Buying sustainably.

Buying sustainably.

WHAT WE BUY

“Our suppliers form an essential part of our strategic direction, they help us serve our customers and drive innovation in both our products and how we process our business. We use the £500m we spend with our supplies to help support our continued efforts with our supply chain to improve on both our environmental and social targets.

Our commitment to helping our supplier’s improve and supporting them when they face difficulties remains a key priority.”

Alex Wolny, Director, Group Procurement & Supplier Management and Chair of the Group Environment Committee

To run our service based business effectively, there are a number of ‘raw materials’ that we need to bring together. Our focus is buying these in the right way to ensure they’ll be available in the future.

  • We need a good supply of people.
  • We need transport to move our people around.
  • We need natural resources to run the business such as energy, paper and water.
  • We need good IT systems to ensure information is available at the touch of a button.
  • We need good relationships with other financial services providers to move money/data around.
  • We need buildings to work from. They need to be clean, tidy and provide a pleasant working environment.

SUPPLY CHAIN IN NUMBERS

supply_chain_lng_csr13

 

2009

2010

2011

2012

2013

2013
versus
2012

Spend with suppliers

£316m

£369m

£439m

£446m

£504m

+13%

Number of suppliers

2,284

2,102

2,077

2,005

2,638

+32%

Number of key suppliers

50

40

40

140

185

+32%

Percentage of supplier spend operating in high risk countries (as defined by FTSE4Good)

2%

15%

16%

9%

14%

+55%

SUPPLY CHAIN RISK

We use best practice processes to identify suppliers that meet or exceed our (and our customers’) requirements in terms of quality, value and speed of delivery. At the same time, we ensure we minimise our impact on the environment, maintaining international standard of workers welfare and actively encourage improving their local communities.

Continuous improvement is at the heart of what we do. By working in partnership with our suppliers, our constantly evolving standards help us to support and guide the delivery of goods and services.

We play closer attention to companies that deliver their services from higher risk countries.

We explicitly require our suppliers to have a code of conduct outlining employee relations, which requires them to uphold minimum commitments relating to labour standards. Their code of conduct should meet the four ‘core’ ILO conventions on labour rights, namely:

  • The effective abolition of child labour.
  • The elimination of all form of bonded labour and compulsory labour.
  • The elimination of discrimination with respect to employment and occupation.
  • Freedom of association and the effective recognition of the right to collective bargaining.

INCREASING INFLUENCE

In 2012 we revised our key supplier criteria so it included a greater number of our suppliers. We’ve continued this work through 2013 with the number of our key suppliers increasing to 185. We’ve implemented a key supplier governance framework that includes the requirement for key suppliers to report their environmental, social and governance performance improvements.

In the Netherlands and France, we’ve further localise their versions of our sustainable procurement policy. The UK business remains the largest procurer of products and service by far.

GOVERNANCE AND POLICY

All suppliers must comply with our sustainable procurement policy (PDF). We continually review our governance model and policies to ensure they remain relevant in today’s market, whilst maintaining standards such as anti-bribery and corruption.

The Group-wide corporate responsibility and ethics committee expects suppliers to:

  • maintain effective policies and procedures to manage their environmental impact;
  • respect fundamental human rights including worker representation;
  • have a positive impact on the communities in which they operate;
  • maintain responsible health and safety practices;
  • be committed to equal opportunities in employment; and
  • adopt ethical business practices.

BENCHMARKING PERFORMANCE

In 2013 we retained our ISO14001 accreditation within our supply chain operations.

Our procurement environmental management system represents our commitment to improving the way we manage our direct and indirect supply chain impact. We continue to validate and improve our approach to supplier management against external organisations, including the:

  • Financial Services Purchasing Forum
  • Business in the Community Corporate Responsibility Index
  • Dow Jones Sustainability Index
  • EIRIS
  • UN Global Compact
  • FTSE4GOOD
  • Suppliers such as Bureau Veritas and SGS

INCREASE TRAINING AND EDUCATION

We’ve created a new sustainable supply chain committee whose remit includes optimising our supply chain. They do this by working with suppliers and internal and external subject matter experts to influence Group Environmental, Social and Governance targets.

Our commitment to CSR improvement continued in 2013, key supplier relationship managers received training and a handbook, which established governance of our CSR policies and standards.

SUPPLY CHAIN DIVERSITY – SOCIAL ENTERPRISES

Social enterprises are an essential part of the UK economy. We’d like to increase the diversity of our supplier base to include social enterprises.

During 2013 we put procurement contracts into places that social enterprises can pitch for business. However, we found that our national contracts currently are too large for them to handle. So, due to the maturity of the market, we’ve decided to change our approach and stimulate the market in two ways:

  • Early capital investment. We have a joint venture with CAF Venturesome, the Coast to Capital LEP and NESTA, to develop www.se-assist.co.uk. This provides £330,000 of loan capital, mentoring and consultancy to businesses in need of support. Our involvement is helping us understand the barriers to trade with these organisations in our supply chain.
  • Education. In 2013 we hosted a number of social enterprise events across our locations. We invited local and national social enterprises to show case their businesses at Legal & General.

So far we have placed a number of social enterprise contracts:

We’re trialling www.clarityefbp.org products in our London office.

We used www.tier1.com who works with prison inmates to recycle and achieve an NVQ qualifications when we upgraded all our PCs in the UK business.

We hope, as the sector grows and becomes able to deliver national contracts, our investment in this sector will lead to us being able to contract with more organisations in our supply chain.

2013 STANDARDS IMPROVED

We implemented a couple of key standards to improve the lives of people in our supply chain:

  • Adoption of UK living wage. We’ve been working with Share Action and Fair Pensions to be one of the first major companies to adopt and implement the UK Living Wage standards as an employer and as a contractor of services in our major locations. As an employer, we’re already paying a UK living wage, but we’re now paying around 120 contract workers a living wage and have improved their lives and living standards as a result.
  • Adoption of the UK Prompt Payment Code. This ensures that timely payments provide our suppliers with much needed cashflows to small to medium sized businesses in the UK.

THE FUTURE

We’re planning to deliver a number of things, some of which will become targets, others ensure that we are simply doing business better:

  • We’ll enhance the sustainable procurement policy to further include equality, diversity and inclusion and waste reduction elements.
  • We’ll work with our supply chain to minimise our use and consumption of vulnerable raw materials. Without paper our business cannot operate. We’ve established a Print Buyers Forum that ensures our use of our most significant commodity that impacts the environment, paper, is only ever sourced using sustainable or recycled materials. The Print Buyers Forum focuses on reducing our paper requirement and helps us move to the digital delivery of communications.