The case for CSR/ Sustainability Reporting Done Responsibly


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Case study: How ERG promotes sustainability among its suppliers

ERG is the leading wind power operator in Italy and one of the leaders on the European market, active in the production of wind energy, solar energy, hydroelectric energy and high-yield thermoelectric cogeneration energy with low environmental impact. The creation of value for ERG’s business partners is delivered through the responsible management of its suppliers  Tweet This!, who play an essential role in ERG’s ethical and sustainable management.

This case study is based on the 2019 Sustainability Report by ERG 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.

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Thanks to its transparent and ethical approach ERG has developed constructive relations with its suppliers, creating value over time and promoting sustainability principles. In order to promote sustainability among its suppliers ERG took action to:

  • promote compliance
  • monitor suppliers
  • implement a Supplier Code of Conduct

What are the material issues the company has identified?

In its 2019 Sustainability Report ERG identified a range of material issues, such as ethics and integrity, approach to climate change, environmental and biodiversity protection, safety management. Among these, promoting sustainability among its suppliers stands out as a key material issue for ERG.

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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

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 ERG engages with:

To identify and prioritise material topics ERG engaged with its stakeholders through the following channels:

Stakeholder Group                Method of engagement
Institutions ·      Dedicated meetings, round tables and conferences
Shareholders

 

 

·      Shareholders’ Meeting

·      Webcasts

·      Press releases

·      Roadshows

·      Events related to the presentation of the business plan

Financial community

 

 

 

·      Webcasts

·      Press releases

·      Roadshows

·      Events related to the presentation of the business plan

People and trade union organisations

 

·      Activities and tools for training, assessment and internal communication

·      Events during the year

·      Team building

Local Communities

 

 

 

 

·      Meetings with local communities in line with ERG’s business

·      CSR initiatives in the region in the fields of “environment and health”, “promotion of culture”, “youth and sports”

Future generations

 

 

·      Training and information projects

·      CSR initiatives in the region in the fields of “promotion of culture” and “youth and sports”

Media

 

 

·      Press releases to disclose financial statements, business plan and extraordinary transactions

·      Press conferences

Suppliers

 

·      Web platform

·      Involvement and monitoring on “occupational safety” and sustainability issues

Partners ·      Meetings
Customers

 

·      Analysis and sharing of requirements with site customers and development of ad hoc design solutions

What actions were taken by ERG to promote sustainability among its suppliers?

In its 2019 Sustainability Report ERG reports that it took the following actions for promoting sustainability among its suppliers:

  • Promoting compliance
  • Sustainability is one of the key pillars of ERG’s procurement process and is promoted from the registration and certification stage through a web portal introduced in 2019. Anyone who operates with ERG must register and update their personal details using the online tool (including through the receipt of automatic reminders), acknowledging and accepting the contents of the Code of Ethics, the Code of Conduct, the 231 Model and ERG’s Anticorruption Policy. A fundamental element of the contractual relationship with ERG’s suppliers is, therefore, the acceptance of the principles of legality, transparency and fairness expressed in these documents. Furthermore, this is an essential prerequisite for the participation in tenders and the allocation of purchase orders. In the event of breaches of these principles, following the outcome of the due verifications, various actions may be taken: the cancellation of the purchase order, the termination of any contracts in place and, finally, exclusion from the Vendor List. The qualification questionnaires include general questions and more technical ones specific to the product category in question. Additionally, information relative to the protection of human rights, the prohibition of child labour, the right to fair treatment and the prohibition of discrimination is also requested. The combination of the economic, financial, technical, organisation and safety assessment determines the length of the qualification, which can vary from one year to a maximum of three.
  • Monitoring suppliers
  • ERG conducts constant monitoring of its suppliers, both in the case of individual purchase orders or framework agreements, through technical performance evaluations carried out by its internal departments above a certain threshold and based on objective indicators, and through the use of a compliance portal, which flags any negative information such as the presence on international Black Lists. With regard to HSE (health, safety and environment) performance, all suppliers and their subcontractors who provide services for the ERG Group, excluding intellectual services or the simple supply of materials or equipment, are assessed by the internal operator according to predefined criteria. The assessment criteria include:
    • comprehensive employee documentation;
    • the presence of duly authorised staff and means;
    • the use of appropriate PPE (personal protective equipment);
    • compliance with environmental and quality standards;
    • the presence of an overall judgement on safety performance.
  • The Procurement department collects these assessments, along with those provided by the HSE department, for use in the on-site monitoring activities carried out during the works. The department then carries out any correction measures and may decide to suspend a supplier or proceed with their entry into the Black List in the case of poor performance and/or negative information, or significant events that may include, but are not limited to: non-ethical conduct by the supplier; serious environmental or workplace health and safety incidents; serious non-compliance, identified during audits or on-site checks; failure to update or provide the documentation required by workplace health and safety regulations; and documented infringements to legal requirements.
  • Implementing a Supplier Code of Conduct
  • The Supplier Code of Conduct, approved by ERG’s Board of Directors on 31/10/2019, is aimed at ERG’s suppliers, contractors, subcontractors and business partners who are required, through the explicit approval of the document at the time of registration, to adopt the values that guide ERG’s business activities and to ensure their application throughout the supply chain. Compliance with the regulations contained therein is an essential element of the obligations assumed for all legal intents and purposes by the recipients, who are obliged to inform, share and illustrate the principles and guarantee compliance among employees, subcontractors, and third-party companies and their employees. The document includes provisions based on the principles announced at the ILO (International Labour Organization) fundamental conventions and the Universal Declaration of Human Rights of the United Nations, as well as the ten principles of the Global Compact of the United Nations:
    • Governance and Business Integrity: ethics, anti-corruption, compliance, transparency, and privacy in business activities;
    • Respect for Human Rights, focus on employees and local communities: working conditions and practices, health and safety in the workplace, respect of human rights throughout the supply chain;
    • Respect for the environment: legislation and principles relating to reducing and mitigating the environmental impact.

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 414-1 New suppliers that were screened using social criteria

 

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified & IEMA recognised Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI Standards Certified & IEMA recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by ERG, 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/

Note to ERG: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.