Due diligence and risk management
The VanDrie Group aims to produce high-quality, safe and nutritious veal and beef products, calf feed and dairy raw materials and high-quality calf skins. In doing so, we have to meet the standards expected of us that are in keeping with our social position and responsibility. We realise that we must set a good example and act ethically.
As a producer, we are facing a variety of risks, from raw material to finished product, and with all activities in our value chain. These risks cannot be avoided completely. We therefore apply a due diligence approach. We clarify actual and potential risks through this process. This then allows us to make informed decisions on identified risks and their control. We carry out our due diligence in line with the Guidance on Corporate Social Responsibility (CSR) which is based on the OECD Guidelines for Multinational Enterprises.
The table below shows the strategic risk themes and under which category they fall (compliance, operational, strategic or financial). For each risk theme, the identified impact of the risk is described and the VanDrie Group's response to it is stated. This makes it clear what the VanDrie Group is doing to prevent, mitigate or eliminate risks. The overview shows that chain responsibility for these risks is embedded in our policy and in the management systems available for this purpose.
Compliance risk
Strategic risk theme | Identified risk impact | Risk response |
Human rights | Breach of legal and social standards | We monitor adverse media on this topic. SpeakUp, a whistleblowing scheme, has been made available to employees, customers and suppliers and enables abuses to be reported easily, anonymously and in one's own language. All companies also have a confidential adviser. The VanDrie Group has a Code for Doing Business Fairly (Code voor Eerlijk Zakendoen) and proactively shares this within its value chain. In addition, a compass on culture and desirable behaviour and manners is available in 11 languages and is received by every new employee. Regular audits of raw material suppliers are carried out, in which human rights are assessed as a theme. |
Respect for fundamental rights in the value chain | Damage caused to individual persons | |
Loss of good name and reputation | ||
Unlawful behaviour | Punitive sanctions, lawsuits, product recalls, more intensive supervision | The VanDrie Group is committed to making the highest quality products and operating in line with legislation and regulations. As part of our Quality approach, we keep a close eye on regulatory developments regarding food safety and animal welfare. We make our employees aware of what doing business fairly means and what they should do to prevent unlawful behaviour, such as corruption or bribery. We actively monitor compliance themes and regularly screen EU and OFAC sanction lists. We regularly audit our invoicing to ensure the correctness of payments in order to prevent money laundering. |
Preventing the violation of legal standards, corruption, bribery or competition violations | ||
Damage to financial position and operating result, reputation, brand, market share | ||
Breach of relationship with customers and other stakeholders |
Financial risk
Strategic risk theme | Identified risk impact | Risk response |
Financial resilience | Unstable financial position, reduced investment power | As a family-run business, the VanDrie Group believes that stability is important. The group is primarily based in the European Union, so invoicing is mainly carried out in euros. Currency risks are therefore limited or hedged by means of forward contracts. Risks on stocks and receivables are partly mitigated by credit insurance. A sectoral animal health fund (diergezondheidsfonds, DGF) has been established. The DGF is a budgetary fund from which costs related to combating, monitoring and preventing infectious animal diseases and zoonoses are paid. Fifty per cent of these costs are funded by the central government and 50 per cent by the business community. The DGF is, as it were, a provision against risks in the fight against contagious animal diseases. |
Meeting financial obligations | Increased dependency on financiers and insurers |
Operational risk
Strategic risk theme | Identified risk impact | Risk response |
Employment and industrial relations | Labour shortages | Production companies conduct a risk inventory and evaluation (RI&E) annually. A RI&E identifies occupational risks and requires an approach to eliminate or reduce them. This minimises the risk of potential health complaints, absenteeism and accidents. This also means that preventive and protective measures have been implemented within these companies, so that the use of machinery, equipment and chemical products takes place in a safe way. Employees are trained in areas such as work safety and HACCP, and receive instructions in their mother tongue. Through the Central Organisation for the Meat Sector (COV), we cooperate with SNA, whose aim is to prevent fraud and illegal practices in the temporary employment sector. The VanDrie Group's HRM policy has been delegated to the individual main subsidiaries. In 2023, the company intends to develop a corporate strategic HRM plan on themes such as recruitment and selection, assessment and remuneration and professionalisation to ensure an overarching HRM approach. |
