Our commitment to human rights continues to be a key priority for Monster Beverage Corporation and our international business (“Monster” or “we”) as we strive to ensure that we source responsibly and work to prevent modern slavery and human trafficking throughout our organization and in our supply chain. We take this commitment seriously and are opposed to slavery and human trafficking in all its forms. We recognize that modern slavery is a critical global issue, and we continue to engage with our stakeholders and suppliers to provide support and maintain the safety and well-being of our employees and partners.
In this statement, which is made pursuant to the United Kingdom Modern Slavery Act 2015 and the California Transparency in Supply Chains Act of 2010, Monster is disclosing, on behalf of ourselves and our applicable subsidiaries (including, but not limited to, Monster Energy Europe Limited), our efforts taken during the last financial year ending December 31, 2022 to ensure that slavery and human trafficking do not occur in our supply chain or in any part of our business.
Monster 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 choose to work with a limited number of suppliers who adhere to high ethical standards, and we take this into account when identifying and selecting potential business partners and suppliers. We work with suppliers who have passed our internal background checks.
All distribution territories in the United States, and substantially all distribution territories internationally, have been transitioned to The Coca-Cola Company network of bottlers/distributors. As a result, Monster relies in large part on The Coca-Cola Company network of bottlers/distributors and other third parties.
On February 17, 2022, we completed the acquisition of CANarchy Craft Brewery Collective LLC (“CANarchy”), a craft beer and hard seltzer company. Following the recent acquisition, CANarchy is also distributing flavored malt beverages. We are working to integrate the CANarchy suppliers into our wider Monster supplier processes in 2023.
We take a risk-based approach to our due diligence efforts, which requires us to endeavor to include the entirety of our supply chain, while paying greater attention to those suppliers who are deemed a heightened risk for operational or supply chain links to human trafficking and slavery. To this end, our 2022 risk assessment program covers all suppliers as of December 31, 2022.
As in previous years, our specialized third-party service provider sends each of our suppliers a “Slavery and Trafficking Risk Template” (the “STRT”), which we requested that they complete and return. Housed by the Social Responsibility Alliance, the STRT is a data exchange template that seeks to measure suppliers’ vulnerability to modern slavery and human trafficking occurring in their own operations and/or in their supply chain. In the STRT, suppliers are asked numerous 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. 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.
The STRT comprises several sections designed to comprehensively assess suppliers based on specific criteria and standards. The Screening and Prioritization functionality within the STRT enables us to collect information from suppliers about their operations in various countries and helps us to understand inherent risk factors associated with forced labor, such as the use of vulnerable groups of workers. The STRT also enables us to assess policy measures that suppliers have in place to address forced labor and child labor and clarify the protective measures suppliers have in place to support their workforce. Other questions within the STRT enable us to assess the level of due diligence each supplier has in place to manage these risks and deal with any issues or take steps towards remediation.
These verification and certification efforts are not limited to our direct (tier 1) suppliers. Where possible, we review the suppliers of our suppliers (tier 2), going further down the supply chain. The STRT facilitates this sub-tier approach by requiring our direct suppliers to scrutinize their own suppliers for evidence of proper processes for managing human trafficking and slavery risks. Suppliers are asked to certify whether they require their own suppliers 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.
We recognize that in certain high-risk industries, there is a greater risk of forced labor and human trafficking, including the following in our supply chain: sugarcane, coffee, and tea. In line with our risk-based approach, we placed a particular emphasis on our suppliers in these industries. In 2022, we decided to expand our supply chain due diligence efforts to include all of our existing suppliers which resulted in 200 additional suppliers into our risk assessment process compared to 2021. This risk assessment showed opportunities for growth in certain supplier’s policies, processes and practices for managing human trafficking and slavery. As with previous years, we engaged these suppliers in a corrective action process. The increase in supplier oversight meant that we were able to engage an additional 20% of suppliers in tailored corrective action plans compared to 2021. This extensive outreach to our suppliers is currently ongoing and nearly half of our suppliers have now completed their responses to STRTs. We continue to engage with suppliers who remain outstanding. Further detail about the corrective actions process is provided below.
Our ongoing engagement with our suppliers enables us to try and continuously improve our due diligence program and, with time, we have seen an improvement in our suppliers’ willingness and ability to engage with the different aspects of the due diligence process.
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.
