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At Tate & Lyle we see no conflict between high ethical standards and successful business; we see the two as mutually reinforcing. Our priority is to ensure that the high standards of the Tate & Lyle Business Code of Conduct are applied throughout our businesses.
All employees are expected to be aware of and follow the Group's comprehensive policies on ethics and corporate social responsibility and these important policies are made available internally via the Company intranet. The Tate & Lyle Code of Conduct was revised in March 2008 as a summary of the basic policies by which we work to uphold our corporate values.
This Code is applicable both within the Group and with our wider commercial partners. Tate & Lyle believes that the greater the level of management control a company has over a set of operations, the greater its responsibility to ensure compliance with the Code, which applies unconditionally to all operating units and subsidiary companies that are wholly owned by Tate & Lyle PLC. The Group will also seek to apply the Code's principles in those operations in which the Group has a stake of 50% or more. For those operations where we have a minority interest, and for our suppliers and contractors, we will communicate our Code to them and actively encourage them to work rigorously towards adopting and implementing its principles.
Good, long-term relationships with our partners and suppliers are very important at Tate & Lyle. We have a consistent, Group-wide approach, based on our Code of Conduct, which covers purchasing strategies at global, regional and local levels. Supply chain ethics are important to us, and we are committed to sharing best practice and improving standards among suppliers.
Raw material suppliers
Growers and producers of corn and sugar cane, the raw materials we use to make our products, are our biggest suppliers, and we have developed long-standing and mutually beneficial relationships with them over many years. We apply rigorous standards to our raw materials suppliers, and survey many of them on their ethical commitment. We work closely with them to ensure compliance with our needs, implementing traceability and ensuring that our customers' requirements are fully met.
Sugar cane
Auditing the supply chain
We have introduced an auditing programme designed to evaluate the social, ethical and environmental performance of our suppliers and to identify any shortcomings. Where these are found, we will work with that supplier to encourage the necessary improvement. We do not purchase our raw sugar from farmers or sugar mills, but from contract parties, which are government organisations, co-operatives, etc. Auditing the contract party alone will not necessarily determine or improve conditions in the mills supplying sugar for our refining operations, or of the farmers themselves. We have therefore taken the decision to audit our second-tier suppliers with, at this stage, some random sampling of farmers included.
In order to ensure independence, we have contracted a third-party organisation, Cert ID, to run this auditing programme for us. Cert ID is a European certification body that undertakes social, ethical and environmental sustainability auditing against the internationally recognised ProTerra standard. In a rolling three-year period, the auditing programme will cover over 80 supplying mills in 18 countries, with annual repeat audits scheduled for those operations based in countries of particularly high risk.
Fairtrade
Reflecting our long-term commitment to our suppliers, in February 2008 we announced our decision to convert all UK retail cane sugar to Fairtrade by the end of 2009.
Our decision to move our entire range of UK retail cane sugars involved two years of planning and working in partnership with the Fairtrade Foundation to help cane farmers in Belize to meet Fairtrade standards. This involved working with over 6,000 smallholder farmers represented by the Belize Sugar Cane Farmers' Association, and with Belize Sugar Industries, the sole sugar processor in the country.
Over the years, these farming communities in Belize have been affected by higher input prices and changes in the EU market, not to mention natural disasters. Now, every time a customer buys a pack of Tate & Lyle Fairtrade cane sugar, the farmers will benefit from our commitment. In the first year alone, our move to Fairtrade will create an additional return of at least £2 million in premiums for these communities. This money will be invested collectively by farmers who decide democratically how to use it, overseen by an elected committee.
Better Sugarcane Initiative
We continue to support the Better Sugarcane Initiative (BSI), a multi-stakeholder collaboration, whose mission is to promote measurable improvements in the key environmental and social impacts of sugar cane production and primary processing. Our Technical Director, Sugars now chairs the BSI. Over the last year, the initiative has made good progress in establishing itself on a firm operational footing, including finalising its core principles and criteria, terms of reference for technical working groups and appointing the group leaders, gaining recognition within the UK and internationally, and recruiting new members and supporters.
Corn
We process around 2% of the US corn crop each year. The long-term relationships we have built over the years with the family-owned grain businesses, local farmers and other commercial partners who provide us with corn ensure we have the supplies we need for our corn wet mills.
Cane Sugar
Tate & Lyle produces over 1.3 million tonnes of cane sugar per year from our two refineries in Europe, and processes over a million tonnes of sugar cane at our factory in Vietnam. While our Vietnamese operation sources from local growers, our European business secures supply from African, Caribbean and Pacific countries and least-developed countries under the EU sugar regime. These suppliers have preferential access to the European sugar market under various agreements with the EU. Reform of the EU sugar regime and resulting price cuts are affecting the whole of the supply chain, including the growers. This means that maintaining strong working relationships with our suppliers is increasingly important to improve the profitability of the industry for all stakeholders and to ensure we can continue to source the cane sugar we need for our refineries.
The Board reviews corporate social responsibility annually. The Chief Executive is the Board member accountable for ethical conduct. Details of the Group's system of internal control, including its risk management and compliance procedures, are given in the statement on internal control on pages 34-36 and 66 of this year's Annual Report. As part of those procedures, each Tate & Lyle business is asked annually to confirm that the Group's Code of Conduct is being communicated to employees and business partners and to report on compliance.