UTZ GOVERNANCE Structure & Procedures

January 2016

1 www.utz.org Table of Contents

1. List of Acronyms: ...... 3 2. Background and Current Status...... 3 2.1 Purpose of this Document...... 3 2.2 Background ...... 3 2.3 Current legal status ...... 3 3. The UTZ Governance Structure and Procedures ...... 4 3.1 Vision ...... 4 3.2 Principles ...... 4 3.3 Legal Basis ...... 4 3.4 Organization chart ...... 4 3.5 Roles and Responsibilities of bodies ...... 6 4. Publication and Review of this document ...... 11

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1. List of Acronyms: B.V.: Besloten Vennootschap, the Dutch term for Limited Company (Ltd.) ET: Executive Team NGO: Non Governmental Organization PAC: Products Advisory Committee SB: Supervisory Board

2. Background and Current Status 2.1 Purpose of this Document The purpose of this document is to describe the Governance structure and procedures of UTZ.

2.2 Background Following a decision of the Foundation Board taken in May 2007, a fundamental change to its by-laws was formalized by Notarial Act of 30 August 2007. This Act confirmed in law the name change from UTZ Kapeh to UTZ, and its mission from being a coffee certification organization to a worldwide accreditation and tracking program for agricultural production and trade. The Notarial Act of 30 August 2007 provides the basis for the current governance structure and procedures of the organization. At the end of 2012, for technical reasons UTZ Foundation set up a daughter limited company (Ltd. or in Dutch “B.V.”) called UTZ B.V. The Foundation is full-owner of the B.V. and all profits made by the B.V. (program fees minus expenses) flow entirely back into the Foundation. So UTZ as a whole remains a non-profit organizationand retains its charity status (in Dutch algemeen nut beogende instelling, “ANBI”status). This status has certain tax advantages and is a pre-requisite for some potential donors considering sponsoring UTZ. The change of model was a logical step in the development of UTZ.

2.3 Current legal status UTZ Foundation is a non-profit organisation (“Stichting”) established under Dutch civil law by Notarial Act of 3 July 2001. UTZ B.V. is a limited company (Ltd.) under Dutch civil law by Notarial Act of 3 December 2012 and is fully owned by UTZ Foundation.

3 www.utz.org 3. The UTZ Governance Structure and Procedures 3.1 Vision UTZ is recognized by its clients and stakeholders as a credible certification program that has a transparent, accountable, and cost–effective system of governance. UTZ’s business-driven and pragmatic spirit is retained in the Governance structure.

3.2 Principles The governance of UTZ is under-pinned by the following guiding principles:  Expertise & Objectivity: Supervisory Board Members are chosen on the basis of their expertise, experience and objectivity. Supervisory Board members do not represent the stakeholder group of which they may be part, but rather to act in the overall interests of UTZ.  Strong Mandate to Directors1: UTZ operations are led and managed by the Directors (the Executive team) and their staff, without undue interference from the Supervisory Board.  Participation of stakeholders: The Standards Committee and Product Advisory Committees provide the fora for stakeholders along the value chain, from producers to buyers to be involved and influence the operations of UTZ.

3.3 Legal Basis Any substantial change to the Governance Structure and Procedures of UTZ requires a formal decision of the Supervisory Board (as 3.5.1 below) and, as appropriate, to be confirmed in a Notarial Act amending the By-Laws of UTZ.

3.4 Organization chart The Governance structure of UTZ has the following principal components:  Supervisory Board  UTZ Executive Team  UTZ staff  Standards Committee  Product Advisory Committees

1 In 2010 UTZ Certified adopted the board of trustees’ governance model with a Supervisory Board (in Dutch: Raad van Toezicht). From its inception until December 9th 2010, the Board was a formal board with managerial responsibilities (in Dutch: Bestuur). As UTZ Certified matured to the current organizational level, the Board became a Supervisory Board and mandated most of its tasks and responsibilities to the managing directors, together called the Executive Team.

4 www.utz.org They are shown in the following organization chart:

5 www.utz.org 3.5 Roles and Responsibilities of bodies

3.5.1 Supervisory Board2 Role: The Supervisory Board (SB) is the highest decision-making body and shall supervise and give advice to the UTZ Executive Team (ET). The ET needs the approval of the Supervisory Board for major decisions (see “decision making” paragraph below). The SB furthermore provides strategic direction for the organization.

The SB meets at least three times a year and supervises the UTZ Executive Team in their implementation of the organization strategy and its further development.

