Slavery and Human Trafficking Initiative

Monster Beverage Corporation

Slavery and Human Trafficking Initiative

 

The commitment to human rights and the desire to operate with the highest of ethical standards are of the utmost importance to Monster Beverage Corporation and its subsidiaries (collectively, “Monster Energy,” “Monster” or the “Company”).  The International Labor Organization (the “ILO”) estimates that, as of 2016, 24.9 million people are in forced labor situations, over half of whom are in industries that may feed into global supply chains. It is vital to always conduct business in a way that respects and promotes human rights.  We at Monster Energy take slavery and human trafficking seriously, and are opposed to slavery and human trafficking in all its forms.

 

Our Company

Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries, which market and distribute energy drinks throughout the United States, United Kingdom, and a growing number of international markets.  We do not directly manufacture finished goods, but instead outsource the manufacturing process to third-party bottlers and contract packers.  We purchase flavors, concentrates, sweeteners, juices, dietary ingredients, cans, bottles, caps, labels, trays, boxes and other ingredients for our beverage products from our suppliers, which are delivered to our various third-party bottlers and co-packers.  In some cases, certain common supplies may be purchased by our various third-party bottlers and co-packers.  For our Strategic Brands segment, the third-party bottlers/distributors are responsible for the manufacture and packaging of the finished products, including the procurement of all other required ingredients and packaging materials.  Accordingly, we choose to work with a limited number of suppliers who adhere to high ethical standards. 

 

Our Approach

Monster Energy takes a multi-faceted approach to address the risk of human trafficking and slavery in our business and in our supply chain.  The central pillars of our efforts include:

  • Fostering accountability through organizational policies and governance.
  • Incorporating our Supplier Code of Conduct into supplier contracts.
  • Conducting due diligence on our suppliers, including verification and audits.
  • Working with our suppliers to mitigate human trafficking and slavery risks in their operations and supply chains through corrective action plans.
  • Providing training for our employees, auditors, and suppliers.
  • Establishing mechanisms for individuals to raise concerns or identify potential violations of our policies.
  • Taking corrective action when necessary.

 

Governance and Organizational Policies

The Board of Directors of Monster Beverage Corporation oversees Monster Energy’s human rights initiatives and risks.  The Nominating and Corporate Governance Committee of the Board of Directors has oversight of the Company’s policies related to human rights and, at least annually, reviews the Company’s efforts on these issues.  On a day-to-day basis, managers from quality, procurement, and legal work as a team to implement Monster Energy’s human rights policies and initiatives, including oversight of agricultural suppliers and implementation of the Supplier Code of Conduct.  They are assisted and supported by senior members of the Company’s legal department, who are deeply involved in each aspect of Monster’s initiatives.  Our efforts are led by our Senior Vice President & Deputy General Counsel.

 

The Company is committed to respecting the human rights that the ILO has declared to be fundamental rights at work.

 

Monster Beverage Corporation Human Rights Policy

The Monster Beverage Corporation Human Rights Policy applies to all of Monster Energy and its employees, regardless of location.  It addresses forced labor and human trafficking, diversity and inclusion, child labor, workplace health and safety, workplace security, work hours, wages and benefits, freedom of association and collective bargaining, and employee reporting.  The Monster Beverage Corporation Human Rights Policy is available here: https://www.monsterbevcorp.com/hr-policy.php.

 

Monster Beverage Corporation Code of Business Conduct and Ethics

Our Code of Business Conduct and Ethics requires our employees, officers and directors to lawfully conduct our business with integrity.  It specifically addresses respect for human rights, and requires employees to uphold the Monster Beverage Corporation Human Rights Policy.  In addition, the standards of conduct under the Code of Business Conduct and Ethics include equal employment opportunity, providing a safe and healthy work environment, equitable treatment of employees and compliance with laws, rules and regulations applicable to Monster Beverage Corporation. We interpret these standards broadly, and require ethical behavior and compliance with the Code of Business Conduct and Ethics to ensure that slavery and human trafficking do not exist in our supply chain.  Employees are required to promptly report any perceived violations of the law or the Code of Business Conduct and Ethics.  It is available on our corporate website at the following link: http://investors.monsterbevcorp.com/static-files/2cb26535-baa4-4101-9a1e-d1b24af8ec27.

