Case study: How CAL promotes sustainability across its supply chain
Based in Taiwan Taoyuan International Airport, China Airlines (CAL) is the largest airline in Taiwan, providing international passenger and freight air transport services to / from 160 destinations worldwide. CAL has implemented sustainable supply chain management since 2014 and later established the Supply Chain Task Force, to be in charge of sustainable supply chain management covering aviation supplies, jet fuel, in-flight catering, and service procurement as well as general affairs.
This case study is based on the 2019 Corporate Sustainability Report by CAL 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
CAL’s sustainable supply chain management measures include risk review mechanisms, audits, and supplier conferences Tweet This! that facilitate negotiations with suppliers. In order to promote sustainability across its supply chain CAL took action to:
- conduct supplier risk assessments
- convene an annual supplier conference
- provide sustainability training
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With this case study you will see:
- Which are the most important impacts (material issues) CAL has identified;
- How CAL proceeded with stakeholder engagement, and
- What actions were taken by CAL to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2019 Corporate Sustainability Report CAL identified a range of material issues, such as flight safety management, risk and crisis management, governance and integrity management, climate change mitigation and adaptation. Among these, promoting sustainability across its supply chain stands out as a key material issue for CAL.
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 CAL engages with:
| Stakeholder Group | Method of engagement |
| Employees
| · Labour-management meetings · Labour unions · Employee suggestion boxes · Employee feedback website · China Airlines newsletter · China Airlines Retirees Portal |
| Customers
| · Customer satisfaction survey · Global business meetings · Taiwan business meetings · Discussions with travel agencies · CAL’s website, CSR website, Facebook, e-mail, and text messages · Customer service hotline · Corporate customer visits |
| Investors
| · Shareholders’ meetings · Shareholder’s hotline / mailbox · Road shows · Interviews |
| Government
| · Missives · Visits · Participation in projects · Participation in public hearings, seminars, conferences, and negotiation forums · Participation in initiatives · Audits |
| Partners (Suppliers and Contractors)
| · Telephone · Coordination meetings · Business visits · On-site audits |
| Community
| · Charity events · Community activities · News releases · Online mailbox |
| Media | · News releases · Press conferences · Interviews · Active communication of industry information |
| Associations (including Aviation Organisations)
| · Participation in project meetings · Participation in work seminars · Organising or participating in summits, executive summits, committees, and coordination meetings · Participation in government-convened meetings · Telephone, e-mail, and exchange platforms |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics, CAL engaged with its stakeholders through 307 questionnaires.
What actions were taken by CAL to promote sustainability across its supply chain?
In its 2019 Corporate Sustainability Report CAL reports that it took the following actions for promoting sustainability across its supply chain:
- Conducting supplier risk assessments
- To strictly control supply chain sustainability risks, since 2015, CAL has conducted a survey for supply chain sustainability risk and formulated its SAQ (Self-Assessment Questionnaire) based on international initiatives and evaluations such as the GRI Standards, ILO, UNGC, Dow Jones Sustainability Index (DJSI), CDP, and the Universal Declaration of Human Rights. To improve the accuracy of the results of the SAQ, CAL established the mechanism of supply chain management, including defining the definition of critical suppliers’ definition, conducting a sustainability risk survey, setting up an audit plan, and improvement assistance. CAL has referred the survey result of SAQ and feedback on assessed suppliers to adjust SAQ in order to control the risk of supply chain sustainability and enhance sustainable competitiveness. To strengthen the supply chain management, CAL reorganised the internal management cycle in 2019. Instead of reviewing the improvements at the beginning of the year, CAL identified supplier risks at the beginning of the year, conducted due diligence in the middle of the year, and reviewed the improvements at the end of the year. Supplier training was also organised, to fully control suppliers with high risks, and on-site audits were conducted further to reduce supply chain sustainability risks. In 2019, CAL conducted the SAQ with 72 suppliers, accounting for 87.56% of the total procurement amount of all tier-1 suppliers, and received 65.27% of responses. An analysis showed that the average score of the suppliers was 88.88, and there was no supplier with high risk. The average scores in governance, society, and general dimensions were above 85, respectively, showing that most of the suppliers incorporated the concept of sustainability into their management mechanisms. The average score in the environmental dimension was under 85 in 2019. Accordingly, CAL will invest more resources in improving the environmental performance of its suppliers.
- Convening an annual supplier conference
- CAL convened the fourth supplier conference on December 24, 2019, in which a total of 34 domestic suppliers (46 partners) participated. CAL invited international experts in sustainability to share international trends in sustainable development and supply chain management; CAL also elaborated on its sustainable supply chain management practices and approaches in 2019 based on SGDs and its vision and strategies for sustainable development, and on its future goals and plans for supply chain sustainability. To improve the environmental performance of suppliers, CAL explained the risks identified in the sustainable supply chain risk assessment and provided hands-on training to the suppliers in proper introduction of the concept of sustainable development in their business operations.
- Providing sustainability training
- CAL periodically provides sustainability training to enhance the procurement personnel’s knowledge of supply chain sustainability. In 2019, the procurement personnel attended training on supply chain sustainability to better understand international standards, trends, and operations of supply chain management as well as CAL’s approach to future sustainable supply chain management. To strengthen the existing environmental practices and compliance of suppliers, CAL also trained suppliers in identifying environmental regulations and implementing energy conservation and carbon reduction to increase suppliers’ and affiliates’ awareness of environmental sustainability.
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 414-2 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 414-2 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
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 CAL, 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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