Article
Collaborating for responsible and inclusive procurement
Deloitte’s purpose is to make an impact that matters. Achieving this requires that we conduct business mindful of the impact we have on our environment, communities and people. Our purchasing decisions are important both to reducing negative outcomes and leveraging positive ones. Our ability to cut carbon emissions and waste, support quality education and lifelong learning, create access to decent work and reduce inequalities necessarily includes our supply chain.
Our suppliers play a key role in helping us to achieve our purpose.
Designing and implementing a supplier code of conduct has been a useful tool to begin aligning our purchasing decisions with our values. By taking the time to formalise a supplier code this year, in consultation with some of our suppliers, we have begun to understand the practical implications of addressing our material sustainability issues in a supply chain context. Our supplier code standardises and transparently communicates the Environmental, Social and Governance (ESG) expectations we have of ourselves and of our suppliers.
Our intention is to ensure that by 2025 our suppliers are achieving or outperforming standards of conduct that go beyond legal and ethical compliance. Our supplier code of conduct establishes expectations that our suppliers will:
- Integrate ESG thinking into supply chain management
- Establish environmental targets
- Develop impact reporting processes (especially for carbon emissions)
- Pay a living wage
Foundationally, our supplier code relies on an underlying conviction that modern procurement is increasingly digitised, impact-driven and circular. In designing the standards and structure of our supplier code, we started by analysing our spend data and applying a risk analysis. Drawing on analytic insights and reflecting on our values as an organisation, we drafted the supplier code with reference to international conventions, the 10 principles of the UN Global Compact, and a range of local and international best practice exemplars. We confidentially consulted on the draft supplier code with a selection of our suppliers and a number of Deloitte subject matter experts – including members from our procurement practice, Deloitte Taumata, our sustainability practice and our internal procurement, legal and risk teams.
Through this consultation we have learnt a few lessons:
•We must hold ourselves to the same standard as our suppliers in all respects, and transparently communicate our positions;
•In all instances we must work to ensure that the standards are practical, reasonable and tailored to the supplier’s size and capacity;
•Standards are ineffective unless you have a means to evaluating supplier performance, so embed a reporting mechanism approach but ensure it is not onerous compliance or duplicative;and
•Finally, where suppliers are not yet achieving the standards, focus on remediating issues and collaborating towards better outcomes.
We are now in the early stages of implementing our new approach. We recognize that not all of our suppliers will immediately meet the standards, and therefore we must centre our work on slowly ‘going on the journey’ with them – learning from their challenges & experiences, and also learning from those already making significant positive impacts.
In 2020 we will publicly launch our supplier code of conduct and begin working with a pilot group of suppliers to test the supplier standards and reporting approach, and begin to embed the supplier standards into new supplier contracts.
We will utilise insights from supplier reporting to support our sustainability reporting, better collaborate with our suppliers for measurable impact, and adapt our purchasing decisions.
Given the strategic importance of purchasing decisions increases, all businesses have an opportunity to shape their impact by improving procurement outcomes. By ensuring that our purchasing decisions align with our values, we’re on the road towards making an impact that matters.