 

Monster Beverage Corporation Supplier Code of Conduct

Our commitment to human rights extends to our suppliers, who are expected to abide by the Monster Beverage Corporation Supplier Code of Conduct, which applies to both a supplier’s own practices and the acts of a supplier’s employees. We encourage our suppliers to work toward implementing best practices and to exceed the requirements of this Supplier Code of Conduct, and request that our suppliers communicate these policies to their workers.  The Monster Beverage Corporation Supplier Code of Conduct covers forced labor, child labor, abuse of labor, wages, work hours, freedom of association and collective bargaining, and discrimination, among other topics, and is updated regularly.  Not only is the Supplier Code of Conduct communicated to suppliers, certain contracts with suppliers incorporate the Supplier Code of Conduct itself.  As Monster’s contracts with suppliers turn over at various intervals, when renewing, Monster will use commercially reasonable efforts to incorporate its Supplier Code of Conduct, with a view toward achieving incorporation in approximately 10% of its supplier contracts by June 30, 2021, 30% by June 30, 2022, and with the expectation of increasing the percentage to the majority of Monster’s supplier contracts by 2024.   The Supplier Code of Conduct is reviewed at least annually, considering updates based on internal review and guidance from external stakeholders.  The Monster Beverage Corporation Supplier Code of Conduct is found here: https://www.monsterbevcorp.com/sc-conduct.php.

 

Due Diligence Process

Monitoring, Verification and Certification

We survey our suppliers to identify risks of slavery and human trafficking throughout our supply chain and to evaluate the risk profiles of individual suppliers.  We have retained a specialized third-party service provider to engage our suppliers using the Slavery and Trafficking Risk Template (the “STRT”).  Housed by the Social Responsibility Alliance, the STRT is a proven data exchange template that measures suppliers’ vulnerability to modern slavery and human trafficking occurring in their own operations and/or in their supply chain and is maintained by a multi-stakeholder Development Committee comprised of industry leaders, academics, civil society organizations, legal firms and others.  In the STRT, suppliers are asked an array of questions about their operating contexts, their processes, policies and practices, as well as any measures they have in place to identify, prevent and manage risks related to human trafficking and slavery.  Suppliers are also asked to identify whether they operate in countries identified as being at a higher risk of slavery and human trafficking.  This slavery and human trafficking risk survey is provided in multiple languages and suppliers must certify to the accuracy of their responses and provide supporting evidence.  If suppliers do not respond to the survey, they receive personal follow-up, both from the third-party service provider and from Monster Energy employees.

 

These verification and certification efforts are not limited to our direct (tier 1) suppliers; for certain suppliers, we pay attention to the suppliers of our suppliers, going further down the supply chain.  In the slavery and human trafficking survey, our direct suppliers are asked to certify whether their suppliers are required to accept and comply with the direct suppliers’ policies regarding forced labor and human trafficking, and whether that downstream supplier conducts its own verification activities to identify, assess, and manage risks specific to slavery and human trafficking in its own operations and supply chain. This information gives us the ability to survey second tier suppliers.

 

Our most recent survey covered 2017 and 2018 suppliers who contributed to products sold by Monster Energy.  This survey cycle ended in early 2019 and, as of April 30, 2019, over 80% of such suppliers completed the survey.  We continue to work toward increasing this completion percentage, seeking survey responses from those suppliers who have not completed the survey.  We also engage with suppliers after they complete the survey through the actions described below.

 

In certain high-risk industries, there is a greater risk of forced labor and human trafficking, including several in our supply chain: sugarcane, coffee, and tea.  We placed a particular emphasis on our suppliers in these industries, and received STRT responses from 100% of our direct suppliers of sugarcane, coffee, and tea in our most recent survey.  In addition, we have confirmed that our suppliers of these agricultural ingredients are not located in countries identified by the U.S. Department of Labor’s 2018 List of Goods Produced by Child Labor or Forced Labor as having forced labor present in the production of sugarcane.

 

After any additional information requested from suppliers is received, every supplier’s response to the STRT is analyzed and scored.  They are then categorized as to the level of potential risk of slavery and human trafficking in their operations and supply chain.  Monster requests that suppliers identified as being at medium- or high-risk complete a training program on slavery and human trafficking from a specialized third-party provider and Monster and/or a third party service provider contacts such suppliers regarding training with a goal towards improving their compliance.  Monster will use commercially reasonable efforts to have approximately 30% of suppliers flagged as medium- or high-risk trained by June 30, 2022 and with the expectation of training the majority of Monster’s suppliers flagged as medium- or high-risk by 2025.  This supplier training is ongoing.

