The Tchibo Social and Environmental Monitoring Programme

Supplier Manual for Non Food Business Partners 3.00e

3. The Audit Process

The implementation of the Tchibo SCoC is regularly reviewed in audits. An audit usually lasts

a day and is conducted by up to 2 persons. Generally, these audits are announced with a

two weeks timeframe. We reserve the right however to conduct unannounced audits at any

time. There are two types of audits:

?  Factory Audits: Social and Environmental Aspects are an integral part of our Factory

Audits. These are coordinated and conducted by employees working for Tchibo

GmbH in Hamburg (mostly for factories in Africa, Europe and the Middle East) and

Tchibo Merchandising Hong Kong (mostly for factories in Asia). In Factory Audits, the

auditors primary check quality standards and the manufacturing capacity of the

factory. Social and Environmental Aspects are also audited and separately graded

with either “Suitable”, “Suitable with Follow-up necessary” or “Not suitable”.

?  External Risk and Compliance Audits: These audits focus on Social and

Environmental Aspects. The Risk Audit covers the most important issues; the

Compliance Audit is greater in scope and covers a wider range of compliance issues.

Both audits are conducted by external, independent auditing firms such as UL

Responsible Sourcing, a company accredited by the nongovernmental organization

Social Accountability International (SAI). Social and Environmental Aspects will be

graded separately with either “Suitable”, “Suitable with Follow-up necessary” or “Not

suitable”.

An audit consists of various components:

-  Opening meet with the management

-  An inspection of the production site

-  A review of the documents

-  Interviews with employees: Employee interviews are conducted separately and

   without presence of the management. The auditors will select the participants for

   these interviews.

-  Final meeting in which the identified concerns are discussed, as well as the

measures necessary for correcting them

In preparation for the audit, all relevant documents should be made available, e.g. personnel

files, payrolls and time records. A detailed list of all the important documents can be found in

the appendix 7.2. Please find a self-assessment questionnaire in attachment 7.6 that will

help you evaluate your potential compliance status in relation to the Tchibo Social and

Environmental Code of Conduct and international labour standards.

An order can only be placed at vendors/manufacturers with the audit result “Suitable” or

“Suitable with Follow-up necessary”.; Zero Tolerance concerns, which lead to the overall

result “Not suitable”, will need to be remediated before placing an order at the manufacturer.

Business is discontinued with vendors/manufacturers that refuse an audit, repeatedly reach

“Zero Tolerance” violations or do not cooperate sufficiently in the improvement process. The

same applies for attempts at bribery or fraud. These acts are not tolerated by Tchibo and

may lead to the termination of the business relationship.

If the vendor/manufacturer refuses to permit the audit, he has to bear the costs for the

rescheduled audit. Long-term refusal or delay of the process will lead to blacklisting for

further Tchibo orders.