Society and the environment in the value chain

5.4 Working with suppliers

5.4.1 Strategic suppliers approval assessment and monitoring

Our requirements and undertakings lead us to maintain strategic partnerships with suppliers of own-brand meat, fruit and vegetables. In 2005 we had 13 agreements on Eroski Natur meat products, which represented 70% of sales of this product type. In the case of fruit, 39 farms signed our Natur term sheets on farming practices and sensorial parameters, covering 48% of all the fruit and vegetables sold in our stores.

With regard to protecting the environment, in addition to controlling the environmental attributes of Eroski Natur products (see Chapter 4), environmental management also covers our supply chain through a programme of classifying suppliers based on the extent to which they implement an ISO 14001 or EMAS-compliant environmental management system. Under the "e+5" approach (www.emas5.com), 2005 saw the classifying of 39% own-brand suppliers, a figure which rose to 81% in 2006.

This approach also includes a comprehensive help and training dossier which we make available to our suppliers to help them to gradually progress to certification of their system.

We have a scoring system which we use to classify each supplier with a score that complements the e+5 classification and which is used as an indicator to monitor the level of compliance with the Management Plan.

Environmental performance of Own Brand product suppliers

	2005	2006
No. of e+5 evaluations made	147	241
% suppliers evaluated by e+5	39%	81%
Rating achieved	1,93	2,06
% of environmental improvement in suppliers evaluated	ND*	7%

* This indicator is not mentioned

Our requirements and undertakings lead us to maintain strategic partnerships with own-brand meat, fruit and vegetable suppliers.

2006 did not see the set goals achieved, the main reason being the low level of environmental management in the agro-food sector. To correct this situation, we have taken the following measures:

• The sending of e-mails and telephone conversations between the person responsible for the specific product and the own-brand supplier, to underline the importance for the Grupo Eroski group that all its suppliers are, at least, Level 2-compliant.
• The monitoring of improvement plans to increase their level of environmental management , a task that falls to those approving producers.

With regard to the social management of our supply chain, and under the supervision of the Ethics Committee, the SA8000 management system covers in the purchasing centre and high-risk products: textiles, toys, electronics and sundry. These are subject to an annual audit that guarantees compliance with ILO standards on respect for human rights in the workplace, controlling the absence of child and forced labour, remuneration, training, risks, freedom of association, working hours and non-discrimination.

Table 11. Ethical behaviour of Own Brand product suppliers

	2004	2005	2006
No. of evaluations made	40	50	54
% of suppliers evaluated	100%	100%	100%
No. of non-compliances	2	3	NA