Case study: How OCI promotes social responsibility among its suppliers
OCI is a leading global producer of value-added chemicals and materials for a broad range of industries, leveraging its technical expertise, process know-how, and highly efficient manufacturing capabilities to develop a diversified portfolio of world-class products and solutions. OCI seeks to establish a fair and transparent process for managing its suppliers in order to prevent risks that may arise during transactions with them, conducting comprehensive analyses, regular evaluations, and on-site due diligence of existing and new suppliers.
This case study is based on the 2020 Integrated Report by OCI, 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
OCI identifies and monitors its suppliers’ problems and improvements through supplier evaluations Tweet This! and, based on this approach, has prevented any risks that might occur in its supply chain concerning issues such as health and safety. In order to promote social responsibility among its suppliers OCI took action to:
- assess and identify supply chain risks
- promote due diligence
- conduct improvement activities
- enhance the health and safety environments of suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) OCI has identified;
- How OCI proceeded with stakeholder engagement, and
- What actions were taken by OCI to promote social responsibility among its suppliers
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What are the material issues the company has identified?
In its 2020 Integrated Report OCI identified a range of material issues, such as increasing economic profits, developing eco-friendly products and services, enhancing safety and health at business sites, managing energy consumption and increasing energy efficiency. Among these, promoting social responsibility among its suppliers stands out as a key material issue for OCI.
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 OCI engages with:
| Stakeholder Group | Method of engagement |
| Shareholders & Investors
| · General meeting of shareholders · Management disclosure and IR · Integrated Report |
| Employees | · Labour-Management Council · Meetings by job seniority · Presentations on the current state of management |
| Local Community
| · Social contribution activities · Community councils · Scholarship/OCI Museum of Art |
| Suppliers
| · Supplier workshops · Meetings with suppliers · E-procurement system |
| Government
| · Participation in meetings with government agencies · Participation in government policy-making and investments |
| Customers
| · Customer satisfaction survey · Face-to-face and non-face-to-face consultation channels · Sales/marketing activities |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics OCI engaged with its stakeholders through surveys.
What actions were taken by OCI to promote social responsibility among its suppliers?
In its 2020 Integrated Report OCI reports that it took the following actions for promoting social responsibility among its suppliers:
- Assessing and identifying supply chain risks
- OCI assesses and identifies supply chain risks from a variety of different perspectives while taking into consideration various factors, such as impact on raw and subsidiary materials, performance, quality control, and costs, during on-site due diligence and assessment. After the risk assessments, OCI identifies and analyses the suppliers with high potential for risk and then conducts on-site due diligence of their overall management activities.
- Promoting due diligence
- OCI carries out regular on-site due diligence of its suppliers. Prior to on-site due diligence, suppliers need to perform their own evaluations for indicators on overall management activities such as management, technology, quality, the environment, safety, and society, with OCI conducting targeted on-site due diligence based on the evaluation results.
- Conducting improvement activities
- Based on due diligence, OCI identifies risks that have a high potential of occurring, categorises the risk factors as improvement targets, and requests that suppliers establish and implement plans to take corrective actions against them. OCI then takes follow-up actions to ensure the safety of employees. For example, when improvement targets are related to the safety of employees, OCI strongly demand that suppliers achieve such targets. In addition, OCI provides consulting services regarding the improvement targets of each supplier and then requests that the suppliers submit reports on their progress in achieving the targets. If OCI considers a supplier’s progress in fulfilling their social responsibilities to be insufficient, it presents recommendations to the supplier or expresses its opinion on taking additional measures, and in doing so OCI has expanded its risk management measures for suppliers.
- Enhancing the health and safety environments of suppliers
- OCI provides safety training to suppliers to reduce industrial accident rates. In addition, OCI observes the OCI Safety Golden Rule that all employees at its business sites have had to abide by since 2019 in order to create a safe and pleasant working environment and to prevent industrial accidents.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standard addressed in this case is: Disclosure 414-2 Negative social impacts in the supply chain and actions taken
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:
This case study is based on published information by OCI, 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:
https://www.oci.co.kr/upfile/report/sustainability/2020/eng/2020 OCI IR_ENG.pdf
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