Summary
Details
- Global
Mandatory: Supplier Code of Conduct compliance.
Functionally mandatory: traceability, environmental monitoring, data reporting.
Enhanced requirements: cocoa and high-impact suppliers.
Implementation varies by supplier category, but baseline compliance is required.
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What’s Required
Hershey’s framework functions as a procurement-driven private regulatory system, embedding environmental, climate and agricultural governance into supplier contracts, sourcing standards, and long-term supplier relationships.
The architecture integrates:
Supplier Code of Conduct (contractual compliance baseline).
Responsible Sourcing Program (commodity-specific governance, especially cocoa).
Supplier engagement and monitoring systems.
This creates a multi-tier governance structure spanning farm-level production, processing and product manufacturing.
1. Emissions Disclosure, Measurement, and Reduction
Suppliers are required or expected to:
Measure and report greenhouse gas emissions (Scope 1 and Scope 2).
Track energy consumption and environmental performance.
Implement measures to reduce emissions and improve efficiency.
For strategic suppliers, expectations extend to:
Participation in disclosure platforms such as CDP.
Alignment with science-based targets via the Science-Based Targets initiative.
Provision of emissions data supporting Scope 3 accounting.
This creates a functional requirement for carbon accounting systems.
2. Scope 3 Governance and Value Chain Integration
Hershey explicitly links supplier performance to its Scope 3 emissions profile.
Suppliers must:
Provide emissions data linked to cocoa, ingredients, packaging, and manufacturing.
Reduce emissions intensity across production and processing.
Align operations with Hershey’s climate commitments.
This creates a structural dependency:
Agricultural emissions dominate Scope 3.
Supplier performance directly affects corporate reporting.
This represents a commodity-driven Scope 3 governance model, particularly focused on cocoa.
3. Cocoa Traceability and Deforestation Risk Management
A defining feature of Hershey’s framework is cocoa traceability and sourcing governance.
Suppliers must:
Ensure traceability of cocoa to the farm or cooperative level.
Avoid sourcing from areas linked to deforestation.
Implement sustainable farming practices.
Participate in monitoring systems for land use and sourcing.
This creates a land-use governance system, where supplier compliance affects:
Deforestation risk.
Agricultural emissions.
Corporate sustainability commitments.
Suppliers must maintain visibility across:
Farmers and cooperatives.
Processing facilities.
Supply chain intermediaries.
4. Environmental Data Systems and Reporting Infrastructure
Suppliers must:
Provide environmental data through structured reporting systems.
Maintain documentation on emissions, sourcing, and resource use.
Support Hershey’s ESG and sustainability disclosures.
This requires:
Standardized data collection methodologies.
Centralized environmental data management.
Ability to provide auditable, verifiable information.
Traceability systems are closely integrated with environmental reporting.
5. Audit, Verification, and Compliance Enforcement
Hershey enforces compliance through:
Supplier self-assessments.
Third-party audits and verification.
Field monitoring (especially in cocoa supply chains).
Corrective action plans.
Suppliers must:
Provide access to facilities and sourcing data.
Demonstrate compliance with environmental and sourcing standards.
Address non-conformances within defined timelines.
This creates a verification-based compliance regime, combining audits and field-level monitoring.
6. Procurement Integration and Supplier Segmentation
Environmental performance is embedded into procurement through:
Supplier onboarding and qualification.
Ongoing performance evaluation.
Sourcing and contract decisions.
Suppliers are segmented based on:
Commodity type (especially cocoa).
Environmental and deforestation risk.
Contribution to Scope 3 emissions.
High-impact suppliers face:
Mandatory traceability requirements.
Increased disclosure and reporting obligations.
Greater audit scrutiny.
This creates a tiered governance system.
7. Upstream Cascade Requirements
Suppliers are required to:
Extend Hershey standards to farmers and upstream producers.
Ensure compliance across agricultural supply chains.
Maintain traceability and transparency.
This extends governance into multi-tier agricultural networks, particularly in cocoa sourcing regions.
8. Lifecycle and Product-Level Implications
The framework directly influences:
Raw material sourcing (cocoa, sugar, ingredients).
Processing emissions.
Product environmental footprint.
Supplier performance affects:
Product carbon intensity.
Land-use and deforestation impacts.
Corporate ESG disclosures.
This aligns supplier operations with product-level and corporate climate strategies.
Important Deadlines
Key timelines include:
2030 emissions reduction targets aligned with Hershey’s climate commitments.
Deforestation-free sourcing targets (aligned with industry timelines).
Annual supplier reporting cycles.
Continuous improvement milestones.
Suppliers are expected to demonstrate progressive alignment.
Current Status
The framework is active and highly focused on agricultural governance, with increasing emphasis on:
Cocoa traceability.
Supply chain emissions transparency.
Integration with climate and biodiversity commitments.
Hershey continues to strengthen supplier climate governance.
Penalties for Non-Compliance
Enforcement is procurement-driven and includes:
Corrective action requirements.
Reduced sourcing volumes.
Loss of preferred supplier status.
Contract termination.
This creates a direct link between environmental performance and commercial viability.
Examples of Known Violations
Typical failure modes include:
Lack of cocoa traceability.
Non-compliance with deforestation-free sourcing requirements.
Failure to disclose emissions data.
Inconsistent environmental reporting.
Failure to address audit findings.
These failures directly impact supplier eligibility.
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