Responsible and ethical sourcing

HKScan operates openly and maintains the principles of sustainability throughout its supply chain. A well-managed supply chain ensures streamlined, smoothly running cooperation between operators, from the procurement of raw materials and services all the way to the consumer’s shopping basket. Transparent, efficient and responsible sourcing is one of the cornerstones of corporate responsibility at HKScan and a result of systematic long-term work. The meat raw material we use for our products is always traceable.

Sourcing at HKScan is guided by the company’s internal purchase policy, with the Head of Sourcing being responsible for sourcing operations. The company’s suppliers of goods and services are required to sign and comply with its Supplier Guidelines. Sourcing management is also guided by the results of ISO 9001 and ISO 14001 audits.

Animal sourcing at HKScan is guided by the company’s animal purchase policy, which provides guidelines for business practices to be followed with animal producers, among other aspects. The policy also determines internal areas of responsibility related to animal sourcing. The person in charge is the Executive Vice President of Animal Sourcing and Primary Production. 

The management and responsibility of sourcing are monitored internally. Suppliers are also monitored through audits. Cooperation between HKScan and suppliers is developed at joint meetings that are held to assess operational sustainability, such as environmental effects, and to prepare action plans for further improvement. The sourcing team at HKScan collaborates closely with the Group’s quality and corporate responsibility teams.

Local meat production

In its production, HKScan uses mainly locally sourced meat from its long-term contract producers or own farms. All products sold under the HK®, Kariniemen® and Scan® brands are made from domestic meat, with the animals having been slaughtered at HKScan’s slaughterhouses. HKScan cooperates closely with producers: for example, the company provides its contract producers with advisory services related to animal feeding, animal welfare, the design of farm buildings and facilities as well as the development of business competitiveness and profitability.

HKScan acquires nearly 100 per cent of its live animals from local markets, and all animals are acquired in line with the Group’s animal purchase policy. The origin of the meat and the growing conditions of the animals are always known.

The success and productivity of animal sourcing is monitored by means of internal indicators to ensure the continuity and vitality of the local animal production. The achievement of strategic targets and the related indicators are also monitored.

Example

In January 2017, HKScan opened its exports to Asia by the launch of Omega 3 pork at retail stores in Hongkong (Read more in Finnish through this link). 

Sustainability assessment of the supply chain

The food industry uses large amounts of meat and other raw materials, as well as energy, water, packaging materials and various services. The sourcing function has a significant effect on the Group’s sustainability, costs and efficiency. 

HKScan purchases also a majority of other raw materials, products and services from its local home markets. These local purchases represent approximately 70 per cent of the Group’s total sourcing spend.

Suppliers are assessed with regard to criteria related to product safety, quality, the environment, operating methods and each procurement process. HKScan has a supplier assessment process in place to ensure that the company receives sufficient information about the raw materials, products and services that it purchases. HKScan has categorised its suppliers according to the product or service it purchases, and the suppliers are required to have the relevant certificates to ensure quality. These certificates are checked annually. In addition, HKScan has audited all of the suppliers it has classified in a risk category based on the raw material or material it purchases.

The supplier assessment process also includes the evaluation of suppliers whose operations involve ethical risks. HKScan uses the Business Social Compliance Initiative's (BSCI) risk country classification and has a specific process for assessing products coming from risk countries. The goal is to avoid risks related to ethical principles and human rights in HKScan’s supply chain. 

HKScan aims to include its Supplier Guidelines in all of its supplier contracts by 2020.  In 2017, suppliers committed to complying with HKScan’s ethical principles and purchasing practices represented 65 per cent of the cost of services, goods and raw materials acquired by HKScan. This proportion will increase as the contracts are updated.

HKScan uses meat purchased from outside its home markets to supplement its offering in product categories in which domestic meat is not sufficiently available. Imported meat represents around one per cent of the Group’s total meat volume used. The origin and quality of imported meat are also monitored closely, and all of the related slaughterhouses are audited to ensure compliance with the quality requirements.

Responsible sourcing of soy and palm oil

The production of soy and palm oil may have significant environmental and social effects locally. As one of the largest meat producers in Northern Europe, HKScan is committed to using responsibly produced raw materials. To ensure the sustainability of soy and palm oil, we are a member of the Round Table on Responsible Soy (RTRS) and the Roundtable on Sustainable Palm Oil (RSPO).

Soy is used in animal feed because of its good protein content. In HKScan’s home markets, animal feed contains 0–20 per cent soy, depending on the nutritional needs of the animals. Most of the feed is grown locally, and many farms use food industry side streams in animal feed.

HKScan announced in 2014 that, by the end of 2018, it would only use responsibly produced certified soy in its meat value chain. This goal was achieved in Sweden in 2015 and in Finland in 2017. In Denmark, responsibly produced soy represented 25 per cent of the soy used by HKScan in 2017. Estonia will reach the goal in 2018.

The use of soy in chicken feed has been reduced by replacing soy with high-protein fodder plants growing in northern conditions. Side streams of the food industry, such as barley protein feed and mash from the ethanol and starch industry, are increasingly used in pig feed, as are local sources of protein, such as legumes and rapeseed. HKScan continuously cooperates with its feed partners and promotes the use of new domestic sources of protein in feed.

In 2017, HKScan’s indirect soy footprint (animal feed) was 149 000 tonnes, and its direct soy footprint (products) was 0.6 tonnes. Read more from our Fact Sheet

HKScan only uses small amounts of palm oil in its production. However, it is important for the company to ensure that all of this oil is responsibly produced. HKScan is an affiliate member of the Roundtable on Sustainable Palm Oil (RSPO). During 2016, the company and its suppliers examined the amounts and certification level of the palm oil used in its products. The goal is to only use RSPO-certified palm oil or replace palm oil with other oils, such as rapeseed oil, as far as possible. This issue was further examined in 2017.

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