Although professional services firms purchase fewer materials than businesses in many other sectors, we nevertheless strive to manage our sustainability impacts beyond our direct operations. It’s an important part of our commitment to ‘do the right thing’. 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 in recent years, and created a more strategic and formalised approach.
Our strategy involves a combination of policies, service level agreements and targets to define our expectations relating to the environmental, social and ethical performance of our suppliers. We 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 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. One example is our offices at 7 More London and Embankment Place which achieved the first ever outstanding BREEAM rating for a new build and retrofit office, respectively, and which we delivered in conjunction with a host of building related suppliers, including architects, environmental engineers, construction and fit-out specialists.
We’re also actively engaging the rest of the top 100, to encourage them to conduct 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 total impact analysis revealed that this was our biggest, negative environmental impact.
Other suppliers are generally smaller, so we ask them to meet basic requirements as part of the standard selection process, and through the requirement to comply with our responsible procurement policy as set out 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’re willing to adhere to ourselves, and to work with them in a spirit of respect and co-operation.
We measure and publish our progress in a holistic scorecard. It’s designed to ensure sustainability is embedded throughout the procurement lifecycle for the majority of our most important suppliers, and includes concrete targets for each aspect of our programme. We’ve summarised key points about our performance to date in a section of the 2016 digital, annual report.
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 a similar vein, it’s important that we listen and respond to supplier concerns to avoid interruptions to supply of the goods and services we require to run our business and to avoid 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 to position us as a leader in the marketplace and instil pride in our people, who want to work for an employer that is socially and environmentally responsible.
We have programmes in place to manage our supply chain risks, and to take advantage of the opportunities.
When evaluating new suppliers we ask them to complete a questionnaire. It covers 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 the goods and services being procured.
Supplier Sustainability Survey
We use an annual, proprietary sustainability survey to monitor and review the sustainability performance of our top 100 suppliers. The survey questions are reviewed annually to keep them relevant and incorporate any feedback provided by suppliers. For example, in the past year we’ve introduced more focus on how suppliers are moving towards a ‘circular economy’ as our waste and materials programme extends from our core operations to those of our suppliers. And, having ourselves had a human rights policy for our operations in place since 2010, we now use this survey to understand how many of our key suppliers have human rights policies in place, as part of our refreshed human rights and modern slavery approach. Currently 65% report that they have policies on this aspect of their business.
In the last twelve months, we increased the number of key suppliers completing our sustainability survey from 74% to 86%. This means that we've exceeded our 2017 target of 80% with one year to go.
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 information on how they’re working to reduce their greenhouse gas emissions and mitigate climate change. We’ve set a target for 80% of the top 100 to submit their greenhouse gas emissions to CDP by 2017, and for 75% to have set a carbon reduction target. Our 2016 scorecard shows that 72% of our suppliers responded, with 50% disclosing that they have reduction targets. Moreover, we use the information in CDP to track how many of them are actually reducing their emissions: this year 43% reported that they have done so.
To help key suppliers build the capability required to achieve sustainability performance improvements, we host forums focused on sustainability issues relevant to the scope of services they provide to us. We bring in experts from our client Sustainability and Climate Change practice or from third parties, who can coach them and share best practice, and accelerate the timeframe in which they can achieve the standards we’ve requested.
In the past, for example, we’ve offered attendees the opportunity to learn more about the CDP process, and ran workshops to help suppliers with tips on measuring and managing carbon emissions, as well as setting targets. The feedback from suppliers has been very positive and the investment of time and skills has meant we’ve seen strong results in a relatively short period of time.
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 so that staff working permanently at our regional sites currently 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. In 2016, we achieved an average payment period of 26 days.
PwC has supported social enterprises in several ways for many years, including contracting with them as part of our supply chain. It was therefore a natural step for us to also sign up as a founding member of the Buy Social Corporate Challenge, which aims to harness the spending power of business to help start-ups that have a social or environmental mission, providing jobs for disadvantaged groups.
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 PwC Network firms), from receipt of invoice.