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 calfskins. In doing so, we must meet the standards that are expected of us and are in line with our social position and responsibility. We realise that we must set a good example and act ethically.
As producers, we face a variety of risks in all activities in our value chain, from raw materials to the finished product. These risks cannot be avoided completely. We therefore apply a due diligence strategy. This gives us an insight into actual and potential risks. This subsequently allows us to make informed decisions about the risks identified and how to control them. We conduct our due diligence in accordance with the Guidelines for Corporate Social Responsibility (CSR), which is based on the OECD Guidelines for Multinational Enterprises.
The summary below shows which strategic risk themes exist and under which category they fall (compliance, operational, strategic, or financial). The impact of the identified risk and the VanDrie Group's response is described for each risk theme. This makes it clear what the VanDrie Group is doing to prevent, mitigate or eliminate risks. The summary shows that chain responsibility for these risks is embedded in our policy and in the management systems available for this purpose.
Compliance risk - Human Rights
Respect for fundamental rights in the value chain
Impact of identified risk
-
Breach of legal and social standards
-
Harm to individual persons
-
Loss of good name and reputation
Risk response
We monitor adverse media reporting on this topic. SpeakUp, a whistleblowing scheme, has been made available to employees, clients 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 desired behaviour and conduct is publicly available in 11 languages. Regular audits of raw material suppliers are carried out, in which human rights are assessed as a theme.
Compliance risk - Unlawful behaviour
Preventing violation of legal standards, corruption, bribery or competition violations
Impact of identified risk
-
Punitive sanctions, lawsuits, product recalls, intensive supervision
-
Damage to financial position and operating result, reputation, brand, market share
-
Breach of relationship with customers and other stakeholders
Risk response
The VanDrie Group is committed to producing the highest quality products and operating in line with legislation and regulations. Based on our Quality approach, we keep a close eye on developments in legislation related to 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 audit our invoicing regularly to ensure accuracy of payments to prevent money laundering.
Financial risk - Financial resilience
Meeting financial obligations
Impact of identified risk
-
Unstable financial position, reduced investment power
-
Increased dependency on financiers and insurers
Risk response
As a family business, the VanDrie Group believes that stability is important. The group is primarily based in the European Union, so invoicing is done predominantly in euros. Currency risks are therefore limited or hedged with forward contracts. Risks in terms of stocks and receivables are partly mitigated by credit insurance. An sectoral animal health fund (diergezondheidsfonds, DGF) has been established in the Netherlands. The DGF is a budgetary fund from which costs related to combating, monitoring and preventing infectious animal diseases and zoonoses are paid. Fifty percent of these costs are funded by the central government and 50 percent by the business community. The DGF makes provision for risks in the fight against contagious animal diseases.
Operational risk - Employment opportunities and labour relations
Guaranteeing employees' rights and good working conditions
Impact of identified risk
-
Labour shortages
-
Significant production interruptions
-
Negative operating results
Risk response
The production companies conduct a risk inventory and evaluation (RI&E) annually. An RI&E identifies occupational risks and requires a strategy to eliminate or reduce these risks. This minimises the risk of potential health complaints, absenteeism and accidents. This also means preventive and protective measures have been implemented within these companies so the use of machinery, equipment and chemical products takes place in a safe manner. Employees are trained in occupational safety and HACCP, for example, and receive instructions in their mother tongue. Through the Central Organisation for the Meat Sector (Centrale Organisatie voor de Vleessector, COV), we collaborate with the Labour Standards Foundation (Stichting Normering Arbeid, SNA), whose aim is to prevent fraud and illegal practices in the temporary employment sector. In addition, COV's Fair Employment Code applies at our Dutch meat processing companies.
Operational risk - Information security
Ensuring information security, preventing data breaches and complying with privacy regulations
Impact of identified risk
-
Damaging and taking down information systems
-
Occurrence of data breaches
-
Cessation of production
-
Loss of revenue, reputational damage, liability claims from customers and other stakeholders
Risk response
The VanDrie Group regularly conducts stress tests on its information systems to reduce the risk of security breaches. There is continued investment in IT solutions that are used for operational processes. In addition, employees are trained annually in IT awareness.
Strategic risk - Environment
Protecting the ecosystem
Impact of identified risk
-
Degradation of the ecosystem and biodiversity
-
Loss of customer relevance and opportunity for further development
-
Loss of market share and support
Risk response
The VanDrie Group is committed to transforming its business model. This includes mapping our Organisational Environmental Footprint and developing a specific investment policy to start reducing the company's CO2 emissions in an impactive way. 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 ISO 14001-certified. This is the internationally accepted standard for an environmental management system and is used to develop an environmental policy appropriate for the organisation and to ensure the implementation thereof.
Strategic risk - Consumer interests
Safeguarding food safety and providing honest product information and fair pricing
Impact of identified risk
-
Harm to consumers
-
Recalls, financial claims and liabilities
-
Damage to brand and reputation, loss of market access and market share, reduced sales and operational results
Risk response
The VanDrie Group aims to supply high-quality products and services that are produced 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 quality system: Safety Guard. Safety Guard is based on ISO 22000, ISO 14001, Food Safety Supply Chain System, IFS and GMP+ standards. This is how the VanDrie Group’s Dutch companies mitigate 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 discussion and we monitor this dialogue very closely.
Strategic risk - Animal welfare
Prevention of animal health and welfare violations
Impact of identified risk
-
Harm and pain inflicted upon animals
-
Reduced stakeholder confidence in the VanDrie Group's conduct and concerned social reactions
Risk response
Animal Welfare Officers (AWOs) monitor meat processing companies at all times. All meat production companies have camera surveillance (partly equipped with Artificial Intelligence programmes). Transporters and veal farmers are trained and informed about animal behaviour and the dignified treatment of animals. The Foundation for Quality Guarantee of the Veal Sector (Stichting Kwaliteitsgarantie Vleeskalveren, SKV) conducts independent auditing of regulations pertaining to animal welfare, transport and use of antibiotics in our chain. All VanDrie veal farmers in the Netherlands are certified under the Vitaal Kalf (Fit Calf) quality scheme and are regularly audited.
Should risks arise, the relevant, affected stakeholders will be informed in an appropriate manner. Risks of greater social importance are publicly communicated via the VanDrie Group's corporate website. In principle, the VanDrie Group contributes to recovery procedures when abuse or malpractice occurs.
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 mitigate risks entirely. We weigh up the likelihood of the risk occurring against the consequences of the effect. We weigh up whose interests take priority and when challenging compromises have to be made.
Our guiding principles in 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. -
Operational risks
The VanDrie Group takes no risks when it comes to the safety of employees. It also avoids risks that could harm the execution of 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.
Links to strategic themes
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 |
You can read more about our strategy and policy on mitigating risks in the supply chain in the chapter Our Results
