Questions and answers on The Supply Chain Initiative
- What is the purpose of the Initiative? Why are we doing this?
- Who is behind the Initiative?
- Who is responsible for managing the Initiative?
- What are the benefits of signing up?
- What is the geographical and transactions scope?
- Who can register and how?
- What does it cost to register and to participate?
- I am a non-food company, can I register?
- Is registration at company/group level?
- I am a group, can I register my national operating companies progressively?
- How do I register?
- What is the letter of intent and what does it imply?
- Can I immediately register with no prior letter of intent?
- Who should sign the letter of intent?
- What does the self-assessment imply?
- What are process commitments?
- What is the purpose of training and who should be trained? Where can I find help?
- I am not registered, can I benefit from the Initiative?
- What happens in case of an alleged breach of a Principle?
- What are the sanctions and remedies for breaches of Principles?
- What is an aggregated dispute? how is it dealt with?
- Who can launch an aggregated dispute and how?
- There is no national stakeholder platform in my country, what should I do?
- What happens in case of a breach of a Framework obligation (also known as a process commitment)?
- Are sanctions foreseen for breaches of process commitments?
- What is the role of national associations who are members of the Governance Group associations?
- I am already covered by legislation applicable to business to business food supply chain relations at national level, what is the benefit of joining the Initiative?
- What is the annual survey? Why is it important?
- What is the European Commission’s involvement in the Initiative?
- How can I resign from the Initiative?
- Where can I find more information?
This FAQ aims to give some easy-to-understand answers on questions you might have on the Initiative. They are based on the Framework and the Rules of Procedure. The content of these two documents contain the formal information on how the Initiative functions and the obligations contained within it.
The purpose of The Supply Chain Initiative is to promote fair business practices in the food supply chain as a basis for commercial dealings. It aims to generate a culture change through a commitment of signatories to fair trading practices coupled with measures aimed at integrating those principles into company day-to-day operations and to control their application.
The Initiative also aims to ensure that companies address disputes in a fair and transparent manner whilst reassuring the complainants that they will not suffer from retaliation.
Focus on SMEs: The Initiative is designed for all companies irrespective of their size. Conscious however of the administrative burden that some requirements may generate for SMEs, special attention has been given to reduce this burden as much as possible for them.
The organisations that have signed up to the framework are: the European brands association AIM, the European Liaison Committee for Agricultural and Agri-Food Trade CELCAA, the European Retail Round Table ERRT, EuroCommerce, Euro Coop, FoodDrinkEurope and Independent Retail Europe.
AIM - http://www.aim.be/
CELCAA - http://www.celcaa.eu/
ERRT - http://www.errt.org/
EuroCommerce - http://www.eurocommerce.be/
Euro Coop - http://www.eurocoop.coop/
FoodDrinkEurope - http://www.fooddrinkeurope.eu/
Independent Retail Europe - http://www.independentretaileurope.eu/
The Governance Group is responsible for managing the Initiative. The Governance Group came into being on 1 April 2013, as a result of an agreement by the Signatory Organisations to endorse and implement the Principles and the Framework. Its composition reflects the different interests in the food supply chain. The list of governance group members is available here.
The Governance Group’s role is to:
- Give guidance on the interpretation of the Principles and related examples. The Governance Group does not adjudicate commercial disputes.
- Apply sanctions for breaches of process commitments as foreseen in these Rules.
The Governance Group is supported by a permanent secretariat and the day-to-day operations are managed by:
tel: +32 2 285 00 78
By signing you will signal to your customers, your suppliers and other important stakeholders that you are committed to build fair relations throughout the food supply chain.
Voluntary actions have often proven speedier and less costly than regulation.
As a signatory company you can freely commit to fair commercial relations in your daily business with other actors in the food supply chain.
You do not need to wait several years for legislation to find solutions to unfair commercial practices when you can already access a speedy and operational option by signing this voluntary framework.
Both the list of good commercial practices and the implementation framework have been elaborated by and for the companies in the food and drink supply chain.
You will therefore benefit from a system tailored to your needs and specificities.
5. EU-wide scope
The same rules will apply to all signatory companies along the food supply chain and throughout the EU.
Irrespective of your size, you’ll benefit from a clear process that gives you access to a defined set of dispute resolution options.
By signing up you get access to a set of support materials that will facilitate the implementation of your commitments, including a self-assessment tool kit, e-training modules, dedicated website, etc.
Registration is open to any company in the food & drink supply chain operating in the European Union (EU): Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.
If a company operates in the EU and in non-EU countries, it may register for those national markets located in the EU.
