Although professional services firms purchase fewer materials than businesses in many other sectors, we strive to manage our sustainability impacts beyond our direct operations. It’s an important part of our commitment to ‘do the right thing’, and it’s aligned with our responsibilities as a signatory to the United Nations Global Compact, and the BITC Mayday commitments. What’s more, suppliers play an important role in helping us to meet our core sustainability targets, so we collaborate for mutual benefit.
With this in mind, we’ve refreshed our supplier sustainability programme and created a more strategic and formalised approach.
We use a combination of policies, service level agreements, and targets to define our expectations relating to the environmental, social and ethical performance of our suppliers, and apply them differentially by segment, as set out in our Supplier Pyramid (see below).
This prioritises our top 100 or so suppliers, who account for the majority of our contracted spend. Of these, a few provide strategic, bundled services that are critical to our business operations so we collaborate with them on a long-term basis, to find sustainability solutions that deliver benefits for us and for our suppliers. Often, this involves innovating and pioneering new methods or technologies together, to deliver step change in our performance.
We’re actively managing the rest of the top 100, to ensure that they are conducting their businesses in a way which is socially and environmentally responsible, but with a special focus on measuring and reducing their greenhouse gases, because our 2013 and 2014 total impact analysis revealed that this was our biggest, negative environmental impact.
Other suppliers are generally smaller, so are asked to meet basic requirements as part of the standard selection process, and through the responsible procurement policy in their supplier contractual terms and conditions.
For all suppliers, it’s our principle to be fair, and only to ask them to achieve standards that we are willing and able to adhere to ourselves, and to work with them in a spirit of respect and co-operation.
We measure our progress in a holistic scorecard which we are reporting for the first time in 2014. It’s designed to ensure sustainability is embedded throughout the procurement lifecycle for the majority of our most important suppliers. We’ve set targets for 80% of the top 100 to respond to our survey, to report on their carbon emissions, and to have set greenhouse gas emissions reductions goals by 2017, as well as for the same number to have sustainability embedded in their contractual arrangements by the same date.
Our business can only be as sustainable as the products we purchase from our suppliers, and by choosing to do business with them we’re implicitly supporting their business practices, so our suppliers’ performance can impact our reputation by association, which is a risk to our business. In similar vein, it’s important that we listen and respond to any suppliers concerns to avoid interruptions to supply of the goods and services we require to run our business and to avoid any reputational risk from disagreements.
On the other hand, our culture is very collaborative and partnering with our suppliers represents an opportunity to innovate for tangible sustainability enhancements, such as our ‘zero waste to landfill’ achievement, and creating closed loops which convert the used chip fat from our restaurants to make a biofuel we can burn to produce energy for our buildings. Initiatives such as these help position us as a leader in the marketplace and instils pride in our people, who want to work for an employer that is socially and environmentally responsible.
We have programmes in place to manage these risks, and to take advantage of the opportunities.
When evaluating new suppliers we ask them to complete a sustainability questionnaire. It includes questions about their sustainability risks, policies, targets and performance, and we factor the responses in to our evaluation. The weighting for the sustainability questions vary depending upon the nature of goods and services being procured.
Supplier Sustainability Survey
We use an annual, proprietary sustainability survey to monitor and review the broad sustainability performance of our top 100 suppliers. The survey questions are reviewed annually to keep them relevant and incorporate any feedback provided by suppliers. In the last twelve months, we increased the number of key suppliers completing our sustainability survey from 25% to 54%, well on our way towards our 2017 target of 80%.
Carbon Disclosure Project (CDP)
In 2013, we joined the Carbon Disclosure Project’s (CDP) supply chain programme as ‘lead members’ and asked our key suppliers to submit to it, as a way of sharing detailed information on how they’re working to reduce their greenhouse gas emissions and mitigate climate change. We’ve set targets for 2017, and are aiming for 80% of the top 100 to submit their greenhouse gas emissions to CDP by 2017, whilst 75% should include a carbon reduction target. Our 2014 scorecard shows the results from our first year of activity and we’re delighted that already 54% of our suppliers responded and 39% reported reduction targets.
We regularly host a forum for key suppliers focused on sustainability issues relevant to the scope of services they provide to PwC. We bring in experts from our client Sustainability and Climate Change practice or from third parties, who can coach them and share best practice, to accelerate the timeframe in which they can achieve the standards we’ve set for them.
In the past, for example, we offered attendees the opportunity to learn more about the CDP, and ran workshops to help suppliers with tips on measuring and managing carbon emissions, as well as setting targets. The feedback from suppliers was very positive and the investment of time and skills has meant we’ve seen strong results in our first year.
Global supplier relationship management
We're working across the network of PwC territories on a global, integrated Supplier Relationship Management programme. This focuses on increasing the value from our relationships with suppliers through collaboration, and a key activity is aligning the way we address supplier sustainability obligations across the network, focusing on continuous improvement and innovation.
A living wage employer
Our procurement approach extends to our social responsibilities, as well as our environmental footprint. We aim to achieve a positive experience for everyone who works in our business, and this extends to staff employed by our suppliers who work in PwC offices.
In 2006, we introduced the London Living Wage for our on-site staff, including our suppliers. Set each year by the Mayor of London, the London Living Wage is a minimum hourly rate of pay, which is currently 41% above the UK minimum wage. In 2008, we extended the concept with the introduction of a regional living wage, paying above the government-determined national minimum wage outside of London. We aligned this to The National Living Wage when it was introduced in November 2011 and staff working permanently at our regional sites now receive 21% above the UK minimum wage.
A fair customer
As part of being a ‘fair customer’, we seek to pay our suppliers in a way that is fair and prompt, and we’ve introduced a target to pay invoices, on average, in less than 30 days1 . This year, we achieved 26 days.1. Calculated as the average number of days taken by the UK-based entities in the PricewaterhouseCoopers LLP Group to pay supplier invoices (excluding those from PwCnetwork firms), from receipt of invoice.