 

We continue to survey new suppliers that have been engaged after our survey of 2017 and 2018 suppliers concluded.  We are in the process of planning our next survey.

 

Corrective Action Plans

We have engaged the specialized third-party service provider to work with those suppliers flagged as medium- or high-risk to mitigate human trafficking and slavery risks in their operations and supply chains.  After suppliers complete the supplier training described above, the specialized third-party service provider assigns each supplier a corrective action plan that targets the gaps identified through the supplier’s STRT response. Such corrective actions are to be carried out within clearly defined timeframes, and may include the adoption and implementation of new policies, the training of employees, and the establishment of due diligence processes to help the supplier identify and address slavery and human trafficking risks.  In addition to monitoring by the specialized third-party service provider, we will review and track the progress of these suppliers and the implementation of these corrective action plans in our next survey.

 

Audits

Audits are also a key part of our due diligence process.  We conduct announced audits of certain suppliers.  Audits consist of a review of documents, interviews with workers, and visits to production facilities.  Auditors are instructed to include issues of slavery and human trafficking in these audits, for which they are provided specialized training.  Any issues identified during an audit are flagged for the Senior Vice President and Deputy General Counsel to review and take corrective action.

 

Training

Training enables us to educate our employees, auditors, and suppliers on how to recognize and combat forced labor and human trafficking.  We have implemented a training program on slavery and human trafficking, designed by a specialized third-party provider, offering the following categories of trainings:

  • Employee Training – Employees whose work relates to supply chain management (including those in procurement and the legal department) are provided a mandatory training on slavery and human trafficking risks and the Company’s policies. The training equips these employees with an understanding of the issues of slavery and human trafficking, how their position relates to these issues, and steps to take if they have any concerns.  The training is offered in a live session, with a recording available for employees who are unable to attend.
  • Auditor Training – Auditors are given specialized training, designed to help them recognize the risks and signs of slavery and human trafficking in their audits.
  • Supplier Training – As stated above, Monster requests that suppliers identified as being at medium- or high-risk complete a training program on slavery and human trafficking from a specialized third-party provider. This training also covers the Monster Beverage Corporation Supplier Code of Conduct and issues related to recruitment.

 

Reporting and Accountability

We encourage individuals to, without fear of reprisal, report any violations or perceived violations of the law, the Code of Business Conduct and Ethics, the Supplier Code of Conduct, and the Human Rights Policy, and raise any other questions or grievances they have.  We prohibit retaliation against individuals for reporting, through measures such as guaranteeing anonymity.

 

We make a number of mechanisms available for any individuals or groups to report, including:

  • Writing to the Monster Beverage Corporation at the following address:

Monster Beverage Corporation

ATTN: Senior Vice President and Deputy General Counsel

1 Monster Way

Corona, CA 92879

  • Calling the anonymous Monster Beverage Corporation compliance hotline, accessible globally at (800) 506-4310 (U.S.) or (844) 815-4398 (international). The hotline is available 24 hours a day, 365 days a year, and can be reached in several languages.
  • Submitting a report at https://www.mycompliancereport.com/, utilizing the access code, “MEC”.
  • For employees, contacting their direct manager, their next-level manager, or contacting their human resources business partner.

 

If we identify adverse human rights impacts resulting from or caused by our business activities, we are committed to providing for or cooperating in their fair and equitable remediation.  Any employee who is found to have violated the Code of Business Conduct and Ethics is subject to disciplinary action, including termination of employment.  Similarly, if we uncover that a supplier is not adhering to laws regarding slavery and human trafficking, we will take corrective action, including, after consideration of ways to avoid unforeseen negative human rights impacts, terminating our business dealings with such offending supplier.

 

Moving Forward

Monster Energy’s efforts will continue in 2020 and beyond.  In particular, Monster Energy will:

  • Continue to survey new suppliers, work toward increasing the percentage of our suppliers who have completed the survey and plan our next survey of all current suppliers who contributed to products sold by Monster Energy.
  • Continue to follow up with suppliers identified as medium- and high- risk and work with such suppliers on corrective action plans, and monitor the effectiveness of Monster Energy’s efforts.
  • Incorporate the insights we have gained from our last survey while planning our next survey.
  • Continue to train our employees and auditors on these issues, and improve and expand our training programs based on feedback and best practices.

 

A copy of our California Transparency in Supply Chains Act and UK Modern Slavery Act statement is available here.