Case study: How Banpu assesses and mitigates environmental and social risks in its supply chain
As an integrated energy company covering up-stream extraction, mid-stream logistics and down-stream energy generation and service, Banpu seeks to be the Asian energy company at the heart of innovation, technology and sustainability Tweet This!, providing affordable, reliable and environmental-friendly energy for the Asia-Pacific region. Responsible supply chain management is, thus, a top priority.
This case study is based on the 2017 Sustainability Report by Banpu that can be found at this link. Through all case studies we aim to demonstrate what CSR/ 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
Abstract
Making sure its suppliers operate in a socially and environmentally responsible way is a key priority for Banpu. In order to assess and mitigate environmental and social risks in its supply chain Banpu took action to:
- divide the supplier management procedure into steps
- select new suppliers through a Tender Evaluation Process and Contract Negotiation
- apply policies that mitigate supply chain environmental, social and governance risks
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With this case study you will see:
- Which are the most important impacts (material issues) Banpu has identified;
- How Banpu proceeded with stakeholder engagement, and
- What actions were taken by Banpu to assess and mitigate environmental and social risks in its supply chain
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What are the material issues the company has identified?
In its 2017 Sustainability Report Banpu identified a range of material issues, such as leadership development, safety, community engagement, business ethics, contractor management. Among these, assessing and mitigating environmental and social risks in its supply chain stands out as a key material issue for Banpu.
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 s 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 Banpu engages with:
To identify and prioritise material topics Banpu engages with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Government | · Occasional visits · Support to governmental initiatives and activities · Response to requests for information disclosure or report · Publication of annual report and sustainability report |
| Employee
| · Communication between human resources department and employees · Develop a communication channel · Employee involvement in committees · “Banpu spirit” behavioural surveys · Employee engagement survey · Town hall meeting |
| Customer | · Customer satisfaction surveys · Develop a communication channel · Occasional visits · Response to requests for disclosure and report |
| Supplier | · Regular meeting with supplier |
| Contractor
| · Regular meeting with contractors · Executive mine contactor meeting |
| Community
| · Communication satisfaction survey · Develop a communication channel · Establish Community Consultative Committees (CCC) |
| Media | · Response to requests for information disclosure or reports · Publication of annual report and sustainability report |
| Civil Society | · Response to requests for information disclosure or reports · Publication of annual report and sustainability report |
| Investor Shareholder Creditor and Business Partner
| · Annual General Meeting of Shareholders · Board meetings at subsidiary and associated companies · Opportunity Investment Road Shows · Develop a communication channel · Analyst Meeting · Presentation on Opportunity Day organised by Stock Exchange of Thailand |
What actions were taken by Banpu to assess and mitigate environmental and social risks in its supply chain?
In its 2017 Sustainability Report Banpu reports that it took the following actions for assessing and mitigating environmental and social risks in its supply chain:
- Dividing the supplier management procedure into steps
- Banpu has divided the supply chain management process into the following steps:
- identification of major suppliers with a significant impact on the company’s operations
- assessing risks: considering environmental, social and governance risks that may impact business operations
- mitigating risks through preventive and mitigation measures, such as site visits and meeting with potential suppliers to identify environmental, social and governance risks
- monitoring progress
- Selecting new suppliers through a Tender Evaluation Process and Contract Negotiation
- Banpu selects all new suppliers by implementing a Tender Evaluation Process and through Contract Negotiation, based on the following criteria:
- reliability and quality of product and service delivery
- cost effectiveness
- environmental and social responsibility
- alignment of suppliers’ operations with Banpu’s corporate governance policy
- Applying policies that mitigate supply chain environmental, social and governance risks
- To mitigate environmental, social and governance risks from suppliers’ operations, Banpu implements a range of policies that cover every aspect of suppliers’ and contractors’ operations, including business ethics, the environment, occupational health and safety and human rights. In addition, Banpu is currently developing a Supplier and Contractor Code of Conduct.
Which GRI Standards 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 414-1 New suppliers that were screened using social criteria
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 Banpu, 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 at the link:
https://www.banpu.com/backoffice/upload/Banpu_SD_Report_2017_EN.pdf
2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page
3) https://g4.globalreporting.org/Pages/default.aspx
4) https://www.globalreporting.org/standards/gri-standards-download-center/
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