The case for CSR/ Sustainability Reporting Done Responsibly


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Case study: How KBC promotes sustainability among its suppliers

As an integrated bank-insurance group, catering mainly for retail, private banking, SME and mid-cap clients across six core markets – Belgium, the Czech Republic, Slovakia, Hungary, Bulgaria and Ireland -, KBC seeks to integrate sustainability into its procurement activities  Tweet This!, encouraging suppliers to incorporate social, ethical and environmental criteria in their purchase, sale and outsourcing procedures.

This case study is based on the 2017 Sustainability Report by KBC 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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When making procurement decisions, KBC not only considers the best price and quality, but also ethical, environmental and social aspects. In order to promote sustainability among its suppliers KBC took action to:

  • implement a Sustainability Code of Conduct for Suppliers
  • carry out supplier assessments
  • monitor suppliers’ performance

What are the material issues the company has identified?

In its 2017 Sustainability Report KBC identified a range of material issues, such as integrity, compliance with laws and regulations, financial performance, privacy and data protection, quality of products and services. Among these, promoting sustainability among its suppliers stands out as a key material issue for KBC.

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 organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

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 KBC engages with:   

Stakeholder Group                Method of engagement
Clients

 

 

 

·      Annual client satisfaction, NPS and reputation surveys

·      Regular client panels

·      Client consultations and continuous suggestions and complaints management

Employees

 

·      Annual Group Employee Survey

·      Regular consultation with the Health & Safety Committees, prevention advisors and union representatives

·      Annual meeting of the European Works Council

·      Annual evaluation of all staff

Shareholders, investors and financial analysts, sustainability analysts

 

·      Annual General Meeting

·      Investor days

·      Regular investor roadshows

·      Sustainability assessments such as DJSI, CDP, Sustainalytics, FTSE4Good, Bankwijzer Belgium and Ethibel

Local and federal government and regulators

 

 

·      Membership of the banking and insurance sector federations in the different core countries and of other national and international representative bodies to establish and maintain external relationships with political actors, achieve closer follow-up of regulatory initiatives impacting the financial sector (e.g. public consultations)

·      Active participation at networking events

NGOs, communities, social organisations ·      Annual stakeholder dialogue

·      Regular meetings with NGOs regarding KBC’s general sustainability strategy and specific sustainability topics

·      Membership of the local business councils for sustainable development in several core counties

·      Membership of sustainability networking organisations

·      Research papers and media analysis

Suppliers

 

·      CSR questionnaire as integral part of the supplier assessment

·      Supplier screening process by EcoVadis

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics, KBC carried out a survey among over 2000 internal and external stakeholders that was supplemented with qualitative interactions with external stakeholders – dialogue, consultations, discussions.

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

In its 2017 Sustainability Report KBC reports that it took the following actions for promoting sustainability among its suppliers:

  • Implementing a Sustainability Code of Conduct for Suppliers
  • KBC’s suppliers are required to comply with the principles outlined in its Sustainability Code of Conduct for Suppliers, which forms part of KBC’s overall corporate sustainability and responsibility strategy. The Code of Conduct is in line with the UN Global Compact Principles and applies to all KBC group entities and to all KBC’s procurement and outsourcing activities. The Sustainability Code of Conduct for Suppliers sets out, among others, the following requirements:
    • Suppliers respect human rights and do not allow any harassment, physical or mental punishment or any other form of abuse.
    • Suppliers respect local and international labour regulations with regard to working hours and wages.
    • Suppliers warrant that there are no forced labour practices and that employees are free to leave their job after giving reasonable notice.
    • Suppliers have a non-discrimination policy in place that prohibits discrimination on the basis of gender, race, social or physical handicap, religion or origin.
    • Suppliers respect the core principles of the International Labour Organization. This includes not employing children below 14 years of age or as defined under national legislation.
    • Suppliers’ employees enjoy freedom of association and have the right to collective bargaining.
    • Suppliers provide their employees and appointees with safe and healthy working conditions.
    • Suppliers conduct their activities with due respect for the environment and take initiatives to reduce their ecological footprint.
    • Suppliers conduct their business with integrity and have a policy in place that prohibits fraud, money laundering, bribes and kickbacks, showing zero tolerance towards corruption.
  • Carrying out supplier assessments
  • During the selection procedure, all suppliers are assessed on sustainability risk using the KBC Blacklist, World Check and the CSR Questionnaire for Suppliers. If any hits are generated on World Check, they are investigated by the Corporate Sustainability department in cooperation with Group Compliance. It will then be decided whether further cooperation with the supplier is possible. Blacklisted companies are excluded from any activity with KBC. The CSR Questionnaire is, also, an integral part of the screening of a new supplier. It checks compliance with the KBC Sustainability Code of Conduct for Suppliers in more detail and any supplier that passes this screening is then contractually obliged to sign the Code of Conduct.
  • Monitoring suppliers’ performance
  • KBC works with the international consultancy EcoVadis, for in-depth screening of its suppliers’ sustainability performance. Every year, KBC invites several Tier-1 suppliers to undergo screening. The suppliers who are screened receive a scorecard, which they can also use as evidence of their sustainability commitment to other clients. Where the results are less positive, KBC works with the supplier and Ecovadis to prepare an action plan to raise the level of sustainability within the supplier’s company. In 2017, 73 suppliers were invited to participate in EcoVadis screening, to which 46% responded. The average score for the screened KBC suppliers was 52, higher than the average EcoVadis score of 42.

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

 

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.



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References:

1) This case study is based on published information by KBC, 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 KBC: 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.

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