Companies that have registered commit to apply those principles in their commercial transactions. Registered companies are expected to implement the Principles throughout their organisations independently of the geographical origin of their business counterpart provided that the obligations under the contract are to be performed in the EU. Performance is usually interpreted as the place where the product is delivered.
Only companies can register. Trade associations cannot.
The Initiative is open to companies of all sizes in the (fresh & processed) food & drink supply chain, including farmers, wholesalers, processors and retailers (including purchasing companies).
The Framework does not apply to companies in support services (eg. logistics, packaging, etc.).
Registration must be by an executive or a number of executives having the power to commit the whole company in the EU including all subsidiaries in the EU, in accordance with each company’s corporate structure.
Focus on micro, small and medium-sized enterprises: the registration procedure depends on the size of the company. A light procedure is in place for micro/small enterprises and a simplified one for medium-sized enterprises. For detailed information, please check here.
There is no annual or initial registration fee.
Each company carries the cost of implementing the commitments set down by the Initiative but the stakeholder associations provide, for example, tools to help with self-assessment and training, that will make it cost effective for registered companies to sign up. These tools are available here.
The Initiative is open to companies in the food supply chain. However, companies who are part of the food and drink supply chain are encouraged to apply the principles throughout their organisations independently of the nature of the product if similar conditions exist (e.g. similar chain composition; similar product groups or similar procurement policies). This Initiative does not apply to the provision of services that input into the food chain that are merely instrumental to it (e.g. logistics, packaging, transport, IT).
Registration is at group level and includes all subsidiaries across the EU. However, implementation of the Initiative obligations is primarily national. Companies are free to set up their dispute resolution contact point at national or group level. If a company already complies with the Principles and the process commitments in some of its countries and wishes to signal its commitments, you may contact the Secretariat.
As a matter of principle, companies are required to register all their national operating companies at the same time.
However, in the case when a company wishes to register its national markets progressively due to particular circumstances, it may send an official request to the Governance Group explaining these circumstances, via the Secretariat. The Governance Group will then examine the request and allow a progressive registration. It is advised to include the country where the group is based in the first round of registration.
Formal registration is via the website of The Initiative using a standard form. At the time of registration, companies confirm that:
- They comply with the Principles of Good Practice.
- They have undertaken a self-assessment.
- Training is being set up or adapted to ensure compliance with the Principles. Priority targets will already have undergone training but training may not yet have been undertaken by all relevant staff by the time registration takes place.
- They are prepared to engage in the dispute resolution options proposed in the framework.
- They agree that commercial retaliation is a breach of principles and process commitments.
- They communicate their registration to business partners.
- They have appointed contact person(s) for internal dispute resolution and for process-related issues. These can be the same or different persons.
You will receive a confirmation from the Secretariat that your registration has been received and is under review. If your registration is accepted, you will receive a confirmation email and subsequently the name of your company will appear on the registry of signatory organisations.
Focus on micro, small and medium-sized enterprises: the registration procedure depends on the company’s size. A light procedure is in place for micro/small enterprises and a simplified one for medium-sized enterprises. For detailed information, please check here.
The letter of intent is a model letter through which companies signal their commitment to the Principles of Good Practice and their commitment to sign up to the Initiative when they fully comply with all requirements, and so preferably within 6 months.
This letter is common to all companies, regardless of the sector and sets out the requirements that companies need to fulfil when they sign up to the Initiative.
Companies can directly register with no prior letter of intent as long as they comply with the Principles and fulfil the process commitments. Sending a letter of intent aims to show support to the Initiative and send a signal to the company's business partners. (The letter is also available in German here).
The signatory of the letter of intent must be an executive or a number of executives having the power to commit the whole company in the EU including all subsidiaries in the EU, in accordance with each company’s corporate structure.
At the time of registration, companies will have reviewed their internal procedures to ensure that they are compliant with the Initiative. To help doing so, self-assessments tools have been developed. They offer a non-binding standardised procedure to carry out self-assessment and vary depending on whether the company is a SME or a larger company. Medium-sized enterprises benefit from a simplified self-assessment and micro/small enterprises do not need to undertake any self-assessment.
Self-assessment covers the following points:
- The company confirms compliance with the Principles of Good trading Practice (it does not necessarily mean that all contracts have already been modified at the time of registration but that this process is well underway and will be completed at the earliest opportunity).
- Training is being set up or adapted to ensure compliance with the Principles. Priority targets will already have undergone training but it may not yet have been rolled out to all relevant staff by the time registration takes place.
