A PURCHASING POLICY THAT LIVES UP TO OUR COMMITMENTS
The premium quality of the raw materials it sources is one of the keys underpinning the desirability of LVMH’s products and its responsibility framework. Since Scope 3 emissions account for 96% of the Group’s carbon footprint, the Purchasing Department and the Environmental Development Department are looking to build new, more sustainable supply chains. Specific actions are undertaken as part of the social program. The Group endeavors to ensure its suppliers and their service providers uphold human rights and to support them with applying the best possible employment, health, and safety conditions.
OVERSIGHT OF THE PURCHASING POLICY
The Group Purchasing Department and the Maisons’ purchasing teams have ultimate responsibility for quality, cost management and sourcing lead times. Their responsibility also extends to compliance by all the Group’s value chains with the Code of Conduct for Suppliers and Commercial Partners. This Code lays down the ethical and social and environmental responsibility requirements that LVMH sets for its partners, its suppliers and their subcontractors. One of the tasks of the Responsible Purchasing Committee, which is made up of Maisons’ purchasing managers and key strategic supply chain managers, is to monitor compliance with the Group’s environmental and human rights commitments.
IDENTIFYING RISKS AND MAKING PROGRESS TOGETHER
For some considerable time, LVMH has implemented an integrated supplier evaluation and support program fostering the common pursuit of excellence. Given the diversity of its activities and its global footprint, the Group adapts its approach to the individual situations it encounters. Its vigilance framework is based on the maps carried out by the Maisons and a global map. The risks analyzed reflect its commitments to human rights, environmental protection and the fight against corruption. Target Identify priority action areas and support suppliers in making continuous improvements to their practices.
LVMH has also made training for employees and its suppliers the linchpin of its responsible purchasing program. The program’s environmental aspects were expanded in December 2023, with the announcement of the LIFE 360 Business Partners plan. In addition, the Group also actively participates in sector initiatives for high-risk supply chains, such as the Colored Gemstones Working Group and Diamond Source Warranty Protocol and the Action for Sustainable Derivatives.
A PURCHASING PROCESS BASED ON THREE COMPLEMENTARY STAGES
With its Convergence program, LVMH aims to maintain tight control over its non-financial risks linked to its suppliers. It is based on a global map prepared in conjunction with Verisk Maplecroft. Suppliers are rated according to how critical they are. Those classified in the high-risk category on account of being mission-critical are assessed using the EcoVadis platform. The program also includes on-site audits.
Under this extensive analytical process with its three complementary stages, action plans are implemented with remedial measures when compliance breaches are identified. The goal is to support suppliers so they can make progress by adopting an approach aligned with their specific operational requirements.
To guarantee a harmonized approach Group-wide, the Maisons apply standardized audit frameworks. Certain Maisons also solicit anonymous or confidential feedback on working conditions from their suppliers’ employees so they can detect any breaches of employees’ fundamental rights.
To learn more, please refer to the Management Report section of the
“In 2023, LVMH launched its LIFE 360 Business Partners program. It had one simple goal: involve our suppliers and our partners more closely in achieving LIFE 360’s ambitious environmental commitments. It’s a top priority because our Scope 3 accounts for 96% of our carbon footprint. Since it depends on our upstream and downstream value chains, it’s much harder to control. That’s why we can’t go it alone. LIFE 360 Business Partners will enable the Group and its suppliers to adopt a more sophisticated approach to sustainability. Program initiatives will be formulated and assembled gradually, in tandem with the Environmental Development Department."
Mohamed Marfouk,
LVMH’s Operations Director
IMPROVING PRACTICES THROUGHOUT OUR ECOSYSTEM
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