Sustainable supply chains
Neste drives a safe and healthy workplace, fair labor practices and increased commitment to sustainability across the supply chain. Our commitments to responsible and ethical business depend not only on our own people but also on forming relationships with business partners who share our commitments.
Identifying and selecting good partners are crucial to the sustainability of supply chains. We require all our suppliers and business partners to commit to the Neste Supplier Code of Conduct, with strict criteria on human and labor rights, occupational health and safety, climate, the environment and ethical business conduct.
To ensure our suppliers’ compliance with the Supplier Code of Conduct, Neste has implemented systematic controls for counterparty screening and monitoring, during which potential business partners undergo automated screening. Counterparties are screened for economic sanctions and similar compliance issues and selected ethical concern categories in third-party enforcement databases and major news outlet sources.
A key element in understanding the sustainability risks in our supply chains is assessing country risks. We use a bespoke, industry leading country risk assessment methodology from Verisk Maplecroft to identify countries or geographical areas in which we operate and have raw material supply chains with high sustainability risks.
We maintain an up-to-date country risk categorization based on country risk indices such as ethical business practices, human and labor rights, health and safety, and the environment. Our categorization also includes a list of no-go countries and regions based on considerations including trade sanctions, conflicts and sustainability risks. The country risk assessment allows us to effectively prioritize our activities by identifying the most significant sustainability risks in certain countries or geographical areas. Read more about how we integrate country risk assessments into our sustainability due diligence processes in Neste’s Sustainability Report.
Sustainability audits
Neste carries out audits to mitigate sustainability risks in the supply chains. When selecting suppliers to be audited, we pay special attention to suppliers, raw materials or countries with the highest sustainability risks.
Sustainability audits are one way of verifying that our suppliers comply with the Neste Supplier Code of Conduct. All the audits follow the requirements set in the Neste Sustainability Audit Standard, published in 2021. After the audit, we follow up cases of non-compliance and require our suppliers to remediate significant open issues within a specified timeframe.
The sustainability audits are conducted either by our own local sustainability specialists or a third-party auditor. Where possible, we also conduct audits on our suppliers’ suppliers (second-tier suppliers or even beyond).
In 2023, we conducted a total of 154 sustainability audits: 54 on renewable and recycled raw materials, 31 on terminals, and 69 contractor audits. The majority of the audit findings recorded in renewable raw material supplier audits in 2023 were related to health & safety.
Supplier engagement
Neste is committed to driving a safe and healthy workplace, fair labor practices and increased sustainability commitment across the supply chain.
We understand that due diligence processes and sustainability audits alone are insufficient for a positive impact in our value chain. We engage regularly in capacity building with our suppliers. The topics covered with our suppliers over the years have included the Neste Supplier Code of Conduct requirements, sustainability policy development, due diligence, traceability and grievance management. We are also committed to training our employees on our policies.
Engaging with raw material suppliers to mitigate fire safety risks
In 2021, Neste collaborated with a professional fire engineering company to perform comprehensive fire safety risk evaluations for two strategic suppliers of used cooking oil in China. Through this project, we effectively raised awareness among our suppliers and actively engaged with them to mitigate fire risks by providing practical guidance and recommendations. The insights gained from this project have later on played a significant role in the setting of best management practices and development of training materials for other renewable raw material suppliers of Neste. We have globally incorporated the outcomes and best management practices into comprehensive supplier capacity building training ensuring that the suppliers receive the most up-to-date and relevant information on fire safety management.
Engaging with PFAD suppliers
Neste participates in several collaborative efforts to advance positive social and environmental impacts in the palm sector. Neste is a member of the Palm Oil Collaboration Group (POCG) and has participated in its Social Issues Working Group (SIWG) since the initiative was launched in 2020. Neste is also a member of the Consumer Goods Forum (CGF) Forest Positive Coalition and Human Rights Coalition.
Since 2014, we have been organizing annual sustainability workshops for our palm oil and PFAD suppliers. The workshops have been designed with the primary objectives of fostering dialogue and raising awareness on pivotal topics, such as the human rights due diligence, traceability to the plantation (TTP), grievance management, and guidance on tackling scope 3 greenhouse gas emissions. In 2023, we have advanced our efforts to cover human rights due diligence and the requirements of the EU Regulation on deforestation-free products (EUDR), a topic of significant importance within the industry.
Read more about PFAD supplier sustainability workshops.
Supporting smallholders
Neste is supporting smallholders in the palm oil industry to further develop their sustainability awareness and expertise, as well as to improve traceability. In 2023, Neste was collaborating with its supplier to support a smallholder capacity building initiative in Indonesia. The program aims to provide comprehensive support to smallholders and agents buying from farmers to adopt sustainable agricultural practices and improve traceability to plantations in the supply chain. The series of capacity building and mentoring will teach smallholders to improve their cultivation methods and prepare them to register for the ISPO (Indonesian Sustainable Palm Oil) and RSPO (Roundtable on Sustainable Palm Oil) certifications.
Siak Pelalawan Landscape programme
Neste is one of the eight companies driving the sustainable palm oil landscape program in the Siak and Pelalawan districts in Indonesia, via the Siak Pelalawan Landscape Programme (SPLP). The SPLP is a collaborative initiative involving the private sector dedicated to supporting the Siak and Pelalawan district governments in progressing their agenda on the implementation of the Green Siak District Roadmap in Siak and the District Action Plan for Sustainable Palm Oil in Pelalawan. The work is implemented by Proforest and Daemeter, with close collaboration with the district governments as well as NGOs.
Through this collaborative effort at a landscape level, Neste aims to ensure a positive sustainability impact in the region by addressing environmental and social issues such as tackling deforestation, maintaining and enhancing key conservation areas, preventing exploitation, and improving smallholder livelihoods beyond palm oil production, also for multiple commodities such as rubber and pineapple.
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