Due diligence

As a family-owned business, Royal A-ware is committed to safeguarding the needs of future generations by fostering long-term relationships. We build enduring partnerships with our dairy farmers, suppliers, and customers, ensuring sustainable and customised solutions that align with their needs, including those related to sustainability.

To uphold responsible business practices, we have established a robust due diligence framework designed to mitigate environmental and human rights risks throughout our value chains. We are committed to implementing the due diligence process in accordance with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, the United Nations Guiding Principles on Business and Human Rights, and the International Labour Organisation (ILO) conventions on labour rights and social issues.

The scope of our due diligence policy applies to Royal A-ware and extends across its entire global value chain, covering both upstream and downstream operations.

Why is this important to us?

We aim not only for broad sustainability in our operations, but also in the value chain in which we operate. We seek to understand the origin of our raw materials and the conditions under which they were extracted or produced. The aim is to prevent, stop or reduce negative environmental and human rights impacts in our value chains.

What are the risks and opportunities?

Opportunities

• A transparent and honest attitude contributes to long-term collaborations with our customers, dairy farmers, suppliers and other partners.

• Complaints mechanisms (internal, external, whistleblower scheme) help to identify and follow up on possible abuses in a timely manner.

Risks

• Employees within our upstream and downstream value chain may be materially impacted by our operations (excluding our own employees). Material impact is to be expected for workers involved in producing raw materials that we purchase (upstream). For employees active in links downstream, no material impact is expected. Consumers in the downstream chain are also outside the scope because quality systems provide that we supply food-safe products.

• The IMVO Food Covenant identified 12 raw materials that have an increased risk in production related to human rights (such as child labour, forced or compulsory labour), health, worker safety and the environment. Of these, Royal A-ware uses eight raw materials: cocoa, coconut, palm, cane sugar, rice, soy, spices and citrus. These raw materials are sourced globally. Therefore, we have identified raw material supply chains that may pose human rights or environmental risks. No such IMVO Covenant exists for the transport sector.

• We are not aware of child labour in our own operations. Child labour is also not widespread in the chains where we operate. As mentioned above, child labour can occur in our upstream value chain, especially when sourcing high-risk raw materials as stipulated in the iMVO food covenant.

• Our risk analyses on the above high-risk raw materials show that Royal A-ware has a potentially negative impact on child labour and/or forced labour. We only work with suppliers who sign our Code of Conduct for Suppliers, which stipulates, among other things, that child labour and forced labour are not allowed. An example of how Royal A-ware is increasing its positive impact on this issue: our Dutch and Belgian dairy farmers are required to use only RTRS soy or equivalent in their feed. RTRS soy has been grown in an environmentally friendly way. It also protects and promotes human rights, such as working conditions, respect for indigenous people and support for local communities.

Approach and policy

Our due diligence policy outlines our approach to preventing, mitigating, and eliminating human rights and environmental risks within our value chains. This approach is structured around the six-step due diligence framework established by the OECD Guidelines (see figure below).

In addition, we align our policy with the United Nations Guiding Principles on Business and Human Rights and the International Labour Organisation (ILO) conventions on labour rights and social issues. We outline the planned and ongoing measures implemented to address material risks and describe the mechanisms used to monitor and evaluate their effectiveness.

Step 1: Due diligence - integrate into policy and management systems

Royal A-ware is dedicated to implementing a comprehensive due diligence process in alignment with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, the United Nations Guiding Principles on Business and Human Rights, and the International Labour Organisation (ILO) Conventions on labour rights and social issues.

Human trafficking, forced labour and child labour

Our due diligence policy, which includes the Code of Conduct for Employees, explicitly addresses the prevention of human trafficking, forced or compulsory labour, and child labour. This policy outlines our approach to identifying, mitigating, and eliminating human rights and environmental risks within our organisation and value chains. Our approach follows the six-step due diligence framework established by the OECD Guidelines, which provides a structured methodology to prevent, address, and mitigate negative impacts across our value chains.

Our commitment extends to both our own employees and those within our value chain, ensuring the implementation of explicit preventive measures against human trafficking, forced labour, and child labour. We enforce strict internal controls to maintain compliance, with zero tolerance for any form of exploitation. Additionally, we actively monitor compliance with these principles across all operations to uphold our ethical and legal responsibilities.

Responsibilities

• The Management Board is responsible for the overall oversight of due diligence impacts, risks, and opportunities, including strategic commitments and target setting.

• The Management Board has delegated the implementation of the due diligence strategy to dedicated due diligence coordinators.

