How We Manage a Responsible Supply Chain
Our procurement is relatively decentralized with most occurring on an affiliate-by-affiliate basis. The Vice President Global Procurement has responsibility for procurement at the corporate level, with procurement managers in most affiliates.
During 2014, we updated and strengthened our supplier assessment processes at the corporate level. We have begun rationalizing our global supplier base and revising the minimum thresholds for supplier performance. Sustainability questionnaires were sent out to suppliers. We will continue to screen new suppliers and review significant suppliers using this revised methodology and increase focus on performance criteria based on environmental and social issues (labor practices, societal impacts and human rights). At the beginning of 2015, we have appointed for that purpose a Sustainability Manager, Sustainable Supply Chain who will be responsible for overseeing a Group-wide sustainable supply chain management system.
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Our global requests for proposal (RFPs) require suppliers to respond to questions covering sustainability management systems, policies, measurement and reporting of economic, environmental and social impacts, and certifications.
Our standard supplier contract template requires all suppliers to conduct their activities in an environmentally and socially responsible manner, accord with environmental, health, safety and employment policies, abide by relevant standards and legislation, and encourage their own contractors and subcontractors to follow these practices.
All suppliers can use a confidential integrity helpline to raise concerns about the SGS Code of Integrity.
Certain business acquisitions and some types of sourcing, such as low-cost sourcing and major construction projects, have more potential for environmental and social impact than others, and here we tailor our approach.
(See our 2014 Sustainability Review for case studies on Supplier Diversity and Supplier Innovation.)
We actively acquire companies that strengthen our business and support our vision. Part of our due diligence process involves a sustainability assessment to help us better understand company approaches to managing risks and impacts linked to the environment, health and safety, human rights, ethics and community relations. Companies are required to complete a questionnaire detailing relevant policies and management systems, performance measures and impacts, accreditations and certifications, and evidence of external awards and other recognitions for their sustainability approach.
When engaging suppliers from low cost sourcing areas, it is important to ensure that lower costs are not achieved at the expense of workers or the environment. Our Low Cost Country Sourcing (LCCS) initiative is focused on procuring lab consumables and CAPEX projects. Sustainability criteria are included at various stages throughout the supplier and product qualification process, for example:
- In our initial market study, we prefer suppliers with certification to relevant ISO standards, and who have a robust environmental policy
- Potential suppliers must answer questions about their sustainability objectives and those of their own suppliers, their product safety standards and certifications, packaging and transportation, and provide evidence
- We visit the supplier’s facility to check that EHS regulation is being followed (e.g. use of personal protective equipment) and environmental controls are in place (dust collection, noise reduction, adequate lighting). Workers are interviewed to determine their age and how they are treated by their employer. We also ask for waste management records
- The product qualification stage checks that the product meets safety standards
We have rejected potential suppliers who fail to meet our standards. Potential suppliers may also be asked to improve their performance if the audit identifies any gaps. LCCS is a new initiative; the next steps will include applying the principle of continuous improvement during supplier reviews.
Major construction and leasehold improvement projects can have a long-lasting environmental impact. Consideration of green building design at as early a stage as possible can make this impact a positive one. Before the RFP phase for major construction projects, we introduce our Green Building Guidelines and Checklist, and our procurement team will work on this with the project manager and architect. In 2013, we used these tools to incorporate energy efficiency features in a new laboratory in France and in a new office building in Chile.
Please see How We Manage Energy and Climate Change for examples of environmentally responsible purchasing, including Green IT, Green Buildings and Green Cars.