IFBEC Code of Conduct for the Supply Chain Boston – November 19, 2015 B LAIR M ARKS L OCKHEED M ARTIN - D IRECTOR, E THICS A WARENESS AND O PERATIONS D OMINIQUE L AMOUREUX THALES - VP, E THICS AND C ORPORATE R ESPONSIBILITY

N EW C HALLENGES

2 ▌ C OMPLIANCE OF THE SUPPLY CHAIN IS MORE AND MORE CRITICAL New regulations »UK Modern Slavery Act »US / EU Conflict Minerals »French 'Devoir de Vigilance' law, etc. A proliferation of norms and standards »OECD Guidelines for Multinational Companies »UN Guiding Principles for Business and Human Rights »NGOs initiatives,… New requests from stakeholders »Companies are under scrutiny by officials, NGOs and public opinion »And the world of finance (investors, banks, etc.) W HAT IS AT STAKE ? IFBEC Annual Conference - Boston 2015

3 ▌ S UPPLIER MISCONDUCT IS A RISK FOR MANAGEMENT » For example: Rana Plaza » Concerns all ESG issues, with long lasting collateral damage to corporate image » A major unknown: legal uncertainty (from fault liability to risk liability) E XPONENTIAL DEMAND FOR MORE TRANSPARENCY AND REPORTING An example: EU Directive 2014/95 obliges large companies to provide: "a non-financial statement containing information to the extent necessary for an understanding of the undertaking's development, performance, position and impact of its activity, relating to, as a minimum, environmental, social and employee matters, respe ct for human rights, anti-corruption and bribery matters " A CRITICAL ENVIRONMENT IFBEC Annual Conference - Boston 2015

4 Important to define international and sectorial standards ▌ N EED TO DEVELOP NEW SUPPLY CHAIN RELATIONSHIPS » 'Charter for Responsible Purchasing' » Signature of Purchaser's Code of Conduct » Up-dated Terms & Conditions or contractual clauses » Audit and evaluation ▌ B UT SERIOUS LIMITS » Codes and charters are heterogeneous » … when not contradictory » A responsible supplier cannot sign numerous different codes / charters / clauses without significant effort! C ALL FOR AN ADAPTED APPROACH IFBEC Annual Conference - Boston 2015

T HE IFBEC M ODEL S UPPLIER C ODE OF C ONDUCT

6 ▌ The IFBEC Model Supplier Code of Conduct aims to: Provide a model code that IFBEC members and their suppliers can tailor for common usage Develop a win-win strategy between responsible actors Not to make reference to any specific regulations… …but to have a document which gathers best practices O BJECTIVES IFBEC Annual Conference - Boston 2015 Each company will have to adapt it to its national regulations … … and its in-house General Purchasing Conditions

7 ▌ S UPPORTING THE SUPPLY CHAIN IS AN ETHICAL OBLIGATION An ethical obligation Exchange best practices between purchasers… and suppliers Provide resources for addressing gaps in compliance Share adequate training and proven methodologies Concept of national or regional 'Responsible Supplier Label' K EYS FOR SUCCESS IFBEC Annual Conference - Boston 2015 In Europe, supply chain represents 1/3 of total revenues: 199,4 billion € (ASD Facts and Figures 2014)

8 K EYS FOR SUCCESS ▌ F RAMEWORK WORKABLE FOR ALL Considered IFBEC Global Principles of Business Conduct Considered DII Model Supplier Code Tailored content Globalized language No country- or law/regulation- specific content Expect vs require, shall vs must…. Multiple reviews IFBEC Annual Conference - Boston 2015

9 I.Compliance with laws II.Human Rights III.Employment Practices IV.Anti-Corruption V.Conflict of Interest VI.Maintain accurate Records VII.Information Protection VIII.Environment, Health and Safety IX.Global Trade Compliance X.Ethics Program Expectation 10 P RINCIPLES IFBEC Annual Conference - Boston 2015

10 Model industry code adopted by IFBEC IFBEC Code applied by members Suppliers acknowledge receipt and review of code Suppliers agree to abide by code Shared audits of common suppliers F UTURE S TATE P OSSIBILITIES IFBEC ‘Responsible Supplier’ IFBEC Annual Conference - Boston 2015