• Effectiveness of the policy is periodically reviewed through consultations between due diligence coordinators to assess and refine ongoing measures.

• The Management Board receives an annual briefing on due diligence from the Director of Public Affairs, ESG, and Corporate Communication, as part of the broader sustainability agenda update.

• The Procurement and Legal Departments play a key role in implementing the due diligence policy, including monitoring supplier compliance with the Code of Conduct for Suppliers. Over time, additional resources may be required to conduct risk assessments and enhance supplier compliance monitoring.

• A dedicated working group meets at least twice a year to oversee the development and implementation of the due diligence policy and ensure its effective execution.

Step 2: Identify and address risks

The due diligence approach is risk-based, meaning that the most serious risks are addressed first. With a diverse product and service portfolio, it is necessary to prioritise risks based on scope, scale and irreparability. 

For our risk analysis, we use public data such as International Labour Organisation (ILO) reports, independent NGO assessments, industry benchmarks and the Amfori BSCI risk rating system. This public data helps us identify potential risks early, laying the groundwork for more detailed research. While publicly available information provides a solid foundation, it is essential that we also work directly with our suppliers. This will give us a clearer picture of their activities and allow us to better assess whether these risks also play a role in their supply chains. Based on the outcome of risk assessments, we take action to manage identified risks.

Employees within our upstream and downstream value chain may be materially impacted by our activities. Risks have been identified through the above risk analyses. This analysis shows that children and women (partly from an equal pay for equal work perspective) are at higher risk. 

Dairy operations

2024-2025: Following the prioritisation from the Dutch Food Sector IMVO Covenant, we will address supply chain risks related to soy, palm oil, cocoa, cashew nuts, coconut, citrus, hazelnuts, cane sugar, rice and spices.

2026-2027: We will expand our focus on other food ingredients, conduct a risk assessment for our key supply chains and include packaging materials in our evaluation.

From 2028: We will broaden our scope to non-food products and categories other than packaging materials.

Transport operations

We have identified supply chains of raw materials and ingredients that may pose human rights or environmental risks. Examples include tyres (rubber, soot), batteries (cobalt and lithium) and fossil fuels. Between 2024 and 2027, we will engage with suppliers on these risks.

Step 3: Address risks

We take active steps to prevent, reduce and address identified risks in our supply chain. Depending on the type of risk, our relationship with the supplier and customer requirements, we apply different measures to ensure responsible practices.

Direct engagement with suppliers

Before working with a new supplier for our dairy operations, our quality department gathers information to assess the supplier's commitment to sustainable practices. We do this through a supplier questionnaire with key sustainability topics. Developed with input from our coordinators and the ESG team, the questionnaire ensures that we directly consider human rights and environmental risks.

Sustainability, human rights and environmental issues are important topics in discussions with our suppliers. This way, we remain transparent and promote continuous improvement in our shared supply chains. For suppliers in high-risk areas, we take additional steps to ensure compliance. These include, for example, frequent audits or stricter contractual obligations. We may also temporarily restrict or eventually terminate collaboration with suppliers unless they demonstrably improve their practices.

Code of Conduct for Suppliers

Our Code of Conduct for Suppliers is an essential tool for managing sustainability risks. This contains our ethical standards on human rights and environmental protection, based on international principles such as those of the International Labour Organisation (ILO). All suppliers (with annual turnover over 100K) are required to sign the Code of Conduct for Suppliers and complete the Supplier Questionnaire once every three years. This not only serves as a legal agreement but also guides our discussions on responsible business practices. The Code of Conduct for Suppliers states, among other things:

• Suppliers have procedures for making their operations more sustainable and reducing the impact of their activities on the earth, including reducing waste and reducing their carbon footprint. Suppliers comply with environmental regulations and rules, and will always try to prevent damage to the environment and surroundings.

• Suppliers shall ensure a safe working environment and take adequate precautions to prevent accidents and damage to health.

• Suppliers qualify discrimination, harassment, aggression, physical and psychological violence or behaviour involving coercion or exploitation as undesirable and do not tolerate it. Suppliers have a protocol to prevent undesirable behaviour including a complaints procedure.

• Suppliers adopt a fair remuneration policy, with fair remuneration as the starting point.

• Suppliers comply with legislation on working hours and observe the maximum number of working hours. Employees are compensated for overtime.

• The right to freedom of association and collective bargaining of employees is respected by suppliers.

