Critical anchors

Ethical sourcing and preferential procurement (see here) are core principles of our commercial processes and are subject to continuous improvement as we refine our supply chains. We strive for integrity and responsibility in all sourcing, procurement and supplier engagements, continually strengthening our management processes by participating in industry forums and building strong relationships with suppliers and potential partners.

Our ethical sourcing policy, approved by the board in 2018, reflects our commitment to working with suppliers to strengthen sustainable sourcing through sound governance. This policy outlines the responsibilities of both our staff and suppliers to mitigate supply chain risks and build consumer and stakeholder trust. It aligns with our code of conduct and other ethics-related policies, clearly defining the key ethical principles we adhere to, including human rights, labour practices, preferential procurement and environmental protection. The policy is publicly available at www.tigerbrands.com.

While ethical and sustainable sourcing is important to us, we do not yet implement it in a way that generates clear performance data. We are selective about our partners and scrutinise them carefully, but our current system lacks robust checks and follow-up processes. Our procurement, ethical sourcing and supplier engagement processes remain largely manual. However, we have begun transitioning to a centralised digital procurement system to strengthen supplier assurance and auditing processes. The first phase of this project, covering the source-to-contract process, has been completed.

We procure the majority of our agricultural commodities in bulk through local and international buyers, cleaners or aggregators who act as intermediaries between Tiger Brands and farmers. Palm oil and cocoa (both liquor and butter) are key ingredients for our chocolate business and are sourced internationally. For these commodities, deforestation, biodiversity loss and peatland use are significant environmental concerns. These challenges, alongside broader global supply disruptions, including extreme weather events, conflicts and supply chain instability, have created unprecedented pressures on our agricultural supply chains.

As a result, we have prioritised securing supply, even at higher costs. This strategy, however, raises concerns about long-term sustainability as climate change impacts continue to escalate. Progress in ethical sourcing and preferential procurement (see here) has been challenging in this context, where supply security remains our top priority.

Internal procurement challenges have also emerged, including fraud risks and recruitment difficulties. Fortunately, all key vacancies in the procurement team have been filled, and we are addressing fraud risks through our ethical behaviour initiatives (see here), which support the necessary cultural shift across the organisation.

We recently decentralised our procurement function to improve agility, creating structures within individual businesses while maintaining a central procurement unit for sourcing materials and services across multiple entities and driving best practices. The digitalisation of procurement is underway, with phase 1, covering the source-to-contract process, completed. Phase 2, which will cover the procure-to-pay process, is planned for the next financial year.

We are developing a more comprehensive supplier assurance process to better integrate the requirements of our ethical sourcing policy, as part of our transition to a centralised digital procurement system. Our digital procurement platform will facilitate improved supplier interactions, including regular self-assessment questionnaires, surveys and unannounced independent audits of randomly selected suppliers, focusing on compliance with the Financial Intelligence Centre Act (FICA).

Currently, our supplier assurance process includes an onboarding self-assessment questionnaire covering labour practices, conflicts of interest, and basic health and safety. In recent years, we have strengthened due diligence processes for food safety and quality (see here), and fraud risk (see here), integrating these into our risk management and internal auditing processes for both our own operations and those of our suppliers. At present, formal supplier audits are limited to food safety and quality, but we plan to expand these to cover human rights and environmental aspects.

Our engagement with suppliers on biodiversity loss and land-use change, as well as human rights, modern slavery and child labour, is limited to our intermediary suppliers' sourcing and certification processes and does not extend to primary producers or farmers. To mitigate risks related to deforestation, biodiversity loss and peatland use in our palm oil and cocoa sourcing, we require our intermediary suppliers to hold sustainability certifications. This provides some assurance that our palm oil and cocoa supply chains align with sustainable production standards.

We regularly engage with our suppliers on their sustainability certifications and practices, particularly for palm oil and cocoa. Our preferred cocoa and palm oil suppliers have programmes aimed at lifting farmers out of poverty, eradicating child labour, achieving carbon and forest-positive outcomes, and sourcing sustainable ingredients. These suppliers are members of the International Cocoa Organization (ICCO), Fairtrade and the Supplier Ethical Data Exchange (Sedex) and are regularly audited by these bodies to ensure compliance.

Our ethical sourcing declaration process is currently on hold due to the ongoing digital transition of our procurement operations. We plan to resume this process after 2024, using supplier questionnaires on our digital portal.