Re: Art. 964j-l of the Swiss Code of Obligations and the Swiss Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labor.
This voluntary report relates to the due diligence and reporting obligations in relation to minerals and metals from conflict-affected areas and child labor required by Art. 964j-l of the Swiss Code of Obligations (“CO”) and the Swiss “Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labor” (“DDTrO”). It covers the period 1 January 2023 to 31 December 2023. PolyPeptide’s analysis in 2023 in relation to minerals and metals from conflict-affected areas established that it does not place in free circulation or process minerals containing tin, tantalum, tungsten or gold, or metals from conflict-affected and high-risk areas in Switzerland. PolyPeptide also performed its first analysis in 2023 in relation to Child Labor (as defined in its Global Supply Chain Policy on Child Labor1). PolyPeptide came to the conclusion that it does not offer any products or services for which there are reasonable grounds to suspect that they were manufactured or provided using Child Labor. However, given that PolyPeptide operates in potential Child Labor risk contexts (e.g., in light of its global sites and international Supply Chain (as defined in its Global Supply Chain Policy on Child Labor)), it has taken the decision to conduct due diligence and is reporting on this matter on a voluntary basis.
PolyPeptide strives to remain focused on the needs of its customers and its business, while adhering to fundamental principles of ethics and compliance, such as the United Nations Convention on the Rights of the Child2, the Children’s Rights and Business Principles developed by UNICEF, the United Nations Global Compact and Save the Children3 and UNICEF’s Children are everyone’s business workbook 2.04.
PolyPeptide is aware of the problem of Child Labor in global value chains and takes its responsibility to respect human rights in its own operations and throughout its business relationships seriously, meaning to act with due diligence to avoid infringing on the rights of others and to address any adverse impacts. PolyPeptide is committed to complying with all applicable laws and regulations on Child Labor. Effectively preventing and mitigating adverse impacts may also help PolyPeptide maximize positive contributions to society, improve stakeholder relationships and protect its reputation.
The foundation of PolyPeptide’s commitment to complying with all applicable laws and regulations on Child Labor is its Global Supply Chain Policy on Child Labor1, Code of Business Conduct and Ethics1 and Supplier Code of Conduct1, which are mandatory for all employees, vendors, consultants and other business associates across PolyPeptide.
The Global Supply Chain Policy on Child Labor sets out in particular how PolyPeptide will comply with its due diligence and transparency obligations in its Supply Chain in relation to Child Labor. The Group-wide implementation of the principles as set out in the Global Supply Chain Policy on Child Labor helps PolyPeptide to avoid and address any adverse impacts related to Child Labor that may be associated with its Supply Chain.
PolyPeptide’s Supply Chain due diligence and reporting management system as described in its Global Supply Chain Policy on Child Labor is an essential element in (i) detecting any products or services in its Supply Chain in relation to which there is a reasonable suspicion that they have been manufactured or provided using Child Labor, (ii) identifying and assessing the risks of adverse impacts in PolyPeptide’s Supply Chain, (iii) establishing a risk management plan and taking measures to minimize the risks identified, regularly reviewing the effectiveness of the measures taken, including internal documentation, and (iv) preparing and publishing a yearly report on compliance with the due diligence obligations. The Global Supply Chain Policy on Child Labor further outlines PolyPeptide’s Supply Chain Traceability System in relation to Child Labor.
As an integral part of PolyPeptide’s Supply Chain management system, its Global Supply Chain Policy on Child Labor is based on and to be read in conjunction with (i) PolyPeptide’s Supplier Code of Conduct, (ii) the International Labor Organization (the “ILO”) Conventions Nos 1385 and 1826, (iii) the ILO-IOE Child Labour Guidance Tool for Business of 15 December 20157, and (iv) the OECD Due Diligence Guidance for Responsible Business Conduct of 30 May 20188. The Global Supply Chain Policy on Child Labor further supports PolyPeptide’s environmental and human rights sustainability objectives.
The Code of Business Conduct and Ethics serves to (i) emphasize PolyPeptide’s commitment to ethics and compliance with the law; (ii) set forth basic standards of ethical and legal behavior; (iii) provide reporting mechanisms for known or suspected ethical or legal violations; and (iv) help prevent and detect wrongdoing. In particular, the Code of Business Conduct and Ethics emphasizes PolyPeptide’s efforts to ensure that its activities (directly or through its business relations) respect fundamental human rights, as set out by the United Nations Bill of Rights9 and the core conventions of the ILO. PolyPeptide rejects any behavior that violates the human rights of any employee or individuals employed on behalf of the Group, especially forced labor or Child Labor, in its Supply Chain. The use of forced, bonded or indentured labor or involuntary prison labor is strictly prohibited; this applies both to its suppliers and within the Group.
The Supplier Code of Conduct requires suppliers to comply with all applicable national and international laws and regulations, including the ILO and the United Nations’ Universal Declaration of Human Rights, industry standards, and all other relevant statutory requirements whichever requirements impose the highest standards of conduct. The Supplier Code of Conduct sets out PolyPeptide’s expectations with regard to ethics, labor and human rights, health and safety, environment, management systems and how questions or concerns can be reported to PolyPeptide. It states that suppliers must prohibit involuntary labor or work performed under the threat of penalty, including forced, prison, indentured labor, bonded labor, or other forms of slavery and/or servitude. Suppliers must further avoid all use and forms of Child Labor in their business operations and act in accordance with the United Nations Global Compact principles, the ILO labor standards and the OECD Guidance for Responsible Business Conduct. Where local laws are stricter by requiring a higher age for work or compulsory education, they take precedence. The Supplier Code of Conduct further states that suppliers shall publicly declare zero tolerance of Child Labor in their own business operations and prohibit all forms of child or forced labor (including modern slavery and human trafficking) in their own supply chain network. Suppliers must perform the necessary due diligence as specified by the OECD and in accordance with the Swiss regulations, especially when requested by PolyPeptide. The Group commits to provide providing suitable support, should a supplier identify practices or behaviors that fall short of these expectations.
