Responsible culture:

Our supply chain

Our supply chain is critical to the success of our business and to our reputation. Customers and investors require our suppliers to uphold high ethical, labor, health and safety, and environmental standards.

Sustainable sourcing of raw materials helps us secure supplies to meet our customers’ needs now and in the future. It supports progress towards our Forest+, Resource+, and Climate+ commitments. The environmental credentials of our packs are reinforced through the use of raw materials certified to the highest responsible sourcing standards.

Our commitments

We are committed to sourcing our main raw materials from certified responsible sources.

We are committed to monitoring and assessing our supply chain risks as well as actual or potential impacts on the environment and society. We are equally committed to fostering adherence to our requirements by our significant suppliers.

We strive to enable long-term development of a net positive supplier base. We are committed to screening significant new suppliers for our business.

Our approach

We are working to replace virgin and fossil-based materials with renewable, circular and recycled alternatives, and we remain committed to sourcing the A-materials that go directly into our packs from certified, responsible sources:

• Paperboard¹: Forest Stewardship Council™ (FSC™) certification traces materials back to sustainably managed forests and other controlled sources.² FSC™ certification requires that forestry operations avoid forest degradation or deforestation, protect biodiversity, maintain ecosystem services and carbon storage, and respect the rights of workers, local communities, and indigenous peoples. Paperboard production makes use of wood chips and saw dust residues from sawmills. The share depends on the paper mill and was up to 36% in 2023.
• Aluminum foil: ASI certification supports responsible sourcing and production of aluminum through the supply chain. It sets strict standards, including on greenhouse gas emission reductions, water stewardship, waste management, and labor rights. Most of the procured aluminum foil (about 95%) is linked to industry waste input.
• Polymers and films: There is no suitable responsible sourcing certification in place for fossil-based polymers. Our focus is on linking more of the polymers in our packs to renewable or recycled alternatives. We do this using a mass balance system – verified through International Sustainability & Carbon Certification (ISCC) PLUS certification³ – which supports a broader transition away from fossil-based feedstock within the mainstream polymer industry, ensuring the traceability of certified materials along the entire supply chain. The forest-based polymers we procure for the SIG Terra Forest-based cartons and closures link to the feedstock tall oil, which is a wood component and residue in papermaking. The circular polymers we procure for SIG Terra Circular cartons and closures link to chemically recycled mixed plastic household waste.
• Inks and solvents: We are working to transition to bio-based alternatives where we use fossil-based inks and solvents. Since January 2024 all of our plants purchase only plant-based ethanol for printing purposes.

Where feasible, we aim to source locally within each region to increase business resilience, support local economies and communities, and reduce environmental impacts from transporting goods over long distances.

Where our A-materials come from

We source the main⁴ A-materials for our packs from around 150 suppliers – ranging from local paper mills that source wood from their own forests to major multinational mining and chemical companies.

Our responsible aluminum journey with ASI

SIG has led the industry in the responsible sourcing of aluminum through certification to the Aluminium Stewardship Initiative (ASI), which enables us, and our customers, to trace the aluminum in our aseptic cartons through the value chain from mine to smelter to carton.

ASI certification includes independent audits of the aluminum supply chain against strict ethical, environmental, and social standards – including on greenhouse gas emissions reductions, water stewardship, waste management, and labor rights.

Sourcing responsibly

We expect suppliers to meet our responsibility requirements in order to help mitigate social and environmental risks in our supply chain. Negative impacts in the supply chain can potentially arise due to a violation of human rights, whereas transparency around supply chain issues can contribute to better conditions for supply chain workers. SIG has a positive impact by enabling market access for sustainable suppliers.

Our Supplier Code of Conduct sets out our expectations on topics such as labor, health and safety, and environmental protection.

A risk assessment is conducted for all suppliers using the EcoVadis IQ platform to screen against social, environmental and governance criteria (such as potential negative impacts and risks related to ethics and sustainable procurement). The business relevance of the supplier is an additional aspect being considered in the screening process. Further, the supplier screening takes into account available supplier data as well as country and industry risk data. Additional due diligence on responsible sourcing focuses on our significant suppliers.⁶ This requires formal acceptance of our Supplier Code of Conduct, and monitoring compliance through risk performance assessments.

Through our Supplier Code of Conduct, and our general terms and conditions, we require equipment suppliers providing parts for our filling machines to comply with all applicable laws and regulations related to conflict minerals from conflict-affected or high-risk areas. We also require them to complete an additional questionnaire on critical raw materials and a conflict minerals reporting template in support of our responsibility to provide transparency on the minerals in our supply chain.

Our Responsible Sourcing Directives, and accompanying training, provide procurement teams with detailed guidance on how to implement our responsible sourcing approach. In 2024 we rolled out a separate Responsible Sourcing Directive specifically for our aseptic carton filling machine business, which articulates our approach and requirements related to human rights and conflict minerals to support due diligence and transparency in this area.

