Assessment of Risks and Audits

Audits of all critical and major suppliers are conducted by a Product Quality Manager against the Rentokil Initial Supplier Management Standard (re-issued in 2019), which specifies the required standards of product quality, regulatory compliance, factory management and delivery performance as well as adherence to environmental, social and governance standards. The audits start with two sections which focus on CSR and modern slavery, (a) within the factory concerned, and (b) through the supply chain into the factory.

Audit procedures include site inspections, interviews with management and employees, and subsequent corrective action plans for suppliers. Suppliers audited receive a Corrective Action Plan within two days of the audit and must return an initial response within two weeks. Updates on actions are requested at appropriate times, and photographs are requested to demonstrate actions taken or revisits are carried out.

Major and minor local suppliers are reviewed using an audit questionnaire and a site audit is carried out where potential issues are highlighted or the level of risk is perceived to be higher than normal. These local suppliers are audited by the Product Quality Manager in accordance with the Rentokil Initial Supplier Standard.

Pest Control and Hygiene Suppliers

Critical Suppliers are mostly medium-sized manufacturers producing bespoke equipment to internal specifications under the Initial and Rentokil brands. The manufacturers are based around the world as illustrated in the table below, and subject to a high level of audit scrutiny. The majority of these supply products for Hygiene (17), nine are dedicated to Pest Control, and eight supply to both categories.

Country of manufacture	Critical suppliers	Risk of modern slavery*	Supplier Audits
			2018	2019	2020 planned
UK	13	Low	6	5	8
Malaysia	2	High	1	0	2
France	1	Low	1	0	1
USA	2	Low	2	0	2
China	3	Med	2	0	2
Netherlands	4	Low	0	1	3
Spain	3	Low	1	2	0
Poland	2	Med	0	1	2
Belgium	1	Low	0	0	0
Germany	1	Low	0	0	1
Vietnam	1	High	0	0	0
Portugal	1	Low	0	0	0
Romania	1	Med	1	0	1
Slovakia	1	Med	1	1	0
Ireland	1	Low	0	1	0
Czechia	1	Med	1	0	0
Total Critical Suppliers	38	Critical audited	16	11	22
Other supplier audits			16	12	–
Total audits			32	23	22+

_{* Assessed using the Global Slavery Index 2018, based on estimated victims per 1,000 population.}

A total of 23 audits were carried out in 2019, of which 11 were Critical Suppliers. ‘Other Supplier Audits’ include potential new suppliers that do not meet the required standards.

In total, six major non-conformances were raised, covering design and capabilities prior to production, quality control, product testing, control of non-conforming materials and Health and Safety. These have all now been resolved. Of the 52 minor observations raised during these audits, two were in the section covering ‘CSR – Internal Controls’ and 12 in ‘CSR – Through the Supply Chain’. When addressing the companies highlighted with issues relating to responsible and sustainable business approach through the supply chain, firstly, the importance of checking all suppliers at all levels is stated, the current regulations and our questionnaire and approaches are shared. The suppliers are then monitored via a follow-up or second audit. The internal responsible business issues are addressed on a one by one basis.

Note: Major multinational companies who supply their own proprietary branded products for use within Rentokil Initial are assumed to be low-risk from a modern slavery perspective as they are major international companies with their own rigorous audit procedures. Examples include pest control chemicals from suppliers such as Bayer and BASF and batteries from suppliers such as Duracell and Panasonic. These products can be substituted with alternatives at short notice where required. They are audited if a potential issue is identified concerning responsible business standards, product quality or security of supply.

Audits of major local suppliers are carried out if any aspect of their operation is considered a medium or high risk, including product quality, delivery performance or compliance with our responsible and sustainable business approach.

Protect & Enhance Suppliers

Ambius Suppliers

There are three critical suppliers in this category, one of which is a supplier of ambient scenting products in the US from a factory which has been frequently audited in recent years and represents a very low risk in modern slavery terms. Our supplier of plant pots in the US sources from their own factory in China. They were audited in 2019 and a number of improvements were requested which have now been implemented and the supplier has been retained on a one-year audit cycle.

The majority of the plants in the Ambius business are sourced from local growers and distributors. Our main supplier for UK and Europe Ambius has committed to having all of their growers certified under GlobalGAP (Good Agricultural Practices) scheme. This certification will resolve poor visibility of working practices in the high risk regions where specialist plants are sourced from Asia and Latin America.

Initial Workwear (France) Suppliers

The Company’s French Workwear business specialises in the supply and maintenance of garments such as workwear and personal protective equipment. Most garments are supplied through Cawe, our in-house sourcing company based in Strasbourg.

Cawe has been certified to Fairtrade standards by the Max Havelaar and FLO CERT organisations since 2007, and is audited by external auditors every year to ensure that it guarantees producer and worker rights by banning child labour, slavery, and forced labour. Cawe also participates in the Fibre Citoyenne programme managed by Yamana, which ensures the sustainability of the textiles supply chain, including environmental aspects, social compliance, corporate governance and consumer security.

Audits of the Cawe sub-contractors are carried out by the Workwear Quality Manager, or by the Worldwide Ethic Alliance (WethicA), an independent third party. All of the major Cawe suppliers have been fully audited at least once and are visited at least once per year by the Workwear Quality Manager and Production Manager. Cawe is also a member of the OBSAR (Responsible Buyers Observatory). We participate actively in a working group in charge to specify the ESG indicators, related to the workwear industry, for the buyers to put in the tenders. The goal of the group is to provide a clear tool capable of calculating the ESG impact of a workwear from the raw material till the recycling process.

Other external suppliers to the French Workwear business have similar industry-specific accreditation from organisations such as Max Havelaar, Fairtrade and Yamana.

An area of procurement that remains a high risk is the purchase of flat linen (eg. tablecloths) from suppliers in Pakistan, Bangladesh and India for hotels and restaurants in France. Following various divestments, this now represents 0.25% of total direct spend of the Group. We only work with suppliers who have global responsible business accreditations such as the Business Social Compliance Initiative and/or have been audited and passed by WethicA.

Areas of Non-compliance and Corrective Actions in 2019

Following the two areas of non-compliance in Malaysia and China that were uncovered in 2018 during audits and successfully resolved, and reported in last year’s report, there were two further issues discovered in 2019.

A supplier of aerosols to the Asian market had been withholding the passports of their migrant workers. This was picked up by our Regional Product Quality Manager in Singapore during an audit of their factory site. Following extensive discussions to help them understand the issue and its importance to Rentokil Initial, they have now returned the passports, with great fanfare and publicity on their website.

An audit of a supplier of plant pots for our Ambius business revealed poor working conditions, with a number of non-compliances including; not all staff were aware of the unions and their function, limited first aid facilities, limited checks on suppliers with respect to our responsible and sustainable business approach, all of the staff were not covered by social insurance and there were concerns raised on the amount of overtime being worked. A follow up meeting was held to close out most of the issues, with a meeting arranged for March 2020 to address the outstanding issues including the review of contract and further improvement to the current staffing facilities.