Supply chain management

Our direct upstream supply chain comprises (but is not limited to) purchasing of the raw materials and services required for glass production.For the approximate total of 5 billion glass containers that we manufacture each year, we procure around 895 000 metric tons of used glass, 440 000 metric tons of sand, 133 000 metric tons of soda, and 166 metric tons of colouring agents such as iron oxides. Synthetic production of soda is an intensive process in terms of greenhouse gas emissions, and the extraction of sand can negatively impact biodiversity if it is not sourced responsibly. In order to reduce the environmental impact of glass production, we utilise the highest possible share of good-quality cullet as a raw material for new products. Procurement of high-quality cullet is therefore critically important for us.

Overall, Vetropack works with around 324 strategic suppliers; all of them are based in Europe, and they supply our entire Group with the most important goods and services. Other relevant procurement items include machinery, plant and equipment, tools, and transport services.

By heeding internationally recognised standards as well as our own policies and guidelines, we ensure fair working conditions in our suppliers’ operations and minimise damage to the environment. Cases of human rights violations, precarious working conditions, or breaches of environmental laws in the supply chain would jeopardise our brand image and reputation. By guaranteeing the integrity and efficiency of our supply chain management, on the other hand, we reduce the risk of interruptions to the supply chain or to processes, and thus ultimately contribute to our customers’ satisfaction.

Concepts, policies and measures

Strategic supply chain management approach

Vetropack views the purchasing of raw materials and services as a crucially important factor in business success. Supply chain management is located at the highest level, with the Chief Supply Chain Officer as a member of the Management Board. One individual responsible for sustainability also works (part-time) in the Supply Chain Team. In collaboration with the Group Sustainability Manager, this person is responsible for multiple aspects including procurement of electricity from renewable energy sources, verification of compliance with due diligence obligations relating to conflict minerals and child labour, carrying out risk analyses, and for reviewing and updating our Procurement policy.

Cullet and energy procurement strategies

In order to produce glass, it is essential to procure energy and used glass. We set out the key strategic thrusts in our cullet procurement and energy procurement strategies.

Temperatures of around 1,600°C are required to produce glass packaging, so the energy demand is correspondingly high. Ensuring the supply of energy for all our production operations therefore has the highest priority. Our energy procurement strategy includes purchasing both renewable and non-renewable energy. We respond to the volatility of the energy market by planning strategically and calculating future energy costs. As an industrial enterprise with a very high level of power consumption, on-site production of solar power and investing in Power Purchase Agreements (PPAs) enable us to contribute to the availability of renewable energy. This growth in renewable electricity will help us cushion the volatility of the energy market. Guarantees of Origin (or GOs, as they are known) constitute another element of our energy procurement strategy.

As described in the Resources and Climate protection sections, used glass reduces the energy demand and therefore lowers CO₂ emissions arising from the manufacture of new glass products: for instance, a 10 percent addition of recycled glass achieves energy savings of around 2.5 percent and reduces carbon emissions by about 5 percent (source: FEVE). Accordingly, Vetropack has set itself the goal of manufacturing new glass products with an average used glass share of 70 percent by 2030. So that cullet can be used as a raw material for new glass packaging, however, it has to meet quality specifications.

Our cullet procurement strategy aims to ensure that we can always use sufficient cullet – compliant with the defined quality criteria – for new products. The strategy takes account of regulatory changes as well as trade and transport barriers for recycled glass, and it covers strategic partnerships. It includes the purchase of high-quality cullet at the best conditions, and also the company's own processing of cullet in our cullet treatment plants. Most of our sites have their own cullet treatment plants which must constantly improve their performance to increase our cullet share. For this reason, we inspect our plants regularly and invest in technical optimisations when needed. The greatest challenge is the procurement of high-quality white glass, because this colour does not tolerate any contamination by glass of other colours.

Requirements to be met by our suppliers

The core element of supply chain management is our Supplier code of conduct. This code describes Vetropack’s expectations of its suppliers regarding human rights and working conditions, ethics, safety, health, and environmental protection. The Supplier code of conduct is based on our corporate values of integrity, reliability and transparency, and it is an integral part of all collaboration with suppliers.

Signing the Supplier code of conduct is a non-negotiable prerequisite for working with Vetropack. New suppliers must accept and sign the Supplier code of conduct unless they can prove they have their own code of conduct which is at least equivalent to our own code. We revised our Supplier code of conduct in 2023, and then required all our active suppliers to sign it again. In the course of supplier audits, we verify compliance with our requirements arising from the code.

Determining sustainability risks from our suppliers

We undertake an annual risk analysis on child labour and conflict minerals in accordance with the requirements of Swiss law. Every three years, we also evaluate our 100 largest suppliers (according to purchasing volume) on the basis of a wide range of sustainability risks. Indicators for this purpose are the sector and the geographical region. We check whether the suppliers have certifications in place and, at the end of the process, we assign the suppliers to various risk categories. The risk analysis undertaken in 2023 showed that none of our suppliers falls into the category known as ‘high risk’. Classification in the ‘high risk’ category could lead to termination of collaboration with suppliers, following an in-depth investigation. At present, some 46 percent of assessed suppliers have an environment-relevant certification such as ISO 14001; 40 percent have a certification relating to the workplace environment, such as ISO 45001.

Human rights and due diligence obligations in the supply chain

We are aware that risks of human rights violations can arise in complex supply chains that span different industries and regions. Human rights are included in the risk assessments described above. Our direct upstream supply chain gives rise to a risk (assessed as moderate) of human rights violations by suppliers who provide us with soda, chemicals, sand, machines, packaging or moulds. Also, the supply chain risk assessment we performed in 2023 showed that some of our suppliers are located in countries with a moderate risk for human rights violations.

Several guidelines and policies ensure that human rights are respected in the supply chain. The Supplier code of conduct requires all suppliers to comply with the Universal Declaration of Human Rights and the fundamental principles of the International Labour Organization. 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. 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 respected in accordance with international requirements.

The Supply chain policy implemented jointly in 2023 by the Legal and Compliance Department and the Group Sustainability Manager defines the responsibilities and processes in connection with the requirements of the Swiss Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (DDTrO). Maintaining and managing a system that guarantees the traceability of the supply chain are central elements of this policy. Based on the policy, we carry out annual risk analyses in respect of child labour and conflict minerals. For the 2024 reporting year, it was determined that Vetropack is exempt from the reporting obligation regarding conflict minerals and child labour. You can find detailed information on the due diligence obligations regarding child labour and conflict minerals in the Notes to the report.

Sustainable procurement

In keeping with our Clearly sustainable strategic pillar, we also take account of sustainability aspects in our purchasing. Relevant standards and requirements are set out in our Procurement policy. The focus is on the following areas: human rights, working conditions, environmental protection, and fair business practices. The Procurement policy also regulates the integration of environmental clauses (such as certifications), and the reduction of greenhouse gas emissions. When we invest in new goods such as machines, we aim to minimise any negative impacts on the environment or employees by considering other aspects in addition to price: these include energy consumption, particle and pollutant emissions, or noise.

Progress and events in the reporting year

Performance indicators

In the year under review, 65 percent (2023: 80 percent) of our suppliers signed the Supplier code of conduct or use an own equivalent code.

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 19 supplier audits in 2024 (2023: 40), 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. This assessment was carried out in 2023.