- The company is prepared to engage in all the dispute resolution options proposed in the framework.
- The company agrees that commercial retaliation is a breach of principles and process commitments.
- The company communicates its registration to business partners.
- The company has appointed contact person(s) for internal dispute resolution and for process-related issues. These can be the same or different persons.
Process commitments are obligations that registered companies must comply with to fulfil the requirements under the Framework together with the Principles. Process commitments aim to ensure that companies take the necessary steps to integrate the Principles in their daily activities and report on their activity. They include:
- Appointment of a contact point to manage relations under this framework;
- Dispute resolution options, including establishment of a contact person for internal dispute resolution (eg. an internal ombudsman);
- Communication to business partners;
- Participation in the annual survey in each market where the company operates.
Training is a key instrument to incorporate the Principles into a company’s values. The Initiative foresees that training programmes should be adapted, or set up, to integrate the Principles into a company's culture and day-to-day operations but is not prescriptive as to how training should be conducted.
Who should be trained? As a minimum, all staff members involved in negotiations with business partners should be trained in the correct application of the principles, as well as the person(s) responsible for the internal dispute resolution. To create further internal awareness of the principles, directors, managers and internal staff trainers should also be trained.
A common e-learning module has been developed to enable companies to fulfil their training obligations in a cost effective manner. It is available in English, French, German, Italian, Polish and Spanish and soon in Czech and Dutch. It has been designed by SAI together with the Governance Group. You can find further information here.
Focus on SMEs: National federations are encouraged to develop training tools on the Principles and the Framework, especially for SMEs.
Non-registered companies can indirectly benefit from the Initiative because it leads to a culture change that can be beneficial when dealing with registered companies. In addition non-registered are also free to give feedback to their representative association.
However, the Initiative only fully covers relations between companies who agree to abide by Principles of Good Practice in their commercial relationships. To benefit from the full set of options for amicable dispute resolution under this Initiative, companies should be registered.
- Individual dispute
Unless provided otherwise by national law, in the case of an alleged breach of a Principle, the complainant can lodge a complaint using the following options:
- Commercial track, e.g. bringing the issue to a higher level within the companies concerned;
- Contract options;
- Internal dispute resolution: companies appoint a person to handle their disputes who is independent from commercial negotiations (micro and small enterprises are not covered by this requirement);
- Mediation or arbitration (this requires the agreement of both parties);
- Jurisdictional methods.
When resorting to dispute resolution options, the complainant is asked to choose the option that best fits its needs and is proportionate to the nature of the dispute.
The company that is alleged to have breached the Principles commits to not take retaliatory action, which would be a serious breach of the Principles and process commitments.
Focus on SMEs: Only registered companies can resort to dispute resolution options. SMEs have every interest in registering so as to benefit from these options.
- Aggregated dispute
An aggregated dispute involves national and/or EU dialogues. The EU level Governance Group is involved only for cross-border disputes or in absence of national dialogue. It ensures anonymity and confidentiality of the parties, produces guidance and does not seek to solve a dispute.
The remedies, sanctions, and/or penalties, including financial compensation for any actual and proven damages, for non-compliance with the Principles of good practice, including commercial retaliation, are determined by the dispute resolution options used. They are enforceable according to the applicable law in a given jurisdiction.
An aggregated dispute is a dispute regarding an alleged serious breach of a Principle introduced by several companies similarly affected.
The EU-level Governance Group will only consider cases that have a cross border dimension and cases for which there is no national stakeholder platform in place. It will take a decision as to whether interpretation or guidance regarding a principle is needed:
If this is not the case, the Governance Group will decline to issue guidance or interpretation.
If this is the case, the guidance will be developed by the Governance Group, whilst ensuring the anonymity of the parties concerned. Interpretation or guidance will have no retroactive effect and no effect on on-going disputes. Once approved by the Governance Group, guidance or interpretation will be communicated to all concerned and published on the website. Companies will be expected to consider this guidance in interpreting the Principles.
At all times, the confidentiality and anonymity of all the parties involved (complainants and companies alleged to have breached Principles) will be guaranteed by application of the Rules of Procedure.
An aggregated dispute can be launched by a member of the Governance Group in the case of a serious alleged breach of Principles which affects several of its members and with a view to obtaining guidance or interpretation of existing principles.
Any association aggregating a complaint for consideration will:
- Collect the relevant information in a legally compliant manner in order to verify that the complaint has substance;
- Ensure that interpretation or guidance regarding a principle or example is required, and
- Guarantee at all times the anonymity of the parties concerned as well as the confidentiality of any sensitive information.
