Suppliers

Key supplier analysis
Now we have a quantitative way to monitor key social and environment metrics throughout our supply chain, we will be engaging with our key suppliers to drive forward their performance. We have identified our key suppliers through our annual spend. Out of the 10 tier 1 suppliers, we spend 93.4% with just two of them.

• One of these suppliers (supplier 1) produces the metal parts of our products, including powder coating and pattern printing for some products. Also produces lids with metal caps and assembles our core products with lids from other suppliers.
• The other tier 1 supplier (supplier 2) does not produce products for us, but manages three tier 2 suppliers who produce the main components of our Series 2 products. Because of this, we focus our efforts on their three tier 2 suppliers (supplier 3, 4, & 5), and have included them in the data analysis below.

**Audits** We are working with our five main suppliers to provide us with SMETA audit reports at least every two years. Sedex created the SMETA audit framework to ensure consistent standards are being reported-on across industries. SMETA audits are undertaken by certified third parties.

Chilly’s uses these audits to monitor the performance of our suppliers. Where a supplier has not met the requirements of the audit, it is listed as a non-conformity. Below are the findings from the most recent audits for our four key suppliers (this excludes supplier 2 as it does not produce products for Chilly’s).

In these four audits, 32 non-conformities were identified across 11 topics. These range in severity:

· 3 critical – most important to address
· 16 major non-conformities – high importance to address
· 13 minor non- conformities – lower importance to address

In 2024/25 we will focus our efforts on engaging our suppliers to address the areas identified. We’ll use these ratings to guide us on where to focus our attention first. Suppliers can update their progress on the Sedex platform, as well as through future audits. This will allow us to actively monitor progress.

Chilly’s Responsible Procurement Tool
In 2024, Chilly’s internally launched its sustainable procurement tool. The tool will be used by our employees to incorporate sustainability considerations when choosing which supplier to work with or which product to purchase.

The Chilly’s team buys a variety of items, which generally fall into three categories:

• Services – where the supplier will provide a service such as website support or shipping orders
• Goods for resale – products or items that are intended to be sold
• Goods not for resale - products or items that are not intended to be sold, for example office supplies or team equipment

The procurement strategy, tool and accompanying material guidance relate to all three categories. By using the tool, Chilly’s can identify risks associated with the specific products or services we are procuring. From this, specific sustainability criteria are then generated in order to mitigate those risks.

There are three factors that inform the sustainability criteria:

If it is a good for resale – we have stricter criteria for goods for resale compared to goods not for resale or services. These tend to be more commonly purchased and are a core part of our business.
The amount of spend with the supplier – this often indicates the volume of something being supplied – the higher the spend, the higher the volume and therefore, the larger the impact. With our product suppliers, our spend allows us to have more influence over how something is produced.
The level of risk associated with the good or service and location related to activity – this is determined by Radar, a risk tool provided by our supply chain management partner Sedex. Sedex has a wealth of supply chain data, including identified environmental and social issues that occur in supply chains. The tool identifies trends in the data specifically related to a location and type of industry. This then informs the risks and the likelihood of them occurring.

We will continue to use the tool throughout 2024/25, and will be monitoring its use. We will review the procurement tool and train our employees on its use every 12 months.

Supplier policies and questionnaire

Chilly’s has several standards and policies which it requires its tier 1 product suppliers adhere to. These are used before and during our partnership with suppliers. Where specific criteria has been identified through the procurement tool, the criteria are integrated where appropriate into supplier policies and questionnaires.

Chilly’s Supplier Code of Conduct and Ethical Trade & Human Rights Policy
Chilly’s supplier code of conduct outlines the social standards that we require our suppliers who make our products to adhere to. Our Code includes standards related to working conditions, freedom of association, working hours and health and safety. This is aligned to the ETI Base Code, an internationally recognised code of labour practice, founded on the conventions of the International Labour Organisation (ILO).

Our Ethical Trade & Human Rights Policy outlines our baseline requirements, and links back to our Code of Conduct. It also includes how we address non-conformities and corrective action plans.

Supplier Assessment Questionnaire
To understand how our suppliers who produce Chilly’s products are meeting our standards outlined in our Code of Conduct, we ask them to complete a supplier assessment questionnaire. The questions align directly to the standards within our Code of Conduct, enabling us to highlight any non-conformities or areas for improvement. As members of Sedex, we will be moving this onto an online platform, which will analyse the results and identify risks and trends within our suppliers. We’ll keep you updated on our progress.

Environmental policy
Chilly’s Environmental Policy outlines the minimum standards we have adopted, based on international industry standards relating to environmental impacts. They are designed to be reasonable and achievable, and we expect our suppliers who make our products to meet these. It includes requirements relating to hazardous substances, water, emissions and waste. Suppliers are encouraged to go beyond these standards, unless where contradicted by law.

Anti-Modern Slavery Statement
Chilly’s has published an Anti-Modern Slavery Statement, in accordance with the UK Modern Slavery Act 2015 which requires businesses to disclose the steps they are taking to tackle slavery, servitude, forced or compulsory labour and human trafficking (known as modern slavery). It outlines the approach we take to uphold human rights and mitigate modern slavery throughout our supply chain.

Chilly’s does not tolerate slavery and human trafficking within our supply chains. If we find evidence of a failure to comply with our policy, we would engage with the supplier and discuss remediation plans. If there are continued non-compliances, we reserve the right to terminate our relationship with the supplier concerned.