Case study: How EGCO Group promotes sustainability among its suppliers
Electricity Generating Public Company Limited (EGCO) is the first independent power producer in Thailand, established in May 1992 by the Electricity Generation Authority of Thailand (EGAT) to promote the privatisation of the power and utility sector. To generate electricity efficiently and without interruptions, supply chain management, which minimises possible risks that may affect electricity generation, is necessary to operate business in a sustainable manner. It is, accordingly, a key priority for EGCO Group.
This case study is based on the 2019 Sustainability Report by EGCO Group 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
Achieving sustainability throughout its supply chain arises for EGCO Group by adhering to a core principle: creating sustainable growth with its suppliers. Tweet This! In order to promote sustainability among its suppliers EGCO Group took action to:
- identify critical suppliers and risks
- engage suppliers
- implement a Supplier Code of Conduct
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With this case study you will see:
- Which are the most important impacts (material issues) EGCO Group has identified;
- How EGCO Group proceeded with stakeholder engagement, and
- What actions were taken by EGCO Group to promote sustainability among its suppliers
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What are the material issues the company has identified?
In its 2019 Sustainability Report EGCO Group identified a range of material issues, such as market opportunities, human capital development, energy management, digitisation and innovation, climate change, talent attraction and retention. Among these, promoting sustainability among its suppliers stands out as a key material issue for EGCO Group.
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 EGCO Group engages with:
To identify and prioritise material topics EGCO Group engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Customers
| · Information and opinions exchanging meetings with the Transmission Control Unit from the Electricity Generating Authority of Thailand (EGAT) · Bonding activities with the EGAT Group · Meetings with the customers in the industrial estates for the production planning that will meet the customers’ demand. |
| Shareholders
| · Attend shareholder meetings · Informed through annual reports · Power plants visit · Private information session · Roadshows · LIFE quarterly magazine · Provide suggestions and complaints through designated communication channels · Inform through EGCO Group’s website |
| Government Agencies
| · Organise meetings · Company visits · Open channels for complaints, opinions, and suggestions |
| Employees
| · Field relevant business update meetings · Communication Day · Team building activities · Internal communication system |
| Community
| · Power Development Fund meetings · Power plant visits · Quality of life and community development project from a tri-party cooperation between power plants, government agencies, and local communities · SUKJAI quarterly magazine · Open channels for complaints |
| Creditors
| · Meetings · Power plant visits · Prior notice given in case EGCO Group is not able to fulfill the conditions of the loan agreement in order to find solutions to the problems together |
| Suppliers and Business Partners
| · Organise meetings · Company visits · Joint activities · Open channels for complaints, opinions, and suggestions |
| Investors
| · Quarterly analyst meetings · Annual Reports · EGCO Group’s website · Suggestions and complaints through designated communication channels |
| Society
| · Press conferences · Communication through EGCO Group’s website |
| Contractors and Subcontractors
| · Meetings · Company visits · Joint activities · Open channels for complaints, opinions, and suggestions |
| Media
| · Press conference · Exclusive interviews with executives · Company visits |
| Non-Revenue Organisations (NGOs)
| · Environmental conservation projects through the Thai Conservation of Forest Foundation · Company visits · Open channels for complaints, opinions, and suggestions |
What actions were taken by EGCO Group to promote sustainability among its suppliers?
In its 2019 Sustainability Report EGCO Group reports that it took the following actions for promoting sustainability among its suppliers:
- Identifying critical suppliers and risks
- In 2019, EGCO Group organised a workshop with all of its procurement sections, where officers and related personnel participated in analysing over 1,000 suppliers, using the 2018 procurement database, with the equivalent of spending around 22,000 million baht. EGCO Group categorised its suppliers into two groups: (1) Supplies of goods and (2) Supplies of services. Thereafter, EGCO Group conducted an analysis to identify its critical suppliers, using the following criteria: (1) suppliers with the top 80 percent of EGCO Group’s procurement spending (2) suppliers who supply critical components of materials, goods, or services to EGCO Group’s production processes, and (3) suppliers who are monopoly or non-substitutable. EGCO Group organised an additional workshop with its procurement sections and related personnel, to identify environmental, social, and governance (ESG) risks related to sustainable supply chain management. During the workshop, all suppliers were assessed in order to identify those with ESG risks important to EGCO Group. Assessment results showed that out of 1,123 total suppliers, 234 suppliers were identified as having ESG risks. EGCO Group reviewed and selected 30 suppliers from this group and sought their cooperation for assessment and site visit processes, in order to conduct an in-depth risk analysis.
- Engaging suppliers
- EGCO Group held a Supplier Day, at which it communicated to its suppliers its commitment and determination to operate its business sustainably, its sustainable supply chain management approach, its anti-corruption commitment within EGCO Group’s Supplier Code of Conduct (updated version) and Self-Assessment which covers the environmental, social, and governance aspects (updated version). 100 percent of suppliers and under 85 percent of critical and ESG-risk suppliers, who attended Supplier Day engaged and answered on supplier substantiality self-assessment. Around 87 percent of suppliers had good performance in the social and governance dimensions, according to EGCO Group’s expectations. Nevertheless, only 60 percent of suppliers had good environmental guidelines. Therefore, EGCO Group will develop a plan to increase awareness and cooperation with suppliers.
- Implementing a Supplier Code of Conduct
- EGCO Group’s Supplier Code of Conduct covers 7 topics, which are as follows:
- business ethics
- human rights
- employee practice
- occupational health and safety
- social responsibility
- environmental management
- sustainable procurement and knowledge
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: 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
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
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References:
1) This case study is based on published information by EGCO Group, 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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