CSR & supply chain managementEngaging your suppliers and consumers in your CSR agenda Nicoleta Rusu30 October 2009

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The headlines

Child workers, some as young as 10, have been found working in a textile factory in

conditions close to slavery to produce clothes that appear destined for Gap Kids,

one of the most successful arms of the high street giant.

A County Tyrone general manufacturing company has been prosecuted for

the unauthorised discharge of trade effluent into a wastewater treatment works

Nike has been accused of using child labour in the production of

its soccer balls in Pakistan.

In recent months it has been revealed how many high street names

including Cafe Rouge, Carluccio's, Zizzi's

and Garfunkel's pay staff below the minimum wage

Proactively managing our supply chain is vital

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Sustainable Supply Chain - a definition

“Management of raw

materials and services from

suppliers to

manufacturer/service provider

to customer and back with

improvement of the social and

environmental impacts

explicitly considered”.

Source: “Business guide to a Supply Chain – A Practical Guide”, Sustainable New Zealand Business Council for Sustainable Development

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Why Sustainable Procurement / supply chain management is important to CSR

Sustainable Procurement is of critical strategic importance for companies and has additional magnitude in today's high-pressure environment

Because most high profile social and environmental risks are traditionally found in the supply chain, responsible supply chain management is a growing area of interest for companies and their stakeholders

A better integration of corporate responsibility issues into companies' sourcing policies and processes is a way to manage more effectively risk that might arise in the supply chain ….

… It might also create new opportunities in terms of savings, innovation, supplier relation management and competitive advantages.

Source CR Index 2007

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A case study - sustainable procurement at KPMG

CSR

Procurement

Diversity

Sustainable Procurement

HR & Professional ServicesFacilitiesMarketingTechnologyTravel

AgeDisabilityGenderRace / ethnicityReligion / beliefSexual orientation

Carbon emissionsCharitable givingCommunityEthical supply-chainProduct compositionReduce / reuse / recycle

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Sustainable Procurement – the business case

Our clients are demanding it

Our competitors are not far behind us

We are advising our clients to implement such programmes

Leveraging the full value and innovation available in the marketplace

Legislation and regulation increasing requirements

Wholly aligned with KPMG’s values

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Programme structure

Supplier audit

Programme components

Supplier Code of Conduct

Supplier selection

Supplier inclusion

Supporting activities

Supplier baselining

Specification

Client reporting

Small business

mentoring

Tier 1 supplier performance monitoring

Supplier development

Reporting

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Specification

Purchasing decisions impact CSR with respect to:

Meeting the needs of a diverse workforce

Minimising environmental impacts

CSR and diversity considerations mapped against different spend areas

Objective: Ensure that CSR and diversity considerations are incorporated in the specification of the goods/services concerned

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Supplier Inclusion

Links directly with the diversity agenda

KPMG Baselining exercise – a questionnaire sent to approx 1000 significant suppliers

Helps us understand:

the diversity of our supply-base

the CSR and diversity performance of our suppliers

Objective: Understand the demographics of our supply base and remove any barriers that prevent SMEs from selling to KPMG

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Supplier Selection

Series of closed, impact-focused questions designed and incorporated within the firm’s standard Request for Information / Proposal

Supplier responses to the evaluation as part of the tendering process

The questions – consistent with those in the Supplier Baselining activity

Objective: Evaluate from the CSR perspective both the specification of the goods / services and the performance of the supplier

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Supplier Code of Conduct

Supplier Code of Conduct set up in 2007

Closely linked to the UN Global Compact

Comprises 10 principles, under the following headings:

Business Conduct

Labor Conditions and Human Rights

Environment

Objective: Require all suppliers to sign-up to our Supplier Code of Conduct as an integral part of their contract with KPMG

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Supplier Development

Process does not end upon selection of suppliers

Supplier Audits conducted

Suppliers may be required to implement remedial actions, if found to be acting contrary to CSR / Code of Conduct principles

KPMG may offer support from own experience (generally during supplier workshop)

Objective: Ensure that Sustainable Procurement forms part of ongoing supplier management and development activity

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Programme structure

Supplier audit

Programme components

Supplier Code of Conduct

Supplier selection

Supplier inclusion

Supporting activities

Supplier baselining

Specification

Client reporting

Small business

mentoring

Tier 1 supplier performance monitoring

Supplier development

Reporting

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Presenter’s contact details

Nicoleta Rusu

KPMG in Moldova

+373 (22) 201 870

nrusu@kpmg.com

www.kpmg.com

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2009 KPMG Moldova S.R.L., the Moldovan member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Moldova.