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In this section, we look at two companies held in EdenTree portfolios that are taking direct action against two major supply chain issues. We look at how Carrefour are improving responsible agriculture, and at how TUI are fighting back against modern slavery.

Collaboration in Action

Jon Mowll Jon Mowll Responsible Investment Analyst
Edentree Insight reports

Supply Chains: At the heart of business

Jon Mowll

Responsible Investment Analyst
23 Oct 2020

Chapter 5

Collaboration in Action

A Collaborative Approach

All of the methods mentioned in the previous section of this insight are best applied in dynamic, collaborative and emergent systems. Collaborative approaches to dealing with environmental, social, ecological and/or ethical issues in supply chains often yield the most successful and longest-lasting results.

Collaboration means actors at some (ideally, all) stages of the supply chain working together with common goals. It also means involving communities, Non-Governmental Organisations (NGO), civil society groups, local and national governments, and shareholders in discussions. A key contributor to success in collaborative efforts to address challenges within supply chains is long-standing relationships with actors within different tiers. The following case studies provide two examples of companies, held in EdenTree Funds, which are working with partners to address environmental, social, and ultimately financial, reputational, and legal risks and impacts in their extended supply chains.

Carrefour, Farmers, and Biodiversity

Food retailers are highly dependent on healthy, functioning ecosystems and abundant biodiversity to maintain long-term security of food supply. Retailers, such as France’s Carrefour, need to work closely with supplier farms to ensure biodiversity is protected and enhanced, if they are to have robust and resilient supply chains.

Carrefour has long-standing relationships with many supplier farms in France, where it works with 1,700 farmers through specific partnerships as part of Carrefour Quality Lines (CQLs). Launched in 1992, CQLs are a range of mostly fresh products with short food processing lines over which Carrefour has very good visibility. CQL requirements include 10 key features of agroecology, including the minimization of GMOs, better protection of soils, lower fertilizer/pesticide use – practical things at farm level which can enhance biodiversity. There are also initiatives to set aside land between fields for plants favourable to pollinators.

To support farmers transitioning to organic farming methods, Carrefour provides technical support where necessary, and financial security through long-term commitments to offtake (volume) and price. The Paris-listed company is also providing direct financing to farmers who are transitioning to more sustainable agroecology and organic farming practices, designed in part to reduce negative impacts on wildlife, soil, and ecosystems.

CQL requirements include 10 key features of agroecology, including the minimization of GMOs, better protection of soils, lower fertilizer/pesticide use – practical things at farm level which can enhance biodiversity.

In addition to its own partnerships with farmers, Carrefour is working with other national brands in France to accelerate a ‘food transition’, to implement global projects in partnership. Five key priorities are identified within the transition strategy, one of which is biodiversity (enhancing biodiversity as well as limiting negative impacts).

Ultimately, the aim is to bring different stakeholders together across food supply chains to produce healthy food locally and sustainably, drawing down carbon from the atmosphere, restoring degraded ecosystems, and boosting local economies.

TUI Group and Tackling Modern Slavery

TUI Group, held in EdenTree Funds, is one of the largest tourism groups in the world.16 By dint of its sector and some of the regions in which it operates, it has a high risk of Modern Slavery in its supply chains (especially the supply of ‘labour’).

TUI’s approach to Modern Slavery follows the steps outlined in the supply chain management section above: mapping, risk identification, mitigation, auditing, remediation, and repetition. Its disclosures emphasise the importance of multi-stakeholder collaboration in tackling Modern Slavery in its accommodation and third-party labour supply chains.

In 2019, for instance, the Group joined a number of collaborative initiatives aimed at tackling Modern Slavery in the sector, including the World Travel & Tourism Council’s (WTTC) Human Trafficking Task Force and Orphanage Tourism Task Force. These were established to foster cooperation between tourism companies on the issues of trafficking and exploitation of children within the sector.

In addition to industry-wide collaborations with its peers, TUI’s work on Modern Slavery also highlights the need for strong relationships with suppliers and NGOs.

TUI’s 2020 Modern Slavery Statement gives an example of where an issue was uncovered, and TUI worked with various partners to remediate and try to prevent future occurrence. In 2019, a third-party hotel in Thailand was audited by Travelife (one of TUI’s partners) and was found to be discriminating against migrant workers; this included sub-standard staff accommodation compared to staff accommodation for Thai and other foreign employees, and different contracts and terms & conditions.

TUI reports that Travelife worked with the hotel to change their processes and provide evidence that they were complying with their standards in the key areas of concern. Once this process was complete, a senior auditor went to the property to verify that the steps the hotel promised to take were in fact implemented. As a result, the certification body was satisfied that the issues were addressed and that they received enough compliance evidence to certify the property.

TUI’s Modern Slavery disclosures are not typical of the hospitality and tourism industries, however. Most other companies in these industries are doing far less to address this systemic risk within their accommodation and other supply chains.