Our due diligence coordinators ensure that signed codes of conduct are documented and that no business is done with suppliers who have not subscribed to these standards. If we suspect or confirm a violation of the Code of Conduct for Suppliers, the procurement department engages with the supplier to draw up an improvement plan. If a supplier is unwilling or unable to comply, we may terminate the collaboration. With the Code of Conduct for Suppliers, we minimise the likelihood of our procurement activities having a negative impact on employees in the value chain or the environment.

Collaboration with industry initiatives

In some cases, addressing risks requires collective action. For risks beyond our direct control, we collaborate (where possible) with other industry stakeholders by participating in multi- stakeholder initiatives. These collaborations help us address human rights and environmental issues more effectively, especially in areas where our influence is limited. An example of such an initiative whose agreements we follow up on is the Round Table on Responsible Soy (RTRS), an international partnership that, among other things, combats deforestation by certifying soy production.

Use of certified materials

Sourcing certified sustainable raw materials is one of the ways we manage sustainability risks in our supply chain. An example is the procurement of certified cardboard through programmes such as FSC.

Targeted sustainability projects

In cases where a specific sustainability risk needs to be addressed, we work closely with a limited number of suppliers and other partners in the value chain. These specific projects allow us to take a more targeted approach to addressing issues in areas where we have strong relationships with suppliers and where other stakeholders are also invested in the solution.

Supplier questionnaire

As part of the risk assessment process within our dairy operations, we use a supplier questionnaire. This questionnaire is designed to gather specific information about a supplier's policies, practices and obligations. We ensure that the accuracy of the information provided is verified, for example through independent audits, certifications or additional documentation.

Raw materials in the IMVO Covenant

As part of its due diligence policy, Royal A-ware has also developed an approach for raw materials included in the IMVO Food Covenant (see Risks). To manage human rights and environmental risks in the chains, we include social and environmental criteria when selecting suppliers.

When a raw material is sourced, no direct consultation with workers in the value chain takes place. The interests of workers in the value chain are identified as part of the risk analysis made when sourcing a high-risk raw material (as defined in the IMVO Food Covenant). Based partly on desk research, we include the interests of workers in the value chain. The risk analysis is updated annually. 

Step 4: Implementation and results

Monitoring policy effectiveness

Monitoring the effectiveness of our due diligence approach is essential for OECD compliance. The following mechanisms are important for monitoring implementation and results.

• Supplier feedback: We collect direct input from our suppliers, as they have a better understanding of their operations and supply chains. During consultations and site visits, we discuss sustainability risks and - where necessary - develop solutions together. This is especially important for suppliers in high-risk regions or dealing with high-risk ingredients.

• External insights: To keep abreast of evolving risks, we monitor reports and developments from NGOs, industry initiatives and relevant organisations such as the Federation of the Dutch Food Industry (FNLI) and the Dutch Transport and Logistics Association (TLN). This external input is integral in shaping our approach to due diligence.

• Complaints mechanisms: Our complaints mechanisms, open to all stakeholders, is an important tool in monitoring the effectiveness of due diligence.

These mechanisms ensure that our due diligence efforts are consistently monitored, adjusted and aligned with sustainability standards.  If restoration of human rights impact is necessary, we take the measures in step 3.

As a dairy company, our milk suppliers in the Netherlands and Belgium are important partners. Given the strict social and environmental legislation in these countries and the lack of signs of human rights violations or serious environmental risks that are not already regulated through legislation, we do not include milk suppliers in our due diligence policy. We do approach our dairy farmers proactively on climate and biodiversity through initiatives such as our climate transition and biodiversity plans. The due diligence policy for our dairy operations focuses primarily on non-milk-derived food ingredients.

Royal A-ware did not evaluate in 2024 whether employees in the value chain are familiar with and trust the external complaints mechanism. 

Step 5: Transparent communication

• Royal A-ware communicates with its employees about the presence of a complaints procedure. 

• No assessment has taken place in 2024 as to whether in-house staff are aware of and confident in the complaints procedure as included in step 6. See ESRS G1-1.

Step 6: Complaint handling and remedial action

Complaints mechanism

Royal A-ware is committed to acting with integrity, respect and transparency, in accordance with the principles of our code of conduct. Therefore, we have a complaints mechanism to identify, report and investigate concerns about unlawful behaviour or behaviour contrary to the code of conduct. We monitor its effectiveness in order to optimise the complaints mechanism.