Guaranteeing employees' rights and good working conditions | Substantial production interruptions | |
Negative operating results | ||
Information security | Damaging and taking down information systems | The VanDrie Group regularly conducts stress tests on its information systems to reduce the risk of security breaches. Continued investment in IT solutions that are used for operational processes. In addition, employees are trained on IT awareness annually. |
Ensuring information security, preventing data breaches and complying with privacy regulations | Occurrence of data breaches | |
Cessation of production | ||
Loss of revenue, reputational damage, liability claims from customers and other stakeholders |
Strategic risk
Strategic risk theme | Identified risk impact | Risk response |
Environment | Impairment of the ecosystem and biodiversity | The VanDrie Group is committed to transforming its business model. This includes mapping the Organisational Environmental Footprint and developing a specific investment policy to start impactfully reducing the company's CO2 emissions. In collaboration with farmers and other stakeholders, the VanDrie Group is working on concrete objectives regarding sustainable animal feed and improving the living environment in rural areas. All production companies are certified to ISO14001. This is the internationally accepted standard for an environmental management system and is used to develop an environmental policy appropriate to the organisation and ensure the implementation thereof. |
Protecting the ecosystem | Loss of customer relevance and opportunity for further development | |
Loss of market share and support | ||
Consumer interests | Damage causes to consumers | The VanDrie Group aims to provide high-quality products and services made to the highest standards. Food safety is not a marginal theme, but a prerequisite for every operation within the production process. That is why the VanDrie Group has its own active quality system Safety Guard. Safety Guard is based on the ISO22000 and 14001 standards, the Food Safety Supply Chain System and the BRC, IFS and GMP+ quality schemes. In doing so, the VanDrie Group mitigates food safety risks. Buyers of meat products are given Safe Handling Instructions on how to store and handle meat. We work in line with the United Nations Guidelines for Consumer Protection. Fair pricing is an emerging social debate and we monitor this dialogue very closely. |
Ensuring food safety and providing fair product information and fair pricing | Recalls, financial claims and liabilities | |
Damage to brand and reputation, loss of market access and market share, reduced sales and operational results | ||
Animal welfare | Damage and pain inflicted on the animal | Animal Welfare Officers (AWOs) monitor meat processing companies at all times. All meat production plants have camera surveillance (partly with Artificial Intelligence programmes). Transporters and veal farmers are trained/informed about animal behaviour and the humane handling of animals. The Foundation for Quality Guarantee of the Veal Sector carries out independent monitoring of regulations on animal welfare, transport and antibiotic use within the VanDrie chain. All VanDrie veal farmers in the Netherlands are certified under the Vitaal Kalf (Fit Calf) quality scheme and are regularly audited. |
Prevention of animal health and animal welfare violations | Reduced stakeholder confidence in the VanDrie Group's behaviour and socially concerned reactions |
Should risks arise, the relevant, affected stakeholders will be informed in an appropriate manner. In the case of risks that are of greater social importance, we communicate to the public via the VanDrie Group's corporate website. In principle, the VanDrie Group contributes to remedial procedures when abuses or malpractice occur.
Risk assessment
The diagram below displays the risk assessment of the risk themes. It includes an estimation of the probability of a risk occurring within the value chain and what the impact will be if such a risk occurs.
Information security
Information security
Increasing ↗
This risk trend is assessed as increasing. The VanDrie Group relies on information technology for the operational control of business processes and to store a multitude of data. The VanDrie Group checks and processes confidential information. The impression that exists at present is that cybercrime is increasing on a global scale. This means the risk of digital breaches is growing. The result may be that information systems are attacked, damaged or taken down, or data breaches occur. This will result in substantial costs and other negative consequences, such as production stoppages, loss of revenue, reputational damage and liabilities from customers and other stakeholders.
Environment
Environment
Increasing ↗
Requirements for production that meet climate and biodiversity needs are becoming increasingly stringent. The VanDrie Group may not be able to align its business model with those. The VanDrie Group's business model needs to change from product output on its own to a system in which environmental, social and governance factors are balanced with the production model. If this change is too slow or unsuccessful, the VanDrie Group will lose customer relevance, the opportunity for further development, market share and support. If that happens, the company would also be furthering the degradation of the ecosystem and of biodiversity.
