Complex supply chains pose a challenge
The beverage supply chain consists of a broad range ofoperators, including suppliers, bottling plants, producers and ingredient suppliers. The number of operators in the supply chain varies depending on the product in question. The main ingredients for wine are produced in vineyards, while the ingredients for beers and spirits often come from more complex sources. Some ingredients, such as molasses and sugar, are also purchased on international stock exchanges, which makes it difficult – if not impossible – to determine their origin.
Determining the origin of a product is the key to planning sustainability measures. We currently collect information about all of the products in our selection, right back to the production facility. Information about products from high-risk countries is traced all the way back to farms. Multi-tier and continually changing supply chains pose their own challenges for data collection. Our objective is that by 2030, we are be able to fully trace all of the products in our selection right back to their main ingredients.
Primary production involves the greatest risks
In 2020, Alko’s general selection contained products from 78 countries, of which 42 are risk countries. To identify risk countries, we use amfori BSCI’s listing, which is based on a list published by the World Bank. The high-risk areas identified in our supply chain are South Africa, Chile, Argentina and coastal Mediterranean regions. In addition to these areas, certain products involve high risk due to the conditions in which their ingredients are produced, such as sugarcane cultivation in the rum supply chain.
Risk countries are those in which shortcomings in social or environmental issues have been identified in beverage production. By "social risks", we mean negligence with respect to human rights. The most common forms of this in agriculture are shortcomings relating to safety or to seasonal harvesting and the occupational health of the seasonal workforce. These may involve inadequate induction, a lack of safety equipment or overtime that violates the legislation on working hours. The use of child labour or forced labour are examples of serious human rights violations.
Alko’s declaration of human rights
Alko is committed to respecting all internationally recognised human rights in all business operations.
Alko’s operations have both direct and indirect impacts on the human rights of our staff, our customers, and the people working in our supply chain. We engage our stakeholders in dialogue on human rights, and pay attention to them in everything we do.
We require our staff and partners to respect all internationally recognised human rights. We also encourage our partners to make continual improvements in their own operations in this respect.
President & CEO Leena Laitinen signed Alko’s declaration of human rights in December 2017.
Amfori BSCI provides tools for promoting ethical operations
Alko has been a member of amfori BSCI (Business Social Compliance Initiative), which promotes ethical international trade, since 2011. The organisation provides its members with information, tools and training to drive ethical operations in international trade.
We require all our beverage suppliers to complete amfori BSCI’s online training on its Code of Conduct and to commit to promoting the realisation of its principles in their own supply chain as well.
The Amfori Code of Conduct includes a total of 11 principles, of which four can be defined as zero tolerance issues: no child labour, no bonded labour, no violations of occupational health and safety that pose a direct risk to employee health or life, and no unethical business behaviour. If a zero tolerance violation is observed, steps to rectify the situation must be initiated immediately.
To ensure that operations in the supply chain comply with these principles, Alko commissions an independent third party to audit production facilities and farms in countries of origin. We report on the results of these audits in our Annual Report. Read our latest Annual Report.
Dialogue is the most important tool
Due to cultural differences and the multifaceted nature of supply chains, open and proactive discussion is the most important tool to achieve change. Beverage producers, goods suppliers and retailers alike must engage in cooperation to ensure that the beverage industry is responsible and takes both ethical perspectives and environmental impacts into consideration.
In addition to our own actions, we regularly organise events and training for parties in the supply chain in association with the other Nordic alcohol monopolies. For instance, in September 2019 we invited more than 100 actors in the rum supply chain to a seminar in Helsinki. This event aimed to raise awareness among these actors of the working conditions of sugarcane farm workers as well as critical concerns and their consequences, such as chronic kidney disease (CKD). Molasses from sugarcane are used in rum production.
Ethical certificates help ensure transparency
The ethical certification of products is a means to inform beverage producers of measures to promote human well-being in the product supply chain. There are many certificates and their requirements vary. Unfortunately, a symbol or certificate does not always guarantee that everything is in good shape in the supply chain, but they do enable more effective and visible communication about the work done to ensure that products are ethical. Read more about the ethically certified products in Alko’s selection.