The aggregated complaint will initially be submitted to the Co-Chair or Governance Group member representing the sector in which the complaint originates to verify the anonymity of the complaint and, if necessary, edit it to prevent the direct or indirect identification of the parties and eliminate any commercially sensitive information.
As disputes mainly arise on a local level, the framework encourages the setting up of national stakeholder platforms mirroring inasmuch as possible the EU-level platform. Guidelines to set up a national platform can be found here.
In the absence of a national platform, an alleged breach of principles affecting several companies and requiring guidance and interpretation can be brought to the attention of the EU level Governance Group via their national and EU level sector representative organisations.
The Initiative foresees a procedure to flag issues if a registered company is allegedly not meeting its Framework obligations (Framework obligations are also known as process commitments).
If a company comes across an anomaly (e.g. the contact person for internal dispute resolution, whose name is mentioned on the website, has left the company and has not been replaced), it can:
a) Raise the matter with the company concerned;
b) Directly address it to the governance group as a whole through a dedicated e-mail address;
c) Address the complaint to a member of the governance group, which may bring it for discussion to the governance group, while keeping the identity of the complainant confidential.
The Governance Group will deal with complaints for alleged breaches of process commitments in a proportionate and gradual manner as follows:
- For minor breaches, no publication of the company name is foreseen;
- For major breaches of a process commitment, gradual steps are taken, including a request to explain and rectify and a warning letter with sufficient delays to comply. If the major breach is intentional, persists and remains unexplained, measures can lead to suspension or exclusion, with publication on the website and in the annual report. In the latter case, the excluded party will need to reapply should it wish to rejoin the Initiative.
The Governance Group may agree to reconsider the sanction, in the case that new evidence or arguments are introduced.
National members are encouraged to support the Initiative by developing training tools and awareness raising activities. They will play an important role especially in rallying SMEs to the framework.
Furthermore, as disputes arise mainly on the national level, national federations are encouraged to set up similar stakeholder platforms to support the Framework and for the handling of disputes (see Guidelines for setting up a national platform).
The Initiative foresees a procedure whereby a national dialogue / scheme can ask to be recognised as compliant with the European framework. Companies taking part in a compliant national scheme would be deemed compliant with the European framework obligations (see the Compatibility table). They would, however, still need to register with the European Initiative and comply with additional requirements as the case may be (eg. reporting obligations).
Where a national platform gives guidance on interpretation of a Principle as a result of an aggregated dispute referred to it, it has the obligation to inform the EU-level Governance Group to guarantee a coherent interpretation across the EU.
Irrespective of the regulatory framework in place, by signing up to the Initiative companies signal their commitment to fair trading relationships. They draw a benefit in terms of commercial relations based on fair trading practices and subsequently in terms of image. The Initiative acts as a complement to existing national legislation by offering additional norms and behaviours and added dispute resolution options. Signatory companies may find an advantage in resolving their disputes by making use of the Initiative rather than going to court.
Where national rules already impose requirements on companies, these take precedence over the Initiative.
When registering, companies commit to participate in an annual survey. The survey will consist of a simple web-based questionnaire. It will be conducted by an external service provider, ensuring the anonymity and confidentially of the data.
The annual survey will enable the Governance Group to assess the functioning of the system, its impact and effectiveness. It is also a means to receive feedback from registered companies on their experience with the Initiative and identify ways of improving it.
Companies participate in the survey for each of the countries where they operate.
Focus on SMEs: Only registered companies can take part in the annual survey. SMEs are therefore encouraged to register so as to be given an opportunity to be heard via the survey.
In addition, EU level sector organisations represented in the Governance Group can consult their own members on the functioning of the system, including non-registered companies.
EU level sector organisations will inform the Governance Group that they are carrying out such a survey and ensure that the results are presented in a way that is compatible with the annual survey under the Initiative.
The Initiative operates independently from the European Commission. However, the European Commission offered support with translation of the Principles and Framework. It will closely monitor the development of the initiative and have the opportunity to comment on a preliminary version of the annual report. The final report will also be shared with the European Parliament.
The Initiative was developed by a multi-stakeholder dialogue composed of supply chain associations formed in the framework of the High Level Forum on a better functioning of the food supply chain run by the European Commission.
The Supply Chain Initiative is a voluntary initiative. Therefore the companies who have registered may by any time decide to resign. However, please note that, when resigning, the company has to inform its trading partners of its decision. To resign, please contact the Secretariat.
On the website: www.supplychaininitiative.eu.
The Governance Group also takes regularly decisions on specific questions. You may find these decisions in the library.