are in line with expectations must also renew their assessment at least every three years, which explains why continuous improvements can only be achieved in gradual steps.

To complement the EcoVadis online assessment, we continue to carry out TfS audits on suppliers located in risk regions. In 2020, we optimized the TfS audit program and set up a dedicated cross-regional team to monitor the progress of corrective actions. This enabled us to close more than 60% of the previous year’s major audit findings at our suppliers.

Main areas for improvement from the 2019 audits include emergency preparedness, process safety and storage, and occupational health and safety. Suppliers have applied simple and practical steps to help create a safer work environment for people in the supply chain, such as installing additional fire exit doors, improving the availability and accessibility of firefighting equipment and making evacuation signs more visible.

Supplier performance management

In 2020, we adjusted and aligned our existing Supplier Sustainability Balanced Scorecard (SSBS) with our People. Planet. Paint. approach. This will help ensure our suppliers are heading in the same direction to reduce their carbon emissions and move towards a . We’ve also asked our top 20 suppliers to share their ambitions on reducing , waste and energy, and moving towards renewable electricity and a circular economy. Every year, we assess their achievements against these ambitions and score them accordingly. The SSBS results are part of our supplier performance management process.

Capability building

Building on our internal corporate social responsibility training for our buyers, we organized a global training on human rights with 112 buyers in 2020. The goal was to explain the United Nations Guiding Principles on Business and Human Rights and how to ensure that our business partners respect human rights in their value chains.

Business Partner Code of Conduct

Explains what we stand for as a company, what we value and how we run our business. It brings our core values of safety, integrity and sustainability to life and shows what they mean in practice.

Circular economy

An economic system which is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.

Greenhouse gases

Greenhouse gases include CO2, CO, CH4, N2O and HFCs, which have a global warming impact. We also include the impact of VOCs in our targets.