Consumer interests
Consumer interests
Neutral →
This risk trend is assessed as neutral. The products that are produced within the VanDrie chain may not meet required quality standards, resulting in customer dissatisfaction or damage to consumers' health. The VanDrie Group may experience food safety issues due to certain product designs, certain production conditions, or the raw materials, packaging or transport facilities used. Besides harm caused to consumers, this could potentially lead to recalls, financial claims and liabilities, damage to the company's brand and reputation, loss of market access and market share and reduced revenue and operating results.
Animal welfare
Animal welfare
Increasing ↗
The societal focus on animal welfare is growing. The intrinsic value of animals must be protected. The VanDrie Group may not be able to ensure animal welfare in every link of the value chain (birth, trade, transportation, husbandry, slaughter) at all times. This would lead to damage and pain to the animal, reduced stakeholder confidence in the VanDrie Group's behaviour and socially concerned reactions.
Employment and industrial relations
Employment and industrial relations
Neutral →
This risk trend is assessed as neutral. Attracting and retaining employees is critical to the VanDrie Group's success. Insufficient employees can result in labour shortages and significant production stoppages. There is a lot of competition in the labour market from other employers and there is a high dependence on agency workers from abroad. Fraud and illegality in the employment agency industry are still issues to this day. An increase in personnel costs (due to higher collective labour agreements, increases in minimum wages, higher pension contributions, turnover costs) is having a negative impact on operating results. In addition, more difficult working conditions in production sites (working in the cold, early starts) can lead to physical and mental discomfort among employees.
Human rights
Human rights
Neutral →
This risk trend is assessed as neutral. The VanDrie Group may be exposed to risks of human rights violations when implementing its strategy. This risk is present in the value chain, such as with the extraction of raw materials in overseas territories in order to produce animal feed. Cases of discrimination, violence, harassment or transgressive behaviour may also occur in the workplace, on an occasional or structural basis. Not only does this violate legal and social standards, but it also harms individuals and causes loss of trust and damages the good name of the VanDrie Group.
Unlawful behaviour
Unlawful behaviour
Even →
The development of this risk trend is assessed as neutral. The VanDrie Group operates in a highly regulated environment in terms of checks on food safety and animal welfare. Any non-compliance or observed violation of legislation and regulations may result in punitive sanctions, lawsuits, product recalls, intensive supervision and reduced confidence, which would have tangible adverse consequences for the VanDrie Group. For example, issues could negatively affect the VanDrie Group's financial position and operational results, as well as harm its reputation, brand, market share and relationship with customers and other stakeholders.
Financial resilience
Financial resilience
Low ↓
This risk trend is rated as low. Potentially significant market shocks could occur, such as a global pandemic, war or closure of borders/markets due to other geopolitical reasons. From a historical perspective, the outbreak of an animal disease has a negative impact on the equity capital and on the profitability of livestock farming. These risks would result in a less stable financial position for the VanDrie Group, with less investment power and more dependencies on financiers and insurers.
Risk appetite
Managing risks is part of the control and decision-making process of the VanDrie Group. The management board discusses the risks on a regular basis. It assesses what effects the risks may have on the external environment, strategic objectives, business operations and reputation.
We know that we cannot completely remove risks. We weigh up the probability that the risk will occur against the consequence of the effect. We weigh up whose interests come first and when difficult compromises have to be made.
Our guiding principles in the case of risk management are:
-
Strategic risks
The VanDrie Group takes a clear position: no risks can be taken with regard to animal welfare and food safety. This potentially harms animals, buyers, consumers and ultimately confidence in the company. -
Operating risks
The VanDrie Group does not want to take any risks when it comes to the safety of employees. It also avoids risks that could harm the implementation of the business processes. -
Compliance risks
Our fundamental belief is that we must adhere to legislation and regulations and that our own codes of conduct must be observed. -
Financial risks
The VanDrie Group strives to maintain its solid financial position and aims to meet the relevant financial ratios. This means seeking the right balance between financial and commercial risks and longer-term objectives.
Link to strategic themes
In the chapter Our Results you can read more about our approach and our policies to mitigate risks in the chain.
Strategic pillars Risk themes | Our market position | Sustainability | Food safety | Animal health and welfare | Good employment practices |
Human rights | x | x | |||
Information security | x | ||||
Environment | x | ||||
Unlawful behaviour | x | ||||
Consumer interests | x | x | |||
Employment and industrial relations | x | ||||
Animal welfare | x | ||||
Financial resilience | x |