“

My mission is to procure energy and raw materials so as to ensure that we can operate our melting furnaces with consistently high utilisation of capacities. For this purpose, we always work together with suppliers who act responsibly.

Stephen Rayment, Chief Supply Chain Officer

Sustainability

Supply chain management

Efficient and responsible supply chain management has gained enormous importance in recent years. We have reflected this in our strategy, our organisation and in the relevant guidelines, policies and measures. Our Supplier Code of Conduct, for example, guarantees that Vetropack’s values are respected in the supply chain and that suppliers operate with integrity. Our Supply Chain Policy helps to ensure compliance with relevant laws.

Review of due diligence obligations regarding conflict minerals and metals and child labour completed
Energy procurement and cullet procurement strategy
Supplier audits conducted
Sustainability risks assessed for the 100 most important suppliers
Efficiency analysis of the supply chain management system completed

The aim of our supply chain management is to make the entire supply chain efficient and effective so we can deliver our glass packaging to our customers on time, in the expected quality, and at reasonable cost. Supply chain management includes planning, controlling and optimising procurement, storage and transport. In these contexts, we aim to collaborate exclusively with suppliers who operate responsibly.

Vetropack procures around 900 000 metric tons of recycling glass (cullet), 475 000 metric tons of sand and 155 000 metric tons of soda to manufacture more than 5 billion glass containers each year. We also purchase machinery, equipment, tools and transport services for the production processes. Energy procurement is a factor of growing strategic importance for our production processes.

Responsibility at Group level

Supply chain management has been located at our company’s highest level since 2021, with the Chief Supply Chain Officer as a member of the Management Board. This highlights the strategic relevance of this activity for Vetropack's business success. Since the end of 2022, the team has also included one individual with responsibility for implementing sustainability aspects in the supply chain. In collaboration with the Group Sustainability Manager, this person is responsible for multiple aspects including procurement of electricity from renewable energy sources, due diligence reviews in respect of conflict minerals and child labour, drafting contractual clauses, carrying out risk analyses, supplier assessments according to ESG criteria, and review of the Procurement Policy.

Multi-supplier strategy

One core element of supply chain management at Vetropack is what we call the multi- supplier strategy. We adopt an approach that enables us to make use of multiple suppliers for important resources. This strategy guarantees our supply of raw materials and minimises the risk of interruptions to supplies and production. This approach may be more costly at the outset but in the long term, it leads to lower costs and greater stability in the supply chain. We measure progress in this context according to key internal performance indicators such as the number of active suppliers per category and the number of long-term contracts.

Human rights in the supply chain

We are aware that our upstream value chain can have potential impacts on human rights. It is therefore all the more important that we fulfil our corporate responsibility in the supply chain as well. This is why we have set out the principles of responsible supply chain management in our Supplier Code of Conduct. Our Supplier Code of Conduct is aligned to our corporate values of integrity, reliability and transparency. We also expect our suppliers to respect these core values.

The Supplier Code of Conduct requires all suppliers to comply with the Universal Declaration of Human Rights and the Fundamental Conventions (core conventions) of the International Labour Organisation. Our suppliers are required to ensure a safe, fair and non-discriminatory working environment, to prevent any form of child or forced labour, and to act with integrity at all times. Freedom of association and the right to collective bargaining must also be guaranteed. In addition to the Supplier Code of Conduct, our Procurement Policy also states that fair working conditions must be ensured and human rights must be observed in accordance with international requirements.

The Supplier Code of Conduct is a fixed component of all forms of collaboration with suppliers. Signing the Code is a formally binding legal obligation which ensures that all employees must adhere to the agreements. This is checked by supplier audits. New suppliers must accept and sign the Code unless they can prove that they have their own code of conduct which is at least equivalent to our own Code of Conduct. Read more about this in the Compliance section.

Due diligence obligations regarding child labour and conflict minerals

Vetropack has drafted and implemented a Supply Chain Policy on Conflict Minerals and Metals and a Supply Chain Policy on Child Labour These policies assign clear responsibilities and define processes for meeting the requirements in accordance with the Swiss Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (DDTrO). For the 2023 reporting year, it was determined that Vetropack is exempt from the reporting obligation regarding conflict minerals and child labour. Detailed information on due diligence with regard to child labour and conflict minerals can be found in the Notes to the report.

