Case study: How D&G promotes sustainable procurement
Founded in 1999, D&G is a leading manufacturer and service provider of medium and large asphalt mixing plants in China, with its headquarters located in Hong Kong. D&G is committed to continuously improving its sustainable procurement mechanism, not least through comprehensive supplier environmental and social assessments.
This case study is based on the 2020 Sustainability Report by D&G, prepared in accordance with the GRI Standards, 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
D&G seeks to establish a stable and sustainable supply chain Tweet This! through stringent control systems and policies and by setting new objectives for the coming years, to scale up its contributions to sustainable procurement. In order to promote sustainable procurement D&G took action to:
- adopt the sustainable procurement charter
- assess suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) D&G has identified;
- How D&G proceeded with stakeholder engagement, and
- What actions were taken by D&G to promote sustainable procurement
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What are the material issues the company has identified?
In its 2020 Sustainability Report D&G identified a range of material issues, such as economic performance, occupational health and safety, air quality control, hazardous waste management. Among these, promoting sustainable procurement stands out as a key material issue for D&G.
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 D&G engages with:
| Stakeholder Group | Method of engagement |
| Employees | · Quality / environmental / occupational health and safety management system trainings · Quality / environmental / occupational health and safety management system three aspects audit · Employee meeting / satisfaction questionnaire · On-the-job training and physical examination |
| Customers | · Satisfaction questionnaire · Factory inspection · Site visit |
| Suppliers | · Study visit · Product technical standards exchange forum · Supplier capability survey · Supplier assessment |
| Education and research partners | · Daily communication exchange (Associations/research centres) · The 11th China Asphalt Mixing Plant Industry Summit (Construction Machinery Association Road Machine Chapter) · Teaching and technical sharing and exchange forum (Research Institute of Highway Ministry of Transport) |
| Government and other public bodies | · Inspection · Factory exchange interviews |
| Business partners
| · Seminars · Training sessions · Meetings and discussion |
| Social media | · Collaboration and cooperation · Advertising and promotion |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics D&G engaged with its stakeholders through questionnaire surveys, collecting opinions from a total of 70 external stakeholders.
What actions were taken by D&G to promote sustainable procurement?
In its 2020 Sustainability Report D&G reports that it took the following actions for promoting sustainable procurement:
- Adopting the sustainable procurement charter
- During the procurement process, apart from basic requirements such as quality, price and delivering capacity of the supplier’s products, D&G considers environmental, occupational health and safety (“EHS”) performance and the financial status of the suppliers. D&G has adopted the sustainable procurement charter, where choosing suppliers must consider different factors such as environmental, social and ethical aspects. Thus, suppliers are required to submit relevant documents for verification. In terms of basic requirements, the Material Supplies Department will consider the procurement standard and production requirement, and compare several factors, including materials quality, price, delivery date, packaging, after-sale service and technological support. The Material Supplies Department selects several qualified suppliers for comparison. In terms of EHS, suppliers have to prove their comprehensive EHS management systems through submission of relevant qualifications and test reports. This ensures they can control sources of pollution and hazards on-site effectively. Additionally, suppliers have to indicate clearly that there is no material environmental pollution or fatality case. The relevant departments could conduct an on-site inspection, if necessary.
- Assessing suppliers
- D&G has stepped forward to tighten EHS requirements for supplier assessments. Suppliers with higher scores are regarded as the major suppliers and are offered larger orders, whereas other suppliers are classified as low-priority and alternative. In order to ensure the sound performance of major suppliers and give opportunities to the low-priority and alternative ones to improve, D&G reviews the supplier list by conducting a yearly assessment on all suppliers. If a supplier fails the yearly assessment, they have to reply and provide an improvement plan within two working days after the release of the assessment results, otherwise they will be treated as acquiesced. The supplier with improvements made will then be re-assessed. To ensure the fairness of the review mechanism, the unqualified suppliers will be classified as alternative suppliers, yet they can still undergo annual reviews. Apart from the Material Supplies Department, the QM (quality management) Department is also responsible for the quality control of the procured materials. If there is a major quality issue when conducting inspection, measurement, observation and process verification, the QM Department shall issue a “non-conformity report”, and hands over the case to the Procurement Department for product return. If the “non-conformity report” is issued twice while the quality is not improved or maintained below standard, the Material Supplies Department shall conduct an emergency assessment, and deal with the supplier and keep relevant records in accordance with the assessment results. D&G will terminate the cooperation with directly disqualified suppliers for at least two years.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standard addressed in this case is: Disclosure 414-1 New suppliers that were screened using social criteria
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
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References:
This case study is based on published information by D&G, 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 following link:
http://media-dgtechnology.todayir.com/2021063019160223049824647_en.pdf
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