Tag Archives: sustainable procurement

Define your sustainable procurement strategy with the SDGs


Cliff and blue seaSince their adoption, there is an ongoing discussion how SDGs can be integrated and used by businesses; indeed, the SDGs explicitly name companies as contributors to a solution for sustainable development challenges. This article describes how the SDGs can be used as a framework for sustainable procurement strategy.

Sustainable procurement means turning risks into opportunities

Many risks companies face today are located in the supply chain and refer to reputation (corporate image) and strategy. First, deficits in the supply chain can damage a company’s reputation severely. This refers both to social and environmental issues; a widely known example is BP whose reputation was damaged due to the company’s handling of the Deepwater Horizon catastrophe. While every supply chain issue can cause direct financial cost for a company, reputation damage is something which can last for a very long time and which can hit a company in multiple ways. Despite lower sales, a reputation damage can for example also discourage talented people from applying for a job at the company.

Secondly, it can also be a strategic risk for a company not to manage its supply chain properly. If future scarcities of resources which are essential for a company’s operations are not properly accounted for in the strategy, and if a company is therefore not prepared to future price rises, it endangers its economic viability in the long term.

To tackle such risks, companies can implement sustainable procurement. It means that they can set standards that their suppliers need to follow. It consists of integrating sustainability criteria into the supply chain. On the one hand, risks are reduced. Indeed, if the supplier environmental system is solid, accidents and crisis should be solved quicker, reducing operational risks. If there is sound social dialogue and decent working conditions, there are less risks of strikes and of related production disruption. If human rights are respected, the reputation risk is managed. In the other hand, companies can benefit from various opportunities: more collaboration, more trust, innovation and new products, customer satisfaction, …

How can now the SDGs help companies to address and structure supply chain management?

You can tune your sustainable procurement strategy with the SDGs

The SDGs essentially represent a framework which addresses the full scope of sustainability topics and actors. The strength of this framework lies in its global acceptance and popularity; thus, using this framework for CSR communications means lowering the threshold of stakeholders to understand and back a company’s CSR strategy, including the sustainable procurement strategy.

The SDG Compass, issued by the Global Reporting Initiative gives an overview, how companies can link these targets to their business. By means of a high-level mapping of their value chain, companies can first identify topics where impacts are likely to occur. In the end, it should be clear whether core competencies, technologies and product portfolio of a company have rather positive or rather negative influence. This mapping process includes external stakeholder participation which adds additional aspects and points of view to the process. It is highly important to interact with the suppliers to understand what the impacts are, and where they occur. Indeed, in some cases such impacts are located only in the supply chain. For example, any retailer will avoid the potential risks linked to manufacturing, like occupational health and safety linked to machine use and high resource consumption. To do so, companies can ask suppliers about such risks during business reviews, make a quick analysis of their website or resort to risk databases.

After the mapping, a company should set measurable and time-bound goals to reflect the priorities and adopt related indicators. Such indicators express the relation between the company’s activities and the impact on stakeholders, and data for these indicators should be collected. Depending on the magnitude, severity and likelihood of current and potential negative impacts, a company then prioritizes indicators. Indicators linked to the supply chain need to reflect actual actions: share of suppliers considered at risk, share of suppliers audits, share of suppliers completing corrective action plan, share of successful re-audits, number of products including new sustainable features thanks to supplier collaboration, …

These preconditions met, a company is ready to integrate sustainability into its sourcing practices. In the case of supply chain, active leadership by the procurement management is key to implement the company’s requirements. A shared understanding of how value is created by becoming more sustainable help to anchor the set sustainable procurement strategy. In this sense, the company needs to communicate such requirements to the procurement department, who then interacts with the suppliers. Another best practice is the integration of sustainability goals into supplier performance reviews.

Finally, progress has to be constantly reported in order to demonstrate credibility. Results should be communicated to both suppliers and buyers. To ensure transparency throughout the supply chain, it is important to communicate such results publically. Indeed, clients of the company might also want to want to know what happens in the upstream supply chain. In this sense, the use internationally recognized reporting standards such as GRI, CDP or others is recommended in order to achieve comparability between companies.

For more information, contact us at info@dfge.de or visit our page on Sustainability Management.

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Looking for help and support for your EcoVadis participation?


EcoVadisIn winter 2016, we announced our partnership with EcoVadis, a company linking suppliers and buyers in a collaborative platform where suppliers are assessed on their sustainability performance. We will provide various levels of support to organizations answering EcoVadis.