PolyPeptide maintains a network of over 440 direct raw material suppliers around the globe. In 2023, the top 100 raw material suppliers together accounted for around 90% of the total material spending. The Group’s main raw material categories constitute starting materials, solvents, reagents, and purification resins. Where feasible, PolyPeptide sources these products regionally, which benefits regional economies and communities.
PolyPeptide requires its suppliers to acknowledge and comply with its Supplier Code of Conduct and the Global Supply Chain Policy on Child Labor. The Group carries out a risk-based assessment to anticipate, avoid or mitigate potential or actual adverse impacts associated with its Supply Chain. The instruments that PolyPeptide may use to identify and assess any risks of Child Labor in its Supply Chain are described in the Global Supply Chain Policy on Child Labor.
For example, PolyPeptide introduced in 2023 a uniform supplier screening and onboarding process, starting with a search on a third-party screening interface. The process contributes to the identification of high-risk suppliers and the risk-based prioritization. In addition, with the support of a multinational assurance, inspection, product testing and certification company, PolyPeptide began engaging with selected high-risk tier 1 raw material suppliers through a questionnaire based on ISO 26000. Suppliers are selected using a risk-based approach, focused on any enhanced risks of human rights and Child Labor violations based on, inter alia, the UNICEF Children’s Rights in the Workplace Index. PolyPeptide may further conduct on-site as well as remote audits on a case-by-case basis to verify compliance. In the event of any observations or suspicions of actual or potential violations, PolyPeptide will engage with the supplier to create a remediation plan, and in severe cases terminate the relationship. In 2023, nine selected high-risk tier 1 raw material suppliers (that are among PolyPeptide’s top 100 suppliers) started their participation in assessments, including for human rights and Child Labor issues. With regard to human rights and/or Child Labor issues, no violations were detected as of 31 December 2023. PolyPeptide is committed to expanding and continuously improving the assessment of its Supply Chain, with a particular focus on any potential new suppliers from high-risk areas before entering into any business relationships. At the same time, PolyPeptide is committed to the ongoing training of relevant employees on the topic of Child Labor to foster awareness within the Group and cooperation with suppliers.
For the financial year 2023, PolyPeptide assessed whether it offers any products or services for which there are reasonable grounds to suspect that they were manufactured or provided using Child Labor. As of 31 December 2023, through its risk analysis, information and research based on reasonable investigation, the assessment did not reveal any suspicion of Child Labor related to PolyPeptide’s own business activity or that of its selected high-risk tier 1 raw material suppliers. PolyPeptide has internally documented this finding. Furthermore, through its risk analysis conducted in 2023, PolyPeptide did not identify any suspicion of Child Labor beyond its tier 1 Supply Chain. Given the complexity of the Supply Chain beyond tier 1, PolyPeptide will strive to expand its monitoring activities to enhance its diagnostic understanding of those suppliers.
PolyPeptide maintains, as an early warning mechanism for risk identification, a reporting procedure that allows all interested parties to raise reasonable concerns about the existence of a potential or actual adverse impact related to Child Labor.
Anybody with knowledge or suspicion of illegal activities or irregularities at PolyPeptide (including any concerns about Child Labor in PolyPeptide’s Supply Chain) can report observations confidentially and even anonymously, if desired, through PolyPeptide’s whistleblower programs. Further information about PolyPeptide’s whistleblower policies and hotlines can be found at: www.polypeptide.com/investors/corporate-governance/. Anyone who, in good faith, raises a concern about a possible ethics or compliance violation will be supported by PolyPeptide management and will not be subject to any form of retaliation. In addition, PolyPeptide will provide information on reports received to the Audit and Risk Committee or Board of Directors, as appropriate. All reports will be internally documented in writing.
In 2023, PolyPeptide did not receive any complaints or reports about Child Labor in its own operations or Supply Chain.
Names and addresses of all PolyPeptide’s tier 1 raw material suppliers, as well as the category of the goods or services they provide, are recorded in the Group’s ERP systems. PolyPeptide keeps records of its monitoring activities, assessments, and completed third party ISO 26000 questionnaires.
PolyPeptide established and will maintain, as integral part of its Supply Chain management system, a system to document information for each product or service for which there are reasonable grounds to suspect Child Labor, if any (“Supply Chain Traceability System”). The Supply Chain Traceability System consists of internal company documentation and would list, insofar as reasonably possible, the following information for each product or service in the upstream Supply Chain for which there are reasonable grounds to suspect Child Labor: (a) description of the product or service and the trade name (if one exists) and (b) the names and addresses of the vendor and the production sites or the service provider for PolyPeptide. As of 31 December 2023, the Supply Chain Traceability System contained no entries, as PolyPeptide’s assessment did not reveal any reasonable suspicion of Child Labor.
PolyPeptide’s general communication and reporting in relation to Child Labor are described in the Global Supply Chain Policy on Child Labor.
The Global Supply Chain Policy on Child Labor, Code of Business Conduct and Ethics and Supplier Code of Conduct are all publicly available on PolyPeptide’s website. PolyPeptide will continue to report in accordance with the DDTrO.