Membership: A minimum of 5 to a maximum of 13 individuals who are recognized experts in fields associated with labour issues, business sustainability, commodities and/or certification. SB members have experience in the management and supervision of relevant organizations. They also have complementary skills and experience that together enable the SB to assess the internal and external performance of the organization.

The Supervisory Board is a multi-stakeholder body whose composition reflects a balance between production and consumption interests, as well as encompassing the range of expertise and experience required. There will be minimally one SB member drawn from the following groups: a. production; b. supply chain (including brands, processors, trade, retailers); c. civil society/non-governmental organisations (NGOs) and d. trade unions Supervisory Board members do not represent the stakeholder group of which they may be part, but rather act in the overall interests of UTZ.

Members of the Supervisory Board are appointed and dismissed by the SB itself. The term will consist of a period of 3 years. This term is renewable once only. A third term is possible only if it is as a first or second term as Chair. In order to preserve continuity terms shall not coincide.

Decision making/Approval needed for:  Elects its own Vice-Chair and Treasurer.  Name change of the organization  (Substantive) changes to the governance structure, procedures, policies, regulations and articles of association  UTZ Annual Report  UTZ Annual Accounts  UTZ Annual Work plan and Budget  UTZ multi-year strategy  Annual Performance Appraisal of UTZ Executive Team  Winding up the foundation, request bankruptcy or a moratorium

2 UTZ Foundation has a Supervisory Board and UTZ B.V. (Ltd.) has a Board of Trustees. The way they operate is virtually identical and therefore we chose to describe the structure and procedures of the Foundation’s Supervisory Board here.

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 Entering into legal merger or legal de-merger and major acquisitions  Contract investments above €100.000  Entering into or breaking off long-term collaborations with other undertakings, organisations and joint ventures.  To acquire, transfer or encumber real estate  Enter into money loan and credits beyond 10% of the turnover realised in the preceding financial year, as creditor and debtor  To participate in other enterprises, companies, legal entities and joint ventures and breaking off or termination of these  Acts and the entering into financial responsibilities beyond a maximum amount (needs to be defined), which maximum amount shall be determined by the Supervisory Board annually  To assign, amend or withdraw a procuration  Approval to develop a code for a new UTZ product.  Final code versions by verifying whether the code development procedure has been duly followed.

The Supervisory Board decides where possible by consensus; if not possible then by majority vote with any dissenting views noted if wished.

SB decisions are taken on the basis of written proposals with supporting analysis provided in advance of meetings by the UTZ Executive Team, or by one of its members mandated to do so. Only in exceptional circumstances are decisions taken without a written proposal.

Reports:  Supervisory Board Minutes  Other reports as required

3.5.2 UTZ Executive Team Role: The UTZ Executive Team leads the commercial, operational and technical implementation and development of the certification programs and services offered by UTZ to its clients.

Membership: Directors are appointed by the Supervisory Board following a transparent recruitment process that is open to all suitably qualified candidates, internal as well as external. The Executive Team comprises of four Directors: the Executive Director, the Program Director, the Innovation & Technology Director and the Markets Director. In the event of disagreement among the Directors, the Executive Director has the final decision authority.

Under exceptional circumstances other directors can ask the Supervisory Board to review a decision taken by the Executive Director with which s/he does not agree.

Accountability:  The Executive Team are accountable to the Supervisory Board for their own performance and that of the staff in implementing the agreed strategy and work plan within the approved budget.

Decision making:  Profile and external communications

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 Marketing and sales of UTZ services and products  Innovation and development of new UTZ products  Hiring and management of UTZ staff  Financial and fundraising decisions within the approved annual budget  Changes to program fees and any other new or significantly modified charges, following consultation with Product Advisory Committees (PACs).

Reports  Quarterly Financial Reports to the SB  6 Monthly Commercial and Program Reports to the SB  Brief (ca. 1 page) updates on Finance, Commercial and Program activities prepared for SB meetings  Published Annual Report  Other reports as required by funders  Other reports as agreed or required by the SB

3.5.3 UTZ Staff Role: UTZ staff implement the approved work plan under the guidance and supervision of the UTZ Executive Team.

Membership: Staff are appointed by the UTZ Executive Director following a transparent recruitment process that is open to all suitably qualified internal candidates, as well as external.

Accountability:  Staff members are accountable for their performance to their assigned manager (staff member or Director).  All staff are ultimately accountable to one of the Directors.