Internal complaints procedure

Employees have the right to submit complaints to the Complaints Committee. A complaint is defined as: "An expression of dissatisfaction regarding a decision or action taken within the company (hereinafter referred to as 'conduct'), as well as any failure to act in relation to a decision, event, treatment, or established practice within the company, which affects the employee’s position or presents a personal issue for the employee."

Employees may submit complaints —including anonymously— to a manager, a confidential adviser, or directly to the Complaints Committee. Royal A-ware has appointed both internal and external confidential advisers, some of whom are qualified mediators with the expertise to resolve conflicts in challenging situations.

Due to the differing operational environments, separate internal complaints procedures exist for our dairy and transport operations. These procedures are accessible via the intranet and the internal communication platform AB Connect.

The Complaints Committee conducts an annual review to assess whether any adjustments are required in our complaints mechanism or due diligence approach.

Our complaints mechanism ensures that employees who experience negative impacts—and formally report them through the official complaints process—receive the necessary support and corrective actions. The Internal Grievance Committee is responsible for assessing the effectiveness of these remedial measures.

In 2024, no formal complaints were submitted through the grievance mechanism, preventing an evaluation of the effectiveness of support and remedial actions.

External complaints procedure

Our external complaints procedure is designed for reports of negative impacts by the actions of Royal A-ware and its value chains on the environment, people and animals. The external complaints mechanism has a broader scope than the whistleblowing policy and is also open to employees in our value chains, affected communities and other stakeholders.

These signals can come in through various routes: via online forms on our websites, e-mail or post. Contact forms are available in five languages: English, Dutch, Spanish, German and French. The form includes reference to complaints in supply chains and how these complaints are handled. Complaints are handled by the complaints coordinator. Since the end of 2024, the procedure can be found at www.royal-aware.com/en/report-a-complaint (new window). A procedure manual has been prepared to ensure a correct and uniform approach.

Royal A-ware did not evaluate in 2024 whether employees in the value chain are familiar with and trust the external complaints mechanism. For dairy farmers we work directly with, there is a separate objection procedure.

Stakeholders could potentially face negative consequences when submitting a complaint through the whistleblower scheme or external grievance mechanism. In all cases, we ensure that stakeholders who report through the whistleblower scheme are protected in accordance with the Whistleblower Protection Act. The protection of employees in the value chain who submit complaints through the external grievance mechanism (which will be operational from 2025) will be further developed in 2025.

Whistleblower policy

Royal A-ware's whistleblower policy is for reporting suspected wrongdoing within the company. Misconduct occurs when the public interest is at stake or European law is violated or at risk of being violated. The suspicion of wrongdoing must be based on reasonable grounds. Reports can be made by employees and other stakeholders. Reports are handled by the compliance officer. The procedure can be found at www.royal-aware.com/nl/melding- misstand. (new window)

Procedure

Employees who suspect wrongdoing may seek confidential consultation with a designated adviser, who is bound by a duty of confidentiality. The employer ensures that all information related to the report is handled with the utmost security and remains accessible only to those responsible for managing the report. The identity of the whistleblower is strictly protected.

Monthly or written reports are compiled by the supervisor or compliance officer and subsequently forwarded to the Management Board. Independent investigators will be appointed to handle the case, and affected parties will be informed unless doing so would compromise the investigation. Investigators are granted full access to relevant documents and may conduct and document interviews as part of their inquiry. Employees are permitted to submit relevant documentation to support the investigation. Upon completion, a final investigation report will be formally documented.

If the internal reporting process does not lead to an adequate response from the employer or if the reporter does not receive a decision within the established timeframe, the whistleblower has the right to escalate the matter to an external authority.

In cases of immediate danger or where legal requirements necessitate external disclosure, the reporter may bypass internal procedures and report directly to an appropriate external entity of their choosing.

The whistleblower policy complies with the requirements of the Whistleblower Protection Act, which is the implementation of the European Whistleblower Protection Directive 2019/1937. The reporter will not be disadvantaged by Royal A-ware during and after the handling of the report of suspected wrongdoing. This also applies to the reporter's adviser and the officers such as the compliance officer, the confidential adviser and the investigators who are involved because of the performance of the duties described in these whistleblowing rules.

Compliance with UN Guiding Principles on Business and Human Rights (UNGPs), the International Labour Organisation Declaration on Fundamental Principles and Rights at Work or the OECD Guidelines for Multinational Enterprises with respect to employees in the value chain are part of Royal A-ware's due diligence policy. The due diligence policy establishes that stakeholders in the value chain can report violations through the whistleblower scheme and external complaint scheme (starting 2025). Through these channels, no serious violations were reported or linked to any of our activities in 2024.