1. Response check
Your company already has answered several questionnaires, but is still unsure of the format of documents, or the quality of the answers. DFGE will connect to the EcoVadis platform and check if the format or document match the type of questions, if some answers and references are missing, if the question paths are the most appropriate. For instance, if your company declares that it has a policy in place regarding Health and Safety, but the attached document is in fact results from a health and safety audit, we will indicate that this document is not the needed reference here, as it covers actions, and will briefly explain what a policy is.
In this sense, organizations can easily improve their performance as we would have identified the wrong references, and companies can easily add the right supporting documents.

2. DFGE complete: questionnaire and improvement plan
For companies who have never gone through an EcoVadis assessment, or who had several times but wish to quickly improve, we offer the EcoVadis support complete package. With this product, we will
– Make a prioritized list of documents that can be provided, to make sure that everything available has been provided
– Answer the questionnaire ourselves, by making sure documents are well referenced in the right format, by taking the right question paths
– Once the scorecard is published, we will launch a prioritized improvement plan, by improving the existing documentation, and by suggesting you solutions to address new improvement areas. For instance, if your company has an improvement area called “basic policy in human rights”, we will review the policy to know which topics are missing, to check if commitments are company-specific enough and then we will suggest improvements accordingly

3. DFGE services
We offer free webinars, one for Beginners on a weekly basis, one for Repeaters on a monthly basis. For those who want to completely master EcoVadis principles, we organize training sessions where theoretical principles will be put into practice by the attendees.
We are also willing to provide any support to your company, for instance byhelping addressing the improvement areas. For instance, we can assess your carbon footprint or help you take part in UNGC, among many others.

For a detailed description of our products, consult our Press Release: http://dfge.de/en/answering-ecovadis-expert-support-now-available/  or our webpage http://dfge.de/en/ecovadis/ , or feel free to contact us at info@dfge.de

Towards more due diligence in the supply chain


Background story: The majority of our blog posts deals with CSR topics; we write about the latest developments in this field and try to relate it to a company’s daily business. Our background stories have a different perspective: Here, we explain trends, scientific background and societal implications of corporate sustainability – sometimes with a personal touch.

 

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Due diligence in the supply chain

Our partner EcoVadis recently hosted the Sustain event. EcoVadis unlocks the power of transparency in the supply chain, enabling buyers and suppliers to communicate on the results of a sustainability assessment through a collaborative platform. As such, EcoVadis offers a tool for sustainable procurement management, e.g. including social and environmental criteria within the supply chain. This topic has gained so much momentum over the past few years that it is now the object of legislation.  We try to explain thisphenomenon in this blog article, while describing solutions for companies faced with such issues.

Lack of transparency in the supply chain with outsourced impacts

Outsourcing has been growing for the past two decades. According to Deloitte, “the last two decades have been a significant rise in offshoring to external service providers”[1], though a small portion of companies are bringing some outsourced functions back to their home country. In this sense, the environmental and social impacts of production are now still mainly located in the supply chain level. Some events showed that the risks still exist and that scandals impacted the whole supply chain.

In April 2013, the Rana Plaza building collapsed, leaving more than 1,100 casualties and thousands of people injured in Bangladesh[2]. This building housed five factories for the garment industry. This disaster was covered by the media and shed light on the fact that clients don’t know what happen in their supply chain, and that basic safety rules and laws are not applied there. According to the Guardian, “investigators say several factors contributed to the building’s collapse: it was overloaded with machines and generators, constructed on swampy land, and the owner added floors in violation of the original building plan”.[3]

The same year, Europe was stained by the scandal of horsemeat, where horsemeat was sold as beef, showing the lack of transparency within a globalized supply chain. Many other examples could be found in this sense, but our point here is that there is a need for companies to tackle somehow these issues in their supply chain, for the suppliers’ sakes as well as theirs and their clients. [4]

Legislation as a driver for companies to tackle these issues

After these scandals, governments decided to act and to boost companies. Here are a few developments from the past three years.

Since May 2015, companies responding to certain criteria need to publish a statement on the actions they take to prevent slavery and human trafficking, according to the UK Modern Slavery Act.

In the US, the California Transparency in Supply Chain Act, some companies need to disclose in their websites the company’s actions to prevent such abuses.

France is trying to do the same, the bill on due diligence is still in validation by the government instances[5].

In case of non-compliance, some actions can be taken. In any case, companies will suffer from brand-damage, pressure from stakeholders, potential lawsuits …

These developments show that working conditions can be at risk in the supply chain, and that client companies have the power to investigate and require some practices from their suppliers. How can they tackle such issues?

