39 The Hershey Company | 2021 ESG Report Responsible Sourcing and Human Rights The Big Picture Our Company Cocoa Responsible Sourcing and Human Rights Environment Our People Youth Community About This Report Responsible Sourcing Our Responsible Sourcing Strategy is designed to Prioritization was based on our initial risk Supplier Engagement and Training deliver positive impact and long-term sustainability assessment of 1,300 direct raw material We engaged with suppliers to assess links and packaging suppliers, as well as co- between purchasing practices and social in Hershey’s end-to-end supply chain in collaboration manufacturers, copackers, licensees and The compliance through the Better Buying with our suppliers and industry partners. Hershey Experience vendors. Institute’s Partnership Index survey. A total of We are on track to achieve our goal of 85% of in 142 enrolled suppliers were invited to respond scope supplier sites demonstrating compliance to the 12-question survey and provide feedback Responsibly Sourcing with our program requirements through on Hershey’s buying practices. We are analyzing Our Strategy to Source Our Goods and Services achieving green audit results. By the end of feedback to understand best practices and Responsibly 2021, 25% of suppliers had achieved a green continuous improvement opportunities related Our global network of owned operations, audit result. to how our buying practices can impact the Our Responsible Sourcing Strategy is suppliers and business partners are critical to financial, environmental and social sustainability guided by our Human Rights Policy and how we ethically and sustainably provide great- Our 2021 Progress of our suppliers. our Environmental Policy, and includes tasting, high-quality products to our consumers. We provided capacity-building training to a four key focus areas: Hershey facilities undergo a SMETA 4-Pillar Enhancing Supplier Screening number of suppliers through internal trainings 1 and partnership with AIM-Progress in Côte Responsibly Sourcing audit every three years, or more frequently We refreshed our risk assessment across more Goods and Services as needed based on issue remediation or than 900 suppliers not initially enrolled and d’Ivoire, Ghana and China. Looking ahead, customer requests. included new areas within our company, such as we continue to work with our suppliers on Fostering Sustainable Through our Responsible Sourcing Supplier our World Travel Retail Group. developing long-term corrective actions Agricultural Communities Program (Supplier Program), we verify and for all open findings through targeted monitor our Tier 1 suppliers’ compliance with We integrated responsible sourcing and capacity building. Promoting our SCOC. The Supplier Program is aligned human rights risk screening into our ingredient Transparency with our human rights saliency assessment, supplier and co-manufacturing/packaging Read more about our Supplier uses independent third-party verification qualification process. Prior to entering into a Program requirements on our website. Building Hershey’s tools, including SMETA 4-Pillar audits, to commercial relationship, suppliers respond to Capabilities monitor compliance and proactively identifies questions about their management systems opportunities for future due diligence. We related to human rights, labor topics and support suppliers’ continual improvement ingredient certifications as required in our through corrective action plans and supplier and ingredient information forms and Our approach was created in consultation with capacity building. pre-audit checklist. Supplier self-assessment diverse internal and external stakeholders, questionnaires and social compliance audits are including suppliers, customers, human rights The Supplier Program helps strengthen the also reviewed. groups and multiple NGOs that work in our raw long-term sustainability of our supply chain. This screening has been successful in material value chains, among others. By the end of 2021, we achieved our goal of identifying risks, resulting in 6% of suppliers not enrolling 100% of the 450 high-risk suppliers being approved for use due to human rights or and sites that were prioritized for due diligence. environmental risks. 1 The Sedex Members Ethical Trade Audit (SMETA) 4-Pillar audit protocol is composed of four modules: Labor Standards (including human rights and forced labor topics), Health and Safety, Environment and Business Ethics.