Guidelines, policies, supervisory and control instruments

Code of Conduct
Supplier Code of Conduct
Procurement Policy
Supply Chain Policy on Conflict Minerals and Metals
Supply Chain Policy on Child Labour
Vendor Self-Assessment
Sedex Members Ethical Trade Audit (SMETA)
Supply chain management approach with forecasts for warehousing and distribution

Progress and events in the reporting year

Energy procurement is a constant challenge

Ensuring the supply of energy for all our production operations has the highest priority for us. In 2023, we were again confronted with high energy prices and the challenges arising from the shortage of energy. Thanks to a new energy procurement strategy, our planning processes can be optimised and we are better able to forecast our energy costs. You can read more information about our strategy for purchasing renewable energy in the Climate protection section.

Cullet sourcing strategy updated

Producing new glass from sand and soda is a costly process because of the high energy it requires. Manufacturers who can meet their demand for glass from recycling glass will gain competitive edge, because using recycling glass as a starting material reduces the energy required. This is why Vetropack is targeting a recycled content of 70 percent by 2030. In order to achieve this goal, we made a start on revising our cullet procurement strategy during the year under review. As we do so, we are taking account of factors such as regulatory changes – or to be more specific, certain trade and transportation barriers for cullet. Expanding our own capacities for processing cullet is just one example of the ways we are addressing this challenge. You can read more about this in the section on Resources.

Risk analysis of 100 suppliers

Once every three years, Vetropack carries out a risk analysis of our 100 largest suppliers (according to volume purchased). We completed another risk assessment of this sort in 2023. Sustainability risks were determined according to each supplier’s sector, geographical region and individual commitment to sustainability (e.g. ISO certification). On this basis, the suppliers were allocated to various risk categories. No significant risks were identified in the analysis that was undertaken, i.e. all suppliers fall within the ‘low risk’ category.

Efficiency analysis in global supply chain management

Since 2021, the position of Chief Supply Chain Officer has existed at Management Board level in Vetropack. 2022 saw the implementation of a new approach to supply chain management extending from demand forecasts to sales to our customers. Based on this approach, we then carried out a comprehensive efficiency analysis of our supply chain management, its structure and the quality of the processes in 2023. This showed that Vetropack needs to achieve greater flexibility in its response to volatilities – which are currently present in procurement prices and demand. Development of a specific and practical action plan is scheduled for 2024.

Automated warehouse for finished goods and packaging materials

The Boffalora plant, opened in 2023, is equipped with a fully automated warehouse for finished products and packaging materials. As well as optimising logistics, this facility can process orders more efficiently than a conventional semi-automated warehouse, and it reduces work-related hazards. The new system enables full traceability of pallets and packaging materials in real time. An automated system checks whether returned pallets and liners can be re-used, so material is saved and waste is reduced in the long term. Thanks to automation, tasks can be distributed evenly and bottlenecks can be avoided.

Efficient logistics and Yard Management System

To improve logistics both internally and for our customers, we use software that allows our customers' forwarders to select time slots for collecting the ordered goods. This optimises the planning of driving routes and reduces waiting times for product collections. At Boffalora, we have also introduced a Yard Management System (YMS) for the first time. This ensures that forwarders are processed efficiently at our plants. Safety is increased because the forwarders are registered at reception when they arrive at the warehouses, and they have to complete a brief training course on how to behave on site. Thanks to the YMS, our products can be made available for collection at exactly the right time. We intend to roll out this process at other sites in the coming years.

Performance indicators

80% of our suppliers signed the Supplier Code of Conduct in 2023.

GRI 308-1 New suppliers that were screened using environmental criteria

GRI 414-1 New suppliers that were screened using social criteria

Vetropack carried out around 40 supplier audits in 2023, based on a standardised questionnaire that checks social and environmental criteria. There was a particular focus on new suppliers.

The risk assessment of our 100 most relevant suppliers showed that 37 suppliers have an environmental management system certified to ISO 14001, and 28 suppliers have an occupational safety management system certified to ISO 45001.

Compliance

Corporate Governance