Screening and assessing suppliers

• We screened 100% of new significant suppliers for our carton businesses as part of our onboarding process. We also screened 100% of identified new direct significant suppliers for our bag-in-box and spouted pouch business.
  80% of in-scope significant suppliers have signed up to our Supplier Code of Conduct or an equivalent, as well as 100% of the equipment suppliers for our aseptic carton filling machines.
• From the twelve suppliers identified as high risk through self-assessments in 2023, we delisted three suppliers. Three suppliers are no longer high risk because they accepted our Supplier Code of Conduct or have equivalent measures in place (Sedex SMETA or EcoVadis rating). We audited three of the remaining six suppliers and we are following up on areas identified for improvement. From the additional three suppliers we are currently waiting for their audit results. This means we met our annual target to audit 50% of high-risk significant suppliers this year.
• All relevant equipment suppliers have been asked to complete a self-assessment questionnaire related to critical raw materials. We also requested those supplying equipment or components that include conflict minerals to provide a completed conflict minerals reporting template. By the end of 2024, we had already received responses from more than 65% of relevant suppliers and we have begun appropriate follow-up activities.
• We began to extend our Supplier Code of Conduct requirements in our bag-in-box, spouted pouch, and chilled carton businesses.

Rating significant suppliers¹ on responsible sourcing standards

Assessing effectiveness

Regarding sustainable raw materials, the GEB conducts internal audits and regular reviews of performance against the targets. Monthly calls take place between local management teams and the Vice President of Global Sourcing & Procurement, Issues or concerns can be reported via the Integrity & Compliance Hotline or grievance mechanisms that are set up as part of local collection and recycling partnerships.

Regarding the supply chain and suppliers, the Vice President of Global Sourcing & Procurement reviews the effectiveness of our actions on a quarterly basis.

Our targets and performance

Targets, progress and performance

Progress in 2024

• We continued to increase the volume of A-materials from certified and renewable sources for our aseptic cartons.
• Overall, 69% of A-materials for all our packs came from certified sources and 65% came from renewable sources (see table below).

Sourcing A-materials⁴ for our packs

Paperboard

• We continued to purchase 100% of the paperboard for our aseptic cartons with FSC™ Mix certification⁷ – and achieved this milestone for our chilled carton business from January 2024.

Aluminum foil

• Since 2023, we have procured 100% of the aluminum foil for our aseptic cartons as ASI certified.
• In 2024, we maintained Group certification to the ASI Performance Standard for our aseptic carton business and ASI Chain of Custody Certification at all our aseptic carton production plants.
• 95% of the procured aluminum foil was linked to industry waste input in 2024.
• We engaged with suppliers to work towards increasing content linked to post-industrial waste in the aluminum foil we purchase.

Polymers

• We continued to source ISCC PLUS certified polymers linked to renewable materials⁸ to meet customer demand for SIG Terra Forest-based polymers.
• As yet the total volume remains low compared to the amount of fossil-based polymers we source.

Ink

• Since January 2024 all of our plants purchase only plant-based ethanol for printing purposes.

Secondary packaging

• Our aseptic cartons are transported with the use of corrugated cardboard as secondary packaging.
• Across India, the Middle East, Africa, the Americas, Europe, and the Asia Pacific (excluding China), 100% of this cardboard is sourced from FSC™ certified suppliers.

KPIs

Our positive impacts

Through our supplier engagement, we contribute to the United Nations Sustainable Development Goals 8, 12, 13, 15, and 17.

1 Our cartons use paper-based liquid packaging board, referred to throughout as “paperboard”.

2 SIG uses FSC™ Mix material that allows the mixing of FSC™ certified wood with FSC™ controlled wood and ensures that an equivalent amount of FSC™ certified wood is procured at the beginning of the value chain.

3 Polymers linked to wood residues from papermaking via an independently certified mass balance system. In some cases REDcert² certification is used in place of ISCC PLUS.

4 Excludes inks and solvents which we source in negligible volumes compared to our other A-materials.

5 Except the plant in Melbourne, Australia, which was acquired in 2019 and ceased operating in mid-2021.

6 Significant suppliers are those considered most significant to our business (excluding equipment suppliers) based on their potential to affect our ability to meet customer needs, the high volumes we purchase from them, or sustainability risks identified in the supply chain. They include all direct suppliers that provide materials for our packs, as well as some indirect suppliers of secondary packaging and services (such as facilities management and logistics). We have aligned our approach for all significant suppliers to our chilled carton business and all identified direct significant suppliers to our bag-in-box and spouted pouch business.

7 SIG uses FSC™ Mix material that allows the mixing of FSC™ certified wood with FSC™ controlled wood and ensures that an equivalent amount of FSC™ certified wood is procured at the beginning of the value chain.

8 Via an independently certified mass balance system.