The supply chain is a new frontier of responsibility in CSR. Procurement is sustainable by design !
Understanding and quantifying what really matters in the value chain is a key component of the Group’s strategy. It includes things like paying suppliers on time, which is a major challenge in ENGIE’s CSR. With an addressable spend of 19 billion euros in 2017*, of which 80% in Europe. ENGIE Develop and maintain sustainable performance with ~110 000 suppliers 90% being European.
1 - Purchasing at ENGIE – Key Figures (2017)
2 – Our ambition: to engage with suppliers to build a long-term, sustainable business relationship
The challenge here is to incorporate sustainability ahead of decision-making and the purchasing strategy to achieve the optimum level of responsible performance, and to make sustainability an integral part of our management system to facilitate innovation and value creation.
The purchasing ambition of the ENGIE Group is based on a series of goals to be achieved in compliance with the legal and regulatory requirements of the countries in which it operates:
- to contribute to Group operational performance
- to deliver on the commitments the Group makes to its suppliers
- to contribute to Group CSR
- to act as a springboard for career development.
It is inherent to the purchasing function that suppliers and subcontractors are essential stakeholders in the Group value chain.
The Strategic Sourcing & Purchasing Department has set itself the goal of implementing a CSR policy covering procurement chain management in all entities controlled by the Group, and ensuring that this policy is in place by 2020. This policy is broken down into three key commitments:
- paying suppliers and subcontractors on time
- supporting the subcontractor Health & Safety policy
- integrating a continuous improvement process for CSR into operational processes, and providing the corresponding training to key contributors
3 - An ambition driven by a management system
In order to deliver the ambition of introducing a CSR-focused purchasing policy, the purchasing function is able to rely on an ENGIE management structure built around:
A purchasing policy that is intrinsically sustainable: this external document is shared with suppliers, and sets out ENGIE’s involvement by clearly stating the commitments and requirements of the Group in relation to its suppliers, and more specifically:
- Compliance with health and safety requirements: the requirement for suppliers to evidence their own commitment to health and safety
- Social responsibility, business ethics, embargoes and anticorruption: the supplier commitment to ethical business conduct
- Sustainable Development: the commitment to seek competitive bids and sustainable, innovative solutions
A Purchasing Governance structure. This internal document defines the Group-wide principles governing external expenditure, and sets out the practical operating rules for the purchasing function. Its purpose is to increase the level of task segregation between buyers and specifiers, at the same time as increasing the level of cooperation between the two for the purpose of identifying and selecting the best bids from suppliers
The requirements set out in these two reference documents specific to the purchasing function and in more general Group-level documents are incorporated into the operational processes to facilitate their implementation, inspection and remediation. There are 3 operational processes:
- 1. Supplier panel management
- 2. Purchasing category management
- 3. Purchasing/Procurement
The other Group-level reference documents incorporated into these processes are as follows:
- The Ethics & Compliance charter
- The CSR policy
- The Health & Safety policy
- The Supplier Relationship Code
- The Supplier Due Diligence Policy
4 – Implementation
This approach is implemented as a priority for the Group’s 250 or so preferred suppliers, followed by the major suppliers to each Group BU. It is incorporated into the operational processes and based on the following key Plan-Do-Check-Act stages.
- A risks and opportunities analysis for each Purchasing category, prioritized by country
- Each purchasing category is assessed using a standard method based on the following 7 aspects of CSR, weighted by the country-specific risk (using the Maplecroft system)
- 1. Governance
- 2. Environment
- 3. Health & Safety
- 4. Social impact
- 5. Human rights
- 6. Human Resources development
- 7. Ethics and anticorruption
The results of the analysis are used to create a risk mitigation plan and define a series of supplier qualification and selection criteria. Since these plans and criteria are specific, they may incorporate documentary audits or site audits. Specific contractual clauses are drafted to reinforce our requirements. These may be accompanied by systems designed to apply penalties for non-compliance
Lastly, supplier performance is measured periodically as part of Business Reviews; the associated performance improvement plans are also reviewed.
As part of ensuring continuous improvement, all the previous steps are integrated into our internal compliance and audit processes.
5 – Training: the basis for deployment
This entire approach is deployed by means of a progressive in-service training program introduced by the purchasing function in 2013.
- 2013 - 2014 Purchasing Passport – Management category training
- 2016 - 2017 Ethics training
- 2018 - 2019 Passport V2 – Training on the advanced purchasing levers that incorporate CSR
Added to which, all purchasing function management meetings include sessions designed to raise awareness of CSR issues, and meetings are also organized with those specifiers and operations staff involved in the purchasing process.
This training program provides an effective route to upskilling and facilitating transformational change in job functions.