ESG Watch 24 | Supply Chain Management, an Important Part of Corporate Social Responsibility
B5.2 supplier management methods
one
Guide the original text
Describe the practices of hiring suppliers, the number of suppliers to whom the practices are implemented, and the implementation and monitoring methods of the practices.
two
Index interpretation
This indicator is a key performance indicator, and the disclosure requirement is "explain if you don’t comply", which will take effect in the fiscal year starting on or after July 1, 2020.
For the definition of "supplier", please refer to the index definition of "B5.1 number of suppliers".
three
benchmarking
The ESG Guidelines of the Stock Exchange, ISO 26000 and GRI Standards all include the main contents of enterprise supplier management methods. ESG Guidelines focus on the disclosure of the practices of employing suppliers, the number of suppliers implementing relevant practices, and the monitoring methods of implementing relevant practices. ISO 26000 focuses on the main measures taken by enterprises to promote social responsibility in the value chain. GRI Standards focuses on the disclosure of enterprises’ identification and management measures of direct or potential risks to suppliers in terms of environment and human rights. For the contents disclosed in accordance with ESG guidelines, please refer to the disclosure items GRI 308-1, GRI 308-2, GRI 412-1 and GRI 412-2.
Table B5-2 Benchmarking Analysis of Key Performance Indicator B5.2 with ISO 26000 and GRI Standards
Stock exchange ESG guidelines
Describe the practices of employing suppliers, the number of suppliers to whom the practices are implemented, and the implementation and monitoring methods of the practices.
Fair Operation Practice Question 4: Promoting Social Responsibility in the Value Chain
New suppliers screened by environmental standards
GRI 308-2
The negative impact of supply chain on the environment and the actions taken
GRI 414-1
New suppliers screened by social criteria
GRI 414-2
The negative impact of supply chain on society and the actions taken
four
Key points of management
This indicator reflects the responsibility of enterprises to suppliers. The implementation of responsible procurement by enterprises is helpful to manage the environmental and social risks of suppliers, and it is convenient for external stakeholders to understand the procurement methods and principles of enterprises and the procurement situation in areas with high social responsibility risks.
● In order to implement the supplier management policy, enterprises can establish a supplier social responsibility evaluation and investigation mechanism based on the quality and environmental evaluation system, and establish a supplier social responsibility evaluation index system according to the requirements of the access terms.
● Enterprises should jointly improve the social responsibility level of suppliers through auditing, training, counseling and other activities, and take active measures to encourage suppliers to fulfill their social responsibilities.
● Enterprises should evaluate suppliers’ performance of social responsibilities in quality, environment and society in daily management, and regularly evaluate and review suppliers’ performance of social responsibilities by means of self-inspection or entrusting a third-party organization, and the review results can be used as an important basis for supplier selection, order increase, rewards and punishments.
five
Disclosure suggestion
Enterprises should disclose the management points of implementing responsible procurement in the report, including the implementation and evaluation methods of supplier management mechanism. Enterprises that produce or operate in high-risk areas of social responsibility should focus on the disclosure of this indicator, supplemented by written explanations when necessary, so that external stakeholders can understand the procurement situation of enterprises in high-risk areas of social responsibility.
six
Typical case
Source: Canon (China) Corporate Social Responsibility Report 2019-2020 P42.
Canon (China) Corporate Social Responsibility Report 2019-2020 reveals that Canon (China) has formulated a supplier management process that integrates the concept of social responsibility, including key links such as supplier development, supplier cooperation selection, supplier cooperation transaction, supplier performance evaluation, etc., to promote suppliers to continuously improve their own management capabilities and provide strong support for forming an efficient, stable and sustainable "Canon-style supplier team".
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Text | ESG Research Group
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