AEGON sustainability experts discuss the importance of sourcing from sustainable and ethical sources.

1. Sustainability column
Choose your friends carefully
Every year companies spend billions of euros on goods and services. But
do they really know what they‟re getting?
They know about the price, of course. They know when to expect delivery,
and they know where the goods are coming from. But what about the
environmental or social impact? Do they know, for example, if their
suppliers use child labor to make their products? Or are involved in human
rights abuses? Or are polluting the environment?
If you don‟t choose your suppliers carefully, the consequences can be
serious indeed. And there are plenty of examples of companies that, in the
past, have got it wrong.
Give us a break
Two years ago, Nestlé became the target of a campaign by
environmentalists at Greenpeace. Why? The food and drinks giant, said
Greenpeace, had been buying unsustainable palm oil from an Indonesian
supplier called Sinar Mas. Nestlé‟s actions were contributing to the
destruction of the rainforest there and robbing the country‟s orang-utans of
one their few remaining natural habitats.
Cleverly, Greenpeace used an advertising slogan for Kit Kat – one of
Nestlé‟s biggest-selling chocolate bars – as the centrepiece of its
campaign. „Have a break. Have a Kit Kat‟ became „Nestlé – give the
rainforests a break‟.
Of course, it‟s not just about choosing suppliers carefully and setting
minimum standards. It‟s also about enforcing them. Often, that‟s easier said
than done. Remember Mattel, the US toy company that makes Barbie dolls
and Hot Wheels cars? A few years ago, Mattel was forced to recall millions
of toys because of safety concerns over supplies from China.

2. Companies like Nestlé and Mattel have long and complex supply chains –
as a result, they run more risks and have a more difficult task managing
those risks.
For AEGON, the risks are different. We source most of our products and
services locally. We don‟t buy politically sensitive commodities like crude oil
or cocoa beans. And we‟re not in an industry which is constantly looking for
cheap labor.
But that doesn‟t mean we don‟t face risks. We spend just under EUR 1.5
billion a year on goods and services. That‟s a considerable sum. And a lot
of it – not surprisingly – goes on computers and other IT equipment.
Increasingly, IT companies are coming under the spotlight, too. Last year, a
New York-based human rights group, China Labor Watch, criticized three
of the world‟s leading IT suppliers – Apple, HP and Dell – for creating a
network of “electronic sweatshops” in China. And the risks aren‟t confined
to IT: if we want to avoid nasty surprises, we should look at other suppliers,
too. What about our contractors? What about the firms that supply our
paper and other raw materials?
Managing your supply chain matters – whether you are Nestlé or AEGON.
It‟s about financial risk. It‟s about controlling costs. It‟s about being efficient
– and not storing up problems for the future. Most of all, it‟s about
protecting your good name and brand. It takes ten years to build a
reputation – and ten minutes to break it again. It‟s old adage, but still a
good one.
The views and opinions expressed in this document are solely those of the author and do not
necessarily represent those of AEGON N.V. This document is for information purposes only and
any reliance you place on such information is strictly at your own risk. AEGON N.V., its affiliates
and the author cannot be held responsible for the accuracy or reliability of the contents of this
document.