The case for CSR/ Sustainability Reporting Done Responsibly


IDENTIFY - MEASURE - MANAGE - CHANGE

Insights on how you can protect the environment, maintain and increase the value of your company, through a structured process.

Insights on how you can protect the environment, maintain and increase the value of your company, through a structured process.

Home / case studies / Case study: How Outotec promotes social and environmental responsibility among its suppliers

Case study: How Outotec promotes social and environmental responsibility among its suppliers

Outotec develops leading technologies and services for the sustainable use of Earth’s natural resources, creating the best value for its customers in the mining, metal and chemical industries. As approximately 90% of Outotec’s manufacturing, based on monetary value, is sourced from external suppliers, responsible sourcing and supply chain management are highly important for Outotec  Tweet This!.

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

Layout 1Abstract

Outotec has made great progress in regularly auditing its key suppliers and, in 2019, in line with its targets, 34% of Outotec’s key suppliers were audited, with supplier development actions planned (or implemented) according to the audit findings. In order to promote social and environmental responsibility among its suppliers Outotec took action to:

  • carry out supplier environmental assessments
  • combat child, forced and compulsory labour
  • carry out supplier social assessments

What are the material issues the company has identified?

In its 2019 Sustainability Report Outotec identified a range of material issues, such as financial performance, sustainable technologies and innovations, health and safety, ethics, compliance and governance. Among these, promoting social and environmental responsibility among its suppliers stands out as a key material issue for Outotec.

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 Outotec engages with:

Stakeholder Group                Method of engagement
Employees

 

·      Regular briefings and info sessions

·      Regular meetings with employee representatives

·      Global intranet, collaboration tools and social media

·      Performance development dialogues

·      Outotec Round-Table

·      Employee surveys

·      Compliance helpline and feedback channels

·      Young Professionals network

Customers

 

 

·      Regular meetings held by Outotec’s Account Management, and as part of Sell and Deliver processes

·      Customer satisfaction surveys

·      Joint R&D projects

·      Training, user meetings, workshops

·      Seminars, conferences, trade shows

·      Asset walks

·      Newsletters, website, social media

Suppliers and contractors

 

·      Contacts through Outotec’s Delivery process

·      Supplier Policy and Code of Conduct

·      Supplier assessments and audits

·      Joint continuous improvement of processes

·      Outotec Supplier Days

·      Training events and programmes

Investors, analysts and financiers

 

 

·      Quarterly briefings

·      CEO’s mid-quarter Q&A sessions

·      Audited/assured reporting

·      Capital Markets Day

·      Roadshows, one-on-one meetings, industry seminars

·      Annual General Meeting

·      Excursions to Outotec sites

·      Annual surveys

Academia and students

 

·      Joint programmes

·      Involvement in university courses

·      Seminars, lectures, visits

·      Thesis work

·      Internships

·      Networking

Authorities, regulators and governments

 

·      Memberships and chairmanships in EU’s and national working groups

·      Counselling on expert matters

·      