In December 2019 Ethical Consumer searched the Lidl website for information on how it managed its supply chain and viewed its Code of Conduct (COC). Ethical Consumer also viewed a questionnaire response received from Lidl in March 2019.
Supply Chain Policy - reasonable
The COC contained adequate clauses on child and forced labour, discrimination and freedom of association, and for regular working hours it stated that they "must not exceed 48 hours per week. Overtime shall not exceed 12 hours per week". In terms of living wages it stated, "The aim is to pay wages and provide other benefits in order to cover the cost of living, should the legal minimum wage alone be insufficient." However, as it was unclear what Lidl meant by 'benefits in order to cover the cost of living', this was not considered to be an adequate clause on living wage. It also stated, "Every contracted Business Partner of Lidl agrees to implement these social standards in their own company organisation, to impose them also on their respective business partners". Overall its supply chain policy was considered reasonable.
Stakeholder engagement - rudimentary
Lidl’s questionnaire stated, ‘Lidl International is a member of the BSCI (Business Social Compliance Initiative) within the framework of the European Foreign Trade Association. Lidl UK is a member of Sedex and a Sedex Stakeholder Forum (SSF) participant. Ethical audits within our supply chain are completed against the Ethical Trade Initiative (ETI) Base Code in addition to local law. Other MSIs & collaborative networks include: Stronger Together (project sponsor), Spanish Ethical Trading Forum, Food Network for Ethical Trade (FNET), BRC Ethical Labour Working Group, Seafood Ethics Common Language Group.’
However, none of these were considered to be multi-stakeholder initiatives. Lidl was not a member of the ETI. No mention was found of engagement with Trade Unions, NGOs and/or not-for-profit organisations which could systematically verify the company's supply chain audits.
The company did have a number of complaints systems. These included an address to write to, a hotline and the "BKMS reporting tool". The latter was available in all languages, was free and available anonymously.
Stakeholder engagement overall was considered to be rudimentary.
Auditing and Reporting - poor
The questionnaire response stated, "Auditing requirements within our programme are risk-based and any Tier 1 production site for Lidl own-label suppliers deemed ‘high risk’ could be selected to complete a SMETA ethical audit"
"Sites beyond Tier 1 are risk assessed by Lidl UK and will be included in the scope of the ethical trade programme where deemed necessary. All sites rated ‘high risk’ will be re-assessed on an ongoing basis. Any non-compliances/non-conformances identified during the audit must be addressed by the site within the timeframes agreed at the closing meeting of the audit. The closure of the NCs must be managed via the Sedex platform (either through desktop review or follow-up audit) so that evidence of corrective actions taken can be shared with Lidl via Sedex and verified by the audit body."
Ethical Consumer expected that: Results of audits should publicly reported and quantitatively analysed. The company should have a scheduled and transparent audit plan that applies to their whole supply chain, including some second tier suppliers. The company should also have a staged policy for non-compliance. The costs of the audit should be borne by the company.
Lidl had a policy for non-compliance but did not appear to meet the other standards above. It did publish names, addresses and countries of the main production facilities for its own-brand textile and shoe range, updated every six months but not for the rest of its supply chain. Overall, its auditing and reporting was considered poor.
Difficult issues addressed - rudimentary
The questionnaire response stated: "All suppliers are expected to engage in a process of continuous improvement. If practical challenges are found in meeting certain expectations outlined in the Code of Conduct, suppliers are expected to demonstrate that they are making improvements towards meeting our standards. Lidl provided links to its approach to upholding human rights, aligned with the United Nations Guiding Principles on Business and Human Rights, and its Modern Slavery Statement.
Its April 2018 questionnaire response also stated "We appreciate the limitations of third-party auditing in promoting decent work and protection of rights in our supply chains, especially in relation to ‘hidden’ activities such as labour exploitation. We, therefore, place a strong emphasis on root cause analysis, ensuring we build strong long-lasting trading relationships with our suppliers and working collaboratively on industry initiatives." However, the company did not provide any evidence that it had long-term suppliers (e.g. statistics on the number of suppliers used for over five years).
Its website stated, that in its food supply chains it was involved in "capacity building through supplier engagement, delivering training to tackle modern slavery, and developing policies to focus on issues such as labour providers", and in textile supply chains "in Bangladesh, working in partnership with the German Association for International Cooperation (GIZ) to provide dedicated training programmes for production facilities to support compliance with international labour standards."
In 2018 Lidl UK had published a 'Responsible Recruitment in Supply Chains' policy, which its 1st tier suppliers were expected to apply to any labour providers used. Although this was a start, and Lidl reserved the right to audit compliance against this policy, it was not itself robustly monitoring its second, third, fourth tier etc. suppliers.
Overall its approach to difficult issues was considered rudimentary.
Given that Lidl's supply chain policy was considered reasonable, its approach to stakeholder engagement and difficult issues rudimentary and its approach to auditing and reporting poor, it received Ethical Consumer's middle rating for Supply Chain Management and lost half a mark un this category.
https://www.lidl.co.uk (22 January 2019)