Case study: How CNH Industrial promotes social and environmental responsibility among its suppliers
As one of the world’s largest capital goods companies, designing, manufacturing and selling agricultural equipment, construction machinery, trucks, buses, specialty vehicles and powertrains, with a workforce of 63,356 employees and a commercial presence in approximately 180 countries, CNH Industrial seeks to promote high sustainability standards among its suppliers. Tweet This!
This case study is based on the 2017 Sustainability Report by CNH Industrial 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/ 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
With a total network of 5,162 direct material suppliers, developing processes to assess and engage suppliers on sustainability issues is a key priority for CNH Industrial. In order to promote social and environmental responsibility among its suppliers CNH Industrial took action to:
- implement a Supplier Code of Conduct
- evaluate suppliers on the basis of sustainability performance
- ask suppliers to fill out a sustainability self-assessment questionnaire
- carry out sustainability audits
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With this case study you will see:
- Which are the most important impacts (material issues) CNH Industrial has identified;
- How CNH Industrial proceeded with stakeholder engagement, and
- What actions were taken by CNH Industrial to promote social and environmental responsibility among its suppliers
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What are the material issues the company has identified?
In its 2017 Sustainability Report CNH Industrial identified a range of material issues, such as circular product life cycle, CO2 and other air emissions, self-sustaining food systems, renewable energy, employee engagement. Among these, promoting social and environmental responsibility among its suppliers stands out as a key material issue for CNH Industrial.
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 CNH Industrial engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Direct engagement in materiality analysis · Market research · Focus groups · Customer satisfaction surveys · Above-the-line and below-the-line communication channels · Two-way communication through: web, direct mailing, dealerships, toll-free numbers, etc. · Events (product launches, etc.) and participation in exhibitions, trade fairs, and conventions · Customer-Driven Product Development (CPD) · Compliance Helpline |
| Dealer and service network
| · Direct engagement in materiality analysis · Daily contacts and periodic meetings with the network · Two-way communication through the web Dealer Portal and dedicated phone lines · Individuals responsible for monitoring the network and ensuring fulfillment of contractual standards · Dealer development programs · Programs to support dealers, including training, definition of standards, financing, and promotional campaigns · Compliance Helpline |
| Employees | · Direct engagement in materiality analysis · Daily dialogue · Intranet portal · Meetings to communicate expected and actual performance levels and professional development path · Compliance Helpline |
| Professional organisations and associations | · Direct engagement in materiality analysis · Meetings to share and align with corporate objectives and decisions |
| Employees’ families
| · Participation in initiatives (Children’s Christmas, Family Day, etc.) · Internal publications |
| Financial community: Traditional and Socially Responsible Investors (SRIs)
| · Direct engagement in materiality analysis · General Meeting · Price-sensitive disclosures and information · Quarterly conference calls · Seminars, industry conferences, roadshows, and meetings · Daily dialogue (meetings, telephone, emails) · Investor Relations section of the Company website · Annual Report · Sustainability Report |
| Journalists, media, and opinion leaders | · Direct engagement in materiality analysis · Daily dialogue · Presentations and press conferences · Meetings · Brand and Company websites |
| Local communities: Religious, cultural, and socio-political associations, health systems, schools & universities, and non-governmental & non-profit organisations | · Direct engagement in materiality analysis · Meetings with representatives of associations, organisations or local communities · Actions or projects, managed directly or in partnership · Cultural exchange programs · Compliance Helpline |
| Public institutions: Government, local authorities, public agencies, regulatory bodies, international institutions, trade associations, and non-governmental organisations | · Direct engagement in materiality analysis · Periodic ad hoc meetings on corporate objectives and position · Participation in working groups, development of joint projects and alliances · Collaboration on R&D projects · Initiatives to highlight regulatory issues · Dialogue with institutions and environmental associations |
| Scientific and technological research centres and universities | · Direct engagement in materiality analysis · Open-source tools · Periodical meetings |
| Suppliers and commercial partners | · Direct engagement in materiality analysis · Daily relationship through buyers · Web Supplier Portal · WCM suppliers · Supplier Advisory Council (SAC) · Conventions · Technology Days · Su.Per · Compliance Helpline · Dedicated email addresses |
| Trade unions and employee representatives | · Direct engagement in materiality analysis · Institutional meetings and other exchanges pursuant to legal or contractual provisions at plant, legal entity, regional or national levels · Trilateral meetings (Company, trade unions, and government bodies) on matters of particular importance · Ad hoc meetings at plant, legal entity, regional or national level |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics CNH Industrial engaged, via an online survey or direct interview, with a sample of 1,247 stakeholders among employees, customers, dealers, opinion leaders, public institutions, NGOs, investors and journalists.
What actions were taken by CNH Industrial to promote social and environmental responsibility among its suppliers?
In its 2017 Sustainability Report CNH Industrial reports that it took the following actions for promoting social and environmental responsibility among its suppliers:
- Implementing a Supplier Code of Conduct
- CNH Industrial’s Supplier Code of Conduct is available on the corporate website in 8 languages and is circulated to suppliers through the CNH Industrial Supplier Portal. The Supplier Code of Conduct requires respect for, among others, labour and human rights, environmental protection and business ethics. It applies to the entire supply chain, and suppliers are required to transfer the Code’s principles to their employees, subsidiaries, affiliates and subcontractors.
- Evaluating suppliers on the basis of sustainability performance
- CNH Industrial applies a Potential Suppliers Assessment (PSA), a process that is carried out before the procurement phase, to allow potential new suppliers to participate in tenders. PSA evaluation criteria include key sustainability aspects, with a clear reference to environmental and occupational health and safety management. Actually, one of the requirements is the presence of an Environmental and Health and Safety System in the working area, preferably certified by a third party. Additionally, all new suppliers have to comply with the CNH Industrial Code of Conduct and Supplier Code of Conduct. They also have to provide references and show abilities relating to: fighting corruption, protecting and safeguarding the environment, promoting health and safety at work, ensuring non-discrimination, prohibiting forced and/or child labour and recognising freedom of association.
- Asking suppliers to fill out a sustainability self-assessment questionnaire
- CNH Industrial asks suppliers to fill out a sustainability self-assessment questionnaire, providing information on human rights, the environment, compliance and ethics, diversity, and health and safety. The process is completed through a dedicated IT platform developed and managed by a third party, to ensure transparency and neutrality. Questionnaires are then analysed and used to carry out a risk assessment, to identify critical suppliers whose compliance with sustainability criteria has to be addressed.
- Carrying out sustainability audits
- CNH Industrial carries out sustainability audits at suppliers’ plants. These audits are intended to confirm the information submitted through the self-assessment questionnaires and define possible improvement plans, where necessary. If audit findings reveal critical issues to be addressed, joint action plans are prepared with the suppliers to define:
- improvement areas
- responsibilities
- corrective measures
- timing of action plans
- In 2017, CNH Industrial performed 75 audits at 75 supplier plants worldwide.
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 308-2 Negative environmental impacts in the supply chain and actions taken
3) Disclosure 414-1 New suppliers that were screened using social criteria
4) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
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: Achieve gender equality and empower all women and girls
- Business theme: Workplace violence and harassment
- Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
- Business theme: Labor practices in the supply chain
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Workplace violence and harassment
Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:
- Sustainable Development Goal (SDG) 5: Achieve gender equality and empower all women and girls
- Business theme: Workplace violence and harassment
- Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
- Business theme: Labor practices in the supply chain
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Workplace violence and harassment
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References:
1) This case study is based on published information by CNH Industrial, 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) 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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