Training for those involved in various procedures

• The confidential advisers within Royal A-ware are trained by external experts and/or have the necessary qualifications.

• Members of the internal complaints committee are proficient from their work experience.

• The compliance officer is Royal A-ware's general council. From work experience and education, additional training is not required.

• The Due diligence coordinator receives on-the-job training by our Legal department.

Objectives and achievements

Royal A-ware operates a due diligence policy through which we implement the agreements of the IMVO and OECD guidelines.

Due diligence policies must be in place and related measures will be reviewed annually. No assumptions were used in setting the targets.

• A-ware Dairy: Risk assessments on eight high-risk food commodities by 2024.

• A-ware Dairy: Triennial reviews on risk assessments of high-risk food commodities.

• A-ware Dairy: We will expand our focus in 2026/2027 to other food ingredients, conduct a risk assessment for our key supply chains and include packaging materials in our evaluation.

• A-ware Dairy: From 2028, we will broaden our scope to non-food products and categories other than packaging materials.

• AB Texel: Dialogue in 2025 with two strategic partners on fossil fuels and equipment.

• 2026/2027: Dialogue with additional suppliers of high-risk raw materials

No serious human rights issues and incidents related to our upstream and downstream value chain were reported in 2024. 

Our actions in 2024

Our 2024 measures can be divided into six categories:

Due diligence policy and commitment:

• Due diligence has been completed.

• The public version will be on the website no later than december 2024.

• The policy is discussed periodically with Sustainability Steering Group.

Identify risks:

• Risk assessments for high-risk raw materials have been completed.

Address risks:

• Arranging signing and monitoring of compliance with the Code of Conduct for Suppliers.

• Additional actions are taken, based on the risk analysis of high-risk raw materials, in collaboration with due diligence coordinators. These measures can have a positive impact on employees in the value chain. 

Monitor implementation and results:

• Monitoring will be set up in 2024 and rolled out in 2025. 

• We use the following mechanisms to monitor the effectiveness of due diligence: feedback from suppliers, external insights (e.g. reports from civil society organisations) and complaints mechanisms.

Transparent communication:

• Internally: via Speakap, I-ware, AB Drive, AB Connect.

• Externally: Annual Report 2024, public version of policy on website, interviews.

Targeted sustainability projects:

• Internal complaints procedure and whistleblower scheme are in place.

• External complaints procedure will be rolled out no later than 1 January 2025.

How do we engage our stakeholders?

The due diligence policy was developed by the due diligence working group. The working group consists of:

• General Counsel Royal A-ware

• Director of Public Affairs, ESG and Corporate Communications Royal A-ware

• Purchasing director Borrelgemak Bouter

• Managing director Borrelgemak Bouter

• Group QA Manager Bouter

• Manager Purchasing A-ware Dairy

• Head of ESG A-ware Dairy

• Director QSHE A-ware Dairy

• CFO AB Texel

The due diligence policy, including its targets, was discussed with the Sustainability Steering Group and formally adopted by the Management Board. Relevant stakeholders are informed about the aspects of the policy that directly affect them, as outlined in Step 5 of the Due Diligence Framework.

The perspectives of employees within the value chain are taken into account when making decisions or implementing initiatives aimed at managing actual and potential impacts on workers. In cases where a negative impact is identified within our operations or value chain, we take appropriate corrective actions. When tackling issues or developing solutions, we engage with relevant stakeholders either directly or through their representatives.

Currently, there is no direct dialogue with workers in the raw material procurement segment of the value chain. However, insights into their perspectives have been obtained through risk assessments conducted for high-risk raw materials as part of our due diligence policy. These assessments rely on reports from governments, civil society organisations, and other credible sources, providing valuable insights into the concerns and interests of employees within the value chain.

We also collect raw material-related information from various sources and stakeholders. For example, we receive insights through an advisory board associated with the "De Duurzame ZuivelKeten" initiative, which includes sector stakeholders such as NGOs. As an industry, we engage in discussions on topics such as the use of sustainable soy, with NGOs advocating for the interests of workers in the cultivation of soybean.

Employees within the value chain are not involved in setting targets, monitoring performance, or identifying improvement actions related to our due diligence efforts.

Other information

Royal A-ware has no Global Framework Agreements (GFAs) or other agreements with Global Union Federations (GUFs) that specifically address the human rights of workers within the value chain. This includes the right to collective bargaining and includes explanations on how we understand workers' views.