Decision making:  Financial and technical decisions on projects assigned, as per agreed work plans or as agreed with the assigned manager.  Managers are responsible for the staff in their units.

Reports:  Reports to clients as relevant  Reports to funders as relevant  Project progress reports  Reports to SB as relevant  Others as required

3.5.4 Standards Committee Role: During code-development and revision workshops in origin all relevant stakeholders are invited to attend and participate. Whilst the feedback from all the stakeholders is taken into account, the Standards Committee is responsible for approving new product codes (standards), approving changes to existing product codes (standards revisions), dealing with complaints, and ensuring the technical consistency and integration of all UTZ Certified programs.

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The Standards Committee may also advise the UTZ Executive Team and the Supervisory Board on credible claims that can be made with respect to different levels of performance.

Membership:  The Standard Committee consists of a minimum of 6 (six) up to a maximum of 12 (twelve) individuals (including non-voting ex officio members) with recognized expertise in standards and certification, important aspects of the UTZ Certified program or specific expertise of one or more of the UTZ products.  Members are appointed by the Supervisory Board on proposal of the UTZ Executive Team or their nominated Standards and Certification Manager.  The composition of the Standards Committee represents the various stakeholders involved in the UTZ Certified program. In order to ensure a balanced representation the members of the Standard Committee are grouped into the following categories. The number of representatives for each category is binding.

Category Number of representatives Comments Producer and Supply Chain Minimum of 2 representatives NGOs and Technical Experts on Minimum of 2 specific sustainability issues such as labour issues, gender, good agricultural practices and biodiversity. Certification or Sustainability experts Minimum of 2 UTZ Certified staff 1 – 2 Non-voting ex officio member(s)

Additional to the above mentioned categories, the following rules apply for the composition of the Standards Committee:  At least 30% of the representatives have to come from UTZ Certified origin (production) countries  For each of the products for which a UTZ Certified Code of Conduct exists, at least one member of the standard committee has to have in-depth knowledge of this product (i.e. one member with proven expertise in coffee, one member with proven expertise in cocoa, etc.) The in-depth knowledge can be in either production or supply chain aspects.  The members of the Standard Committee are appointed for a term of 2 (two) years. The maximum number of terms a member of the Standard Committee can serve is 3 (three). The possibility to serve for several terms allows for greater continuity and consistency in the Standards Committee’s performance.

Communication and Meetings:  The Standards Committee is informed by the Standards and Certification Manager about ongoing standards developments and revisions as well as specific topics linked to them.  Meetings: The Standards Committee meets twice per calendar year – one meeting is a physical meeting and one meeting is web or phone-based (web or teleconference).  If needed, i.e. in periods with intensive code developments and/or code revisions, the Standard Committee can request additional meetings. The request can be approved by the UTZ Executive Team, based on resources and time available.

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 In-between meetings members of the Standards Committee communicate via e-mail.

Accountability:  The Standards Committee reports to the Standards Director.

Decision making:  The Standards Committee takes decisions where possible by consensus whereas consensus is defined as the absence of sustained opposition but does not require unanimity; where a consensus is not possible, decisions are taken by majority vote with any dissenting views noted if wished.  The Standard Committee approves or rejects new and revised UTZ Certified Codes of Conduct (Standards). The final approval of the code is then given by the Supervisory Board based on the careful and correct application of the code development procedure.

Reports:  Minutes of Standard Committee meetings  Other reports as required

3.5.5 Product Advisory Committees (PACs) Role: The PACs are advisory committees to the UTZ Programs3. The PAC advises UTZ on the development, implementation and revision of product specific programs.

Membership: Members of the PAC are members of UTZ, from the entire coffee supply chain. Additional members are a limited number of NGOs, sector organizations and other experts on the relevant sectors. New members can be appointed by UTZ when deemed necessary.

Accountability:  To the UTZ Executive Team and staff

Decision making:  Consensus

Reports:  Minutes of meeting  Advisory Memos to the Standards Committee, the UTZ Executive Team, or other bodies.

3 At this time, UTZ does not have a PAC for its Tea and Hazelnut Programs. However, the Tea PAC will be set up in 2016 and a Hazelnut PAC might also be created in the future. www.utz.org 10

4. Publication and Review of this document This document is publicly available on the UTZ Certified website.

The Supervisory Board will monitor the implementation of the Governance structure at its regular meetings.

Changes to the UTZ Certified governance structure and procedures are made by decision of the Supervisory Board and will be published on the UTZ Certified website within 2 months of any substantive change.