In 2022, we continued to engage a specialized third-party service provider to facilitate our engagement with the high risk suppliers in mitigating human trafficking and slavery risks in their operations and supply chains. We developed corrective action plans tailored to individual suppliers, with each element of the plan designed to address specific issues which came to light during the risk assessment process. Such corrective actions may include the adoption and implementation of new policies, the training of employees, and the establishment of internal due diligence processes to help the supplier identify and address slavery and human trafficking risks in their own business and supply chains. The implementation of the corrective action plans is preceded by training on the risks of slavery and trafficking and how to mitigate these for the affected suppliers. This encourages suppliers to approach their assigned corrective actions with a better understanding of modern slavery risks and why it is important that they take the actions assigned to them.
In addition to STRT responses, we try to track and follow up on the progress made by each supplier on their corrective action plan. We continue to engage with the outstanding suppliers to advance any specific corrective actions. We are also engaging with those suppliers that are yet to complete the initial assessment.
We recognize that certain groups are at higher risk of forced labor than others. We seek to mitigate this risk in our supply chain by making specific inquiries through the STRT into the presence of child labor and migrant workers in our supply chains. We also inquire into suppliers’ practices for preventing discrimination before hiring, on the job or upon leaving based on race and/or color, sex, religion, political opinion, national extraction, age, HIV/AIDS status, disability, nationality, sexual orientation, familial responsibilities, and trade union membership or activities.
We have a number of appropriate policies in place that underpin our commitment to ensure that there is no modern slavery or human trafficking in our supply chains or in any part of our business, and we expect our employees, suppliers and partners to adhere to such policies. These policies are reviewed and updated periodically to reflect any change in risk profiles, international guidance or local law requirements.
The Monster Beverage Corporation Human Rights Policy applies to all of Monster and our 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 .
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. 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. We distribute the Code of Business Conduct and Ethics to each of our employees, officers and directors, and make it available on our corporate website at the following link: https://investors.monsterbevcorp.com/static-files/2cb26535-baa4-4101-9a1e-d1b24af8ec27 .
We expect our suppliers to comply with all legal requirements of the country or countries in which they are doing business, including laws regarding slavery and human trafficking. Just as our Code of Business Conduct and Ethics sets high standards for our employees, officers, and directors, suppliers are expected to abide by our Supplier Code of Conduct, which covers areas including forced labor, child labor, abuse of labor, wages, hours, freedom of association and collective bargaining, and discrimination, among others. We encourage our suppliers to work toward implementing best practices and to exceed the requirements of our Supplier Code of Conduct. Adherence to the Supplier Code of Conduct is a contractual requirement for the majority of our supplier contracts, and we continue to increase incorporation of such requirement into our contracts as our contracts with suppliers turn over. The Monster Beverage Company Supplier Code of Conduct is found here: https://www.monsterbevcorp.com/sc-conduct.php .
To ensure a proper understanding of the risks of modern slavery and human trafficking in our supply chains and our business, we provide a training program from a specialized third-party provider on slavery and human trafficking, offering the following categories of training:
Employees whose work relates to supply chain management (including those in procurement and the legal department) are provided with mandatory training on slavery and human trafficking risks in addition to our policies. This training explains what modern slavery is, explains how to mitigate the risks within the supply chain and how to deal with suppliers in the event of an issue.
Auditors are given specialized training, designed to help them recognize the risks and signs of slavery and human trafficking in their audits.
Monster offers training from a specialized third-party provider for certain suppliers on slavery, human trafficking and ethical recruitment. We are pleased to see that, notwithstanding the pandemic, the vast majority of contacted suppliers engaged in online anti-slavery training.
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 also have appropriate systems in place to protect whistle-blowers via the anonymous hotline.
We make a number of mechanisms available for any individuals or groups to report, including:
The existence of the hotline has been specifically communicated to external stakeholders to ensure that they are aware of it.
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 potentially terminating our business dealings with such offending supplier.
This statement is made pursuant to Section 54(1) of the United Kingdom Modern Slavery Act 2015 and Section 3 of the California Transparency in Supply Chains Act of 2010, and constitutes Monster Beverage Corporation’s slavery and human trafficking statement for the year ended December 31, 2022. This statement was approved by the full board of directors.
Hilton H. Schlosberg
Vice Chairman of the Board of Directors and Co-Chief Executive Officer