Case study: How Ambuja promotes sustainability across its supply chain
Ambuja Cements Limited (ACL) is one of India’s leading cement manufacturing companies, with a product portfolio largely revolving around cementitious products. As a strong brand, procurement standards followed by Ambuja are very transparent, with a procurement policy which includes a code of practice Tweet This! that encourages fair, open, and transparent competition.
This case study is based on the 2019 Sustainable Development Report by Ambuja published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Ambuja’s initiatives of engaging with its suppliers so as to promote sustainability include but are not limited to health and safety, Contractor Safety Management, Sustainable Procurement, an Anti-Bribery and Anti-Corruption Directive, and Third Party Due Diligence. In order to promote sustainability across its supply chain Ambuja took action to:
- assess suppliers
- implement a Supplier Code of Conduct
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With this case study you will see:
- Which are the most important impacts (material issues) Ambuja has identified;
- How Ambuja proceeded with stakeholder engagement, and
- What actions were taken by Ambuja to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2019 Sustainable Development Report Ambuja identified a range of material issues, such as economic performance, energy efficiency, compliance to regulatory requirements, biodiversity, health & safety, greenhouse gas emissions and climate change. Among these, promoting sustainability across its supply chain stands out as a key material issue for Ambuja.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Ambuja engages with:
To identify and prioritise material topics Ambuja engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Shareholders and Investors
| · Annual General Meeting · Investor Grievance Cell · Board Meetings/Communications · Annual Report |
| Dealers and Suppliers
| · Channel Satisfaction Survey · Grihalakshmi Conference · Annual Meeting · Marketing Meetings |
| Customers
| · Technical Services Team · Camps · Workshops · Seminars · Site Visits |
| Employees
| · Employee Engagement Survey · Function-specific Meetings and Newsletters · Magazines — I CAN, I SIGHT · Townhall · Functions and Programmes |
| Community and NGOs
| · Ambuja Cement Foundation · Community Advisory Panel · Site Specific Impact Assessment |
| Government and Regulatory Authorities | · Meetings · Communications on proposed legislations |
| Media
| · Press Briefings/Invitation to Events · Site Specific Impact Assessment |
| Construction Professionals | · Ambuja Knowledge Centres |
| Industry Associations
| · Meetings · Policy Papers · Tele-cons · Delegation |
What actions were taken by Ambuja to promote sustainability across its supply chain?
In its 2019 Sustainable Development Report Ambuja reports that it took the following actions for promoting sustainability across its supply chain:
- Assessing suppliers
- As part of its Sustainable Procurement Initiative (SPI), Ambuja assesses its suppliers who are allocated with a sustainability risk rating based on the methodology defined in its SPI manual. Through the SPI guidelines, Ambuja maps its suppliers with high, medium, or low risk. In 2019, Ambuja engaged with 8,359 tier-1 suppliers and prioritised the potential high-risk suppliers based on three categories: Anti-bribery and corruption (ABC), Sustainable Development and Contractor Health & Safety. Ambuja includes two elements/criteria to define and identify its critical suppliers: High risk suppliers and percentage of total spend, classifying suppliers who represent the top 80% of spend as critical. During 2019, out of 7,841 critical tier-1 suppliers 518 were engaged for sustainability assessment, including 155 new suppliers and 363 existing suppliers. The top three categories of critical suppliers include production services providers (includes manpower contractors), facilities service providers and logistics service providers. Ambuja’s third-party global consultant Avetta (PICS) helps it to identify risks in its supply chain and manage them by taking corrective action on identified risks through an assessment tool. Through Avetta, the IPO (India Procurement Organisation) team evaluates the performance of suppliers against various prioritisation criteria of integrity, sustainability, health and safety, and human rights, among others, as defined in Ambuja’s Supplier Code of Conduct (SCC) and Sustainable Procurement Manual (SPM). Based on the results of this assessment, corrective action plans are prepared, which are periodically monitored to review improvement in supplier performance. Ambuja’s ‘2030 PLAN’ aims to have 100% of high-risk suppliers assessed, with a consequence management plan. Ambuja also undertakes comprehensive assessments of certain high-risk suppliers (e.g. logistic service providers, labour contractors, alternative fuel vendors) through various methods whose results determine the on-boarding/retention of these suppliers. In 2019, Ambuja undertook comprehensive assessments of about 175 logistic services providers, 409 labour contractors and 465 alternative fuel vendors.
- Implementing a Supplier Code of Conduct
- Ambuja’s Supplier Code of Conduct (SCC) provides a summary of Ambuja’s expectations from its suppliers/contractors in all procurement dealings and covers the standards specified in the Social Accountability Standard SA 8000 and EMS ISO 14001. All new suppliers are made aware of and provided with a copy of the SCC, and their consent to follow it is obtained. Ambuja makes sure that no worker under the legal working age of 18 is employed directly or indirectly by its contractors and all purchase orders and agreements incorporate clauses related to occupational health and safety (OH&S), environmental management, labour standards, and social responsibility. Ambuja also has a system based self-declaration in which vendors answer basic questions about their compliance with these aspects and standards. All suppliers must complete the Supplier CSR and OH&S management system questionnaire as a condition for eligibility.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
2) Disclosure 414-1 New suppliers that were screened using social criteria
3) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
1) This case study is based on published information by Ambuja, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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