As an international energy and services company, we spend billions of pounds with thousands of suppliers every year – from procuring parts to keep our customers’ homes running smoothly, to securing equipment for sourcing energy offshore. As a responsible business with a responsible procurement programme, we use our purchasing power to embed high social, ethical and environmental standards across our supply chain.
To do this, we employ responsible business clauses in supplier contracts, run online supplier assessments, conduct on-the-ground site inspections and create forums for best practice.
We work with independent sustainability experts, EcoVadis, to assess strategic and higher risk suppliers in order to identify sustainability risks in our supply chain, such as human rights abuses or bribery and corruption. In 2016, we assessed 73 suppliers which resulted in an average supplier sustainability risk score of 57 (low risk). This reflects that the majority of our suppliers are based in lower risk countries such as the UK, Europe and North America. Our score is better than the multi-industry average of 42 (medium risk) and marks an improvement on our 2015 score of 54 (low risk).
Where suppliers receive a medium or high risk rating, we work with them and create corrective action plans. In 2016, none of our suppliers were ranked as high risk but 12% were identified as medium risk so we will work with them to raise standards. If suppliers continue to fall short of the standards we expect, we will terminate our relationship with them.
Where necessary, higher risk suppliers, additionally undergo a site inspection which enables a deeper dive into how they do business. In 2016, we conducted two pilot site inspections which included a uniform manufacturer in Vietnam. In 2017, we plan to inspect a further 15 suppliers.
In 2016, we also become partners with the world-class Supply Chain Sustainability School. By partnering with the school, our suppliers have gained access to a wealth of online resources and workshops that will further help enhance skills and action on responsible business practices. We will also collaborate with 45 partner companies to create new resources and establish best practice approaches to effectively manage new and emerging issues, such as modern slavery.
In 2017, the Supply Chain School helped us facilitate a Supplier Forum that we co-hosted with our largest supplier, Carillion. The event was a great success with over 70 attendees and focused on sharing best practice sustainability alongside better ways of working. In 2017, we will look to host additional events to maximise our ability to work both collaboratively and innovatively with our suppliers.
Find out more about our approach to creating sustainable supply chains and look out for our Modern Slavery Act Statement due to be published later in 2017.
If you are a journalist and would like to get in touch with our media team, please contact media_NA@centrica.com.