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At Tate & Lyle we see no conflict between high ethical standards and successful business, we see the two as mutually reinforcing. Our priority is to ensure that the high standards of the Tate & Lyle Code of Conduct are applied throughout our businesses.
All employees are expected to be aware of and follow the Group's comprehensive policies on ethics and corporate social responsibility. Previously, Tate & Lyle's 'Group Policies & Procedures', which include sections on corporate social responsibility, were distributed to employees in printed form. Together with other important policies, these are now also made available internally via the Company intranet, TaLnet. The Tate & Lyle Code of Conduct was published in 2002 as a summary of the basic policies by which we work to uphold our corporate values. This has sections covering business ethics, health & safety, environment, quality, legal compliance and equal opportunities. It has been extensively distributed and explained to employees via employee magazines and leaflets in a number of languages.
This Code is applicable both within the Group and with our wider commercial partners. Tate & Lyle believes that the greater the level of management control a company has over a set of operations, the greater its responsibility to ensure compliance with the Code, which applies unconditionally to all operating units and subsidiary companies that are wholly owned by Tate & Lyle PLC. The Group will also seek to apply these policies in those operations in which the Group has a stake of 50% or more. Where Tate & Lyle has a minority stake, the policies are made known to these commercial partners who are encouraged by the Group to adopt them and implement them rigorously.
Tate & Lyle has a long tradition of working with the growers that deliver our quality raw materials. Every year the Group processes corn grown on approximately 1.6 million acres of US farmland, and we use about 1.5% of the total European Union wheat production. Tate & Lyle also acts as a bridge into the European market for cane sugar, predominantly from African, Caribbean and Pacific (ACP) countries.
Across the Group we have long-standing and mutually beneficial relationships with our growers of sugar cane, sugar beet, maize and wheat. We apply rigorous standards to our raw materials suppliers and survey many of them on their ethical commitment. We work closely with them to ensure compliance with our needs, implementing traceability and ensuring that our customers' requirements over issues such as genetic modification are fully met.
In June 2005, we strengthened our commitment to improving practices in the raw sugar supply chain by hosting the first meeting of 'Better Sugar, Better Business', a joint IFC (International Finance Corporation)/WWF (Worldwide Fund for Nature) initiative on improving the environmental and social impacts of cane growing. Since that meeting, the initiative has formed a steering group, of which Tate & Lyle is a member, and the group is now drafting its terms of reference.
European Sugar Regime
We have for many years highlighted the long-term relationship we have with suppliers of raw sugar for our European Union (EU) cane sugar refining business, acting as a conduit for the EU's policy of providing advantageous prices to these suppliers from the African, Caribbean and Pacific (ACP) countries as well Least Developed and other Developing countries (LDC). Clearly, the reduction in prices agreed by the EU under the new sugar regime will significantly reduce this benefit to our suppliers.
Of the 1.8 million tonnes of sugar that the ACP, LDC and other preferential supplier countries have the entitlement to sell every year into the EU market, Tate & Lyle acts as the most important bridge, taking nearly 1.3 million tonnes. As a result of this access to the EU market, our suppliers receive £150 million to £200 million more for their sugar than would otherwise be the case as we are required to pay at least the EU-established price. The payments that Tate & Lyle receives from the Common Agricultural Policy (CAP), through the UK Rural Payments Agency, are effectively a part of this extra income for the ACP and LDC countries. These funds are vital to sustaining their economies and will reduce over time due to the impact of the Sugar Regime reform. The African, Caribbean and Pacific (ACP) countries are discussing a package of accompanying measures to help them adapt to the new circumstances with the EU Commission. Whilst this is a direct negotiation between the countries and the Commission, we have stressed that these packages must be wholly adequate, correctly targeted, and efficiently delivered in a timely way.
Please click here for more information on the Sugar Regime from our press release dated 25th November 2005.
Supply Chain Ethics
The issue of supply chain ethics is important and we are committed to spreading best practice and improving standards amongst suppliers through our Code of Conduct. In our contracting rounds with suppliers, we attach the Code to agreements. Our Americas and European purchasing organisations attach the Code to Purchase Orders and have asked suppliers to notify us immediately of any issues they may have with it.
The Board reviews corporate social responsibility annually. The Chief Executive is the Board member accountable for ethical conduct. Details of the Group's system of internal control, including its risk management and compliance procedures, are given in the statement on internal control on pages 68/69 of this year's Annual Report. As part of those procedures, each Tate & Lyle business is asked to confirm twice a year that the Group's Code of Conduct is being communicated to suppliers and report on any contravention. Persistent contravention can lead to termination of that supplier relationship.