Global Reporting Initiative - Transparency in the Supply Chain

Hintergrund der Fallstudie

Problemdarstellung/Situation

Multinational Enterprises (MNEs) have extensive, often growing, chains of suppliers in emerging economies. The actual production process of many companies products take place in their supply chain. This is also the place where the most important sustainability impacts occur such as human rights and labor issues, the use of natural resources and CO2 emissions. It is sometimes a challenge for MNE buyers to understand and improve their sustainability impact outside their in-house operations. However, improving their external impacts is often where they can make the most significant changes towards a more sustainable world. Other companies in the supply chain – including Small and Medium sized Enterprises (SMEs) - can and need to contribute in the creation of truly sustainable products and production processes.

Bezug zum Kerngeschäft

The Global Reporting Initiative (GRI) has pioneered the development of the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. This framework sets out the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance. SMEs, although individually small in size SMEs cumulatively account for approximately 90% of businesses worldwide, and are responsible for 50-60% of employment. Working through supply chains and partnering with experienced MNE reporters is a way of reducing the barriers for smaller companies to start reporting and start to manage and benefit from their sustainable development.

Ziel des Engagements

Beschreibung der Aktivität

GRI started the Transparency in the Supply Chain project in 2006 in collaboration with the Deutsche Gesellschaft für technische Zusammenarbeit (GTZ) GmbH and with funding from the German Ministry of Development Cooperation (BMZ). The project consisted of providing support and workshops to suppliers of large multinationals in order to enable them to produce a sustainability report and become more transparent for themselves and their stakeholders.

A training methodology was developed based on GRI's Pathways publication "The GRI Sustainability Reporting Cycle: A handbook for small and not-so-small organizations." A series of workshops were hosted in each country, the suppliers (three for each of the four multinationals) coming together wherever possible. The workshops were provided by local consultants in the local language wherever possible. The first workshops, taking place between March-July 2007, in each country focused on introducing the suppliers to sustainability concepts and preparing them for stakeholder engagement. The second workshops, between June-August 2007, focused on materiality and measuring indicators. The final workshops was a review of the draft report of each supplier, these took place in November and December fo 2007.

The reports and the experiences of the different parties, SME reporters, buying multinationals and consultants were shared at a conference hosted by GTZ in Eschborn, Germany in February 2008. Based on the outcomes of this conference a project resource document, title "Small Smart and Sustainable" was created, consolidating all the feedback from the project.

A new GRI pathways publication focusing on SME suppliers is due to be released in October 2008 at the final conference of the project where project lessons and experiences will be shared with a wider audience.

The GRI is continuing its efforts regarding reporting in the supply chain through the Global Action Network for Transparency in the Supply Chain. Sustainability reporting by supplier companies goes beyond current models of control and audits and looks at ways to build a sense of shared responsibility between supplier and buyer in order to contribute to a sustainable supply chain.

The central proposal of the Global Action Network is for MNE members to provide support to their suppliers, enabling the embedding of a transparent sustainability reporting framework throughout the chain. The network will bring together supply chain leaders, suppliers and trainers to help create transparency and sustainability in supply chains.

Zielgruppe

Supply chain leaders and small or medium sized suppliers around the world.

Implementierung

Strategie

The main assumption of the project was that SME suppliers stood just as much to benefit from structured sustainability reporting as their multinational clients. The challenges for suppliers were a lack of expertise and resources to start up a reporting process. The project sought to address this through workshops and the incentive provided by the clients approaching suppliers to participate. The SMEs would become more familiar with reporting and gain value from the process, continuing in the following years.

Ressourcen

GRI has been involved in coordination and communication of the project. All the first workshops were visited by GRI’s SME and Supply Chain manager and all project budgeting and financing was done by secretariat staff based in Amsterdam. Managing the project occupied roughly 1 Full Time Equivalent (FTE) in 2007 and 0.5 FTE in 2008.

Partner

Public-Private-Partnership (PPP)

Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)

Multi-national Enterprises (MNEs)

Guidance

Akzente kommunikation und beratung, Germany
CII-ITC Centre of Excellence for Sustainable Development, India
Forum Empresa, Chile
Systain, Germany, Hong Kong, Turkey
Trialogue Assurance Services, South Africa

Small and Medium-sized Enterprises (SME Suppliers)

Durovalves India Ltd., India
Interplus, S.A., Chile
New Post, Chile
Shunde Hengfa Knitting Garment, China
Sinstel S.A., Chile
Spring Romance Properties/Impaha, South Africa
Suzy Products, South Africa
Topkapi Iplik San. ve Tic. A.S, Turkey
Victor Gaskets India Ltd, India
Vimal Clothing, South Africa

Herausforderungen

The specific challenges of the project were to enable the suppliers to produce reports. Sustainability, let alone sustainability reporting were often unfamiliar terms to them. The concept of stakeholder engagement and materiality testing, and their value had to be explained and experienced.

Generally suppliers did not have much free resources to dedicate to reporting. When they were encouraged and stimulated to do so, they nevertheless saw the value of the exercise.

Also the suppliers were often at a loss for how to measure certain indicators, a factor where they could often benefit from the experience of the regional consultant.

The suppliers tied the reporting exercise to their relationship with their buyer to a greater or lesser degree. Some suppliers with only a small portion of their production going to a client produced a report, whereas others chose to drop out of the project for business reasons.

Motivations differed substantially based on cultural and sectoral influences, as well as the individual owners and managers of the supplying companies. Managers either individually prioritized the reporting process or not. Their commitment was a key factor in eventual success.

Ergebnisse

Successful outcomes of the project are:

9 out of 12 suppliers produced a sustainability report and have indicated that they will try and continue sustainability reporting.
Suppliers feel that they have been able to improve the overall management of their companies.
Buying companies have noted how much ownership the suppliers took of sustainability issues.
GRI has gained much knowledge on how to approach suppliers and supply chain reporting. This knowledge was consolidated in the Small, Smart and Sustainable project resource document, as well as the reporting handbook for suppliers to be released in October 2008.

Lessons Learned

Accessible and focused trainings for suppliers are important. Flexible support and workshops that communicate key messages in ways that are most appropriate to suppliers in a specific country and sector are essential to realizing understanding and value for those suppliers. The coaching and support of experts, based on GRI material, was a key component of the success of the project.
With all the suppliers, the commitment from the MNE client and training together with other suppliers stimulated report creation.
The enabling environment for reporting is very important as it determines the knowledge and expertise the SMEs start out with. Prior familiarity with sustainability concepts and advanced management systems in some companies made it easier for those companies to report.
Having clear expectations on the part of the client and the supplier was also important to achieve realistic goals, this ensured a postive working environment where tehs uppliers understood they were working for their own benefit and not fulfilling a client request.
The GRI Guidelines need an entry level introduction and guide for suppliers. Training material should be in simple everyday language and relevant examples. Supporting material should be stripped of sustainability jargon as much as possible and should give suppliers an idea of what it is that is expected of them right from the start.

Overall it has become clear that with the right targeted support and coaching, suppliers of all types and sizes can produce a sustainability report that is of great value to their clients, their other stakeholders and, most importantly, themselves.

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