Case study: How Air Products promotes sustainability across its supply chain

What are the material issues the company has identified?

In its 2020 Sustainability Report Air Products identified a range of material issues, such as economic performance, energy and climate, responsible consumption and production, water conservation. Among these, promoting sustainability across its supply chain stands out as a key material issue for Air Products.

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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

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 Air Products engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Air Products interviewed and surveyed key stakeholders to understand their sustainability priorities and concerns.

What actions were taken by Air Products to promote sustainability across its supply chain?

In its 2020 Sustainability Report Air Products reports that it took the following actions for promoting sustainability across its supply chain:

• Evaluating suppliers
• Air Products’ procurement teams have supplier qualification processes in place to make sure Air Products receives the quality supplies and services it needs. In 2019, Air Products conducted onsite evaluations of new suppliers as part of the qualification process. If noncompliance is identified through Air Products’ ongoing monitoring, Air Products works with the supplier to address the issue.

• Promoting supplier diversity
• It is Air Products’ policy and practice to provide maximum practical opportunities to diverse suppliers. In 2019, approximately 20% of Air Products’ procurement in the U.S. was from diverse suppliers. These include small, socially and economically disadvantaged, and other minority-owned and women-owned U.S. businesses that can provide competitive sources of materials and services. Air Products offers advice and guidance to assist minority business firms in building relationships and becoming successful suppliers to it.

• Protecting human rights
• Air Products completes annual human rights assessments for its operations and supply chains. From a supply chain perspective, Air Products examines human rights risks relative to procurement spend and supplier location using country-specific risk information from third parties. Most of Air Products’ suppliers are in heavy industries that are not as susceptible to human rights violations as other industries. However, to promote human rights in its supply chains, Air Products added human rights clauses to its standard terms and conditions for procurement. No significant risks were identified through its assessment, and Air Products was not aware of any allegations of violations of human rights in its supply chain in 2019. Additionally, each year Air Products reports its progress in identifying Conflict Minerals in its supply chain to the U.S. Securities and Exchange Commission and posts its Conflict Minerals report on its website.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

3) Disclosure 414-1 New suppliers that were screened using social criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening 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

78% of the world’s 250 largest companies report in accordance with the GRI Standards

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References:

1) This case study is based on published information by Air Products, 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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