Due diligence in the supply chain: solutions

First we recommend companies to edict clear requirements and made commitments, in the shape of public policies and statements

Then, companies need to let their suppliers/subcontractors know these requirements, so that they can act accordingly.

Suppliers don’t have the same level of risk according to their location, activity or size. We suggest companies to proceed to a risk-mapping. According to the level of risks, actions can be taken.

For instance, suppliers can be asked to be evaluated on their sustainability management system, for instance through EcoVadis or other sustainability assessments platforms.

For suppliers with high-risk level, we recommend having regular audits there, on sustainability topics, made by third parties, and by some members of the companies.

Then, what is key is collaboration and transparency. It is important that buyers, who are in touch with suppliers on a daily basis, are aware of such requirements, to explain them and pass it over to the suppliers. In this sense, we suggest different tools and approaches: training of buyers, dedicated team to help buyers in this sense; business reviews between suppliers and buyers, supplier scorecard including such topics, …

Reaching to your supplier is one thing. Reaching to the supplier of your supplier is another thing. In this sense, we recommend the use of EcoVadis as it enables to cascade requirements in the supply chain. Indeed, clients have their suppliers rated on their sustainability management system, including on how the suppliers handle their supplier sustainability management. Then, if the suppliers improve their own sustainable procurement practices, companies already reach another level in their supply chain.

Finally, we think that collaboration and knowledge sharing is key to success. We advise companies to train their suppliers, raise awareness through handbooks and code of conduct, organize seminars etc.

Last but not least, partnership with a local NGOs can help address the issues on the field and have more visibility on what is happening in the high-risk zones.

We know that it is hard for companies to reach such levels of the supply chain. However, we hope that this articles gives inspiration to solve such complex issues. If you are interested in solutions and consulting services, please contact us at info@dfge.de or consult our EcoVadis webpage.

Resources:

Article on latest regulations http://www.supplychainbrain.com/content/single-article-page/article/the-emerging-compliance-hot-topic-for-2016-regulations-regarding-trafficked-coerced-labor/

UK Modern Slavery Act: http://www.legislation.gov.uk/ukpga/2015/30/contents/enacted

 California Transparency in Supply Chain Act: http://www.state.gov/documents/organization/164934.pdf

Sources:

[1] P.5, Deloitte’s 2014 Global Outsourcing and Insourcing industry http://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-2014-global-outsourcing-insourcing-survey-report-123114.pdf

[2] http://www.cleanclothes.org/safety/ranaplaza

[3] http://www.theguardian.com/world/rana-plaza

[4] http://ec.europa.eu/food/food/horsemeat/

[5] https://www.linkedin.com/pulse/mandatory-human-rights-due-diligence-government-1-devoir-poitevin?trk=hp-feed-article-title-share

Companies are key to the success of the Sustainable Development Goals


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DFGE recently co-animated a webinar organized by the World Environment Center on how Sustainable Development Goals (SDGs) can be implemented at corporate level. Here is the short summary of what was discussed there.

SDGs are the world’s new sustainability agenda

The Sustainable Development Goals were defined by the United Nations to set the 2030 agenda for sustainable development. They build on the Millennium Development Goals (2000-2015) to extend them. The 17 goals cover the three dimensions of sustainable development (Environment, Social, Economic) and targets have been defined to reach them. All countries and all stakeholders agreed to strive to implement them.

SDGs are a reference for organizations

The partnership between stakeholders and companies is key to ensure the achievement of the SDGs. In this sense, companies can use the SDGs as a reference to showcase how their actions impact the global picture: it is a way to ensure better transparency.

Like many other frameworks, it does not compete with existing standards, but companies can build upon them. For instance, answering to CDP will enable to tackle SDG 13 on climate action.

SDGs are also a framework where companies can understand the needs of the stakeholders like local institutions and communities. Dialogue with stakeholders enable companies to identify topics which are material for them, and to align it with the CSR strategy.

CSR management and reporting can help address the goals

CSR (Corporate Social Responsibility) is a way for companies to tackle these global challenges.

With CSR reporting, companies inform the stakeholders they previously consulted and engaged, and can show how their projects are reducing environmental, social and governance impacts.

With a CSR management system, a continuous improvement is fostered. Indeed, impacts are identified and targets are set accordingly. Then actions are implemented to reach these objectives. KPIs enable to measure the success of these actions, and a review leads to new actions.

Below you will find a list of examples of corporate actions that can be implemented.

Examples of corporate actions for each goal

  1. No poverty: labor management relations with a notice before changes, alternative solutions to lay-offs fostered through social dialogue, clear rules for remuneration
  2. Zero hunger: ensuring no poverty (SDG1) leads to less hunger. Partnerships with local community and NGOs on food topics (donation, training, volunteering,)
  3. Good health and well-being: health and safety program including stress prevention plan, ergonomics in the workplace, work-life balance measures
  4. Quality education: training plan for skills enhancement and implementation
  5. Gender equality: equal remuneration, rules for hiring, training of HR and managers on discrimination, whistle-blowing system
  6. Clean water and sanitation: water reduction project, wastewater treatment equipment
  7. Affordable and clean energy: resort to sustainable energy sources, energy reduction program
  8. Decent work and economic growth: rules for hiring, training of HR and managers on identification and prevention of child labor, forced labor, whistle-blowing system… Implementation of shared value initiatives including valorization of the value chain (for example by training a supplier, which then delivers a better product)
  9. Industry, innovation and infrastructure: participation in industry initiatives, like the EICC and the EICC code of conduct for Telecommunications sector
  10. Reduced inequalities: diversity program, non-discrimination training and whistle-blowing
  11. Sustainable cities and communities: stakeholder engagement program, shared value initiatives, community involvement program, community development program (donations, volunteering,)
  12. Responsible consumption and production: sustainable procurement program (risk-assessment, code of conduct, performance assessment, improvement actions, responsible sourcing) and promotion of sustainable consumption (eco-labels, information to customers about sourcing)
  13. Climate action: carbon footprint calculation, energy-efficient materials and measures
  14. Life below water: prevention of water pollution (waste water treatment), partnership with a dedicated NGO
  15. Life on land: natural habitats restoration, assessment of risks linked to biodiversity before construction, partnership with a dedicated NGOs
  16. Peace, justice and strong institutions: Ethics and compliance program, featuring a whistle-blowing line to report such cases, and adequate treatment
  17. Partnerships for the goals: stakeholder engagement program, partnerships on dedicated topics material for the company

If your company would like to know more about how these actions can be quickly implemented, we remain at your entire disposal at info@dfge.de. You can also visit our website: http://www.dfge.de/en/sustainability-communications/ . To know more about the goals: https://sustainabledevelopment.un.org/sdgs

 

EcoVadis and DFGE partnership: boosting sustainable procurement in the German-speaking region


ecovadis-logo01DFGE becomes the first Consulting Partner in the German-speaking region of EcoVadis, the leader in supply chain sustainability ratings. This partnership will help companies to better answer their clients’ requests for an EcoVadis assessment, as well as to improve CSR performance.

EcoVadis, a collaborative sustainability rating platform

EcoVadis operates the first collaborative platform providing Supplier Sustainability Ratings for global supply chains. More than 25,000 companies use EcoVadis’ Corporate Social Responsibility (CSR) assessment, including thousands in Germany, Austria and Switzerland, which provides a rating and scorecard on their environmental, social/labor, and ethical practices.

EcoVadis provides a concrete solution enabling CSR transparency in the supply chain. Companies subscribe to EcoVadis and require their suppliers to be assessed by EcoVadis on their sustainability management. This analysis is carried out by EcoVadis experts and the results are then published on a collaborative platform, accessible by both buyers and suppliers, in the shape of a scorecard.

DFGE will offer various services

EcoVadis trusts DFGE in providing trainings and pre-checks of responses. Trainings are about EcoVadis principles, the questionnaire and platform management. They aim at empowering suppliers in completing the questionnaire and responding to clients’ requests. DFGE will also provide response checks to make sure that the answers are aligned with EcoVadis requirements and methodology. With more than 15 years of experience in sustainability data management and reporting, DFGE can help suppliers to find and improve the right documentation. DFGE also offers complete service packages that reduce company’s investment in time and resources and prepare all requested information to submit to EcoVadis.

On top of that, DFGE can also provide guidance to explain the results of the scorecard, conduct an improvement plan, consolidate the sustainability management system by providing dedicated documents such as the carbon footprint, a CSR report based on GRI guidelines, among other services.

As a consequence, EcoVadis users can benefit from guidance and dedicated feedback, in their own speaking language. DFGE has been trained by EcoVadis to provide the official products.

To read the full PR: http://www.dfge.de/en/ecovadis-partnership/

To learn more about EcoVadis: http://www.ecovadis.com/ or DFGE: http://www.dfge.de/en/

Or contact us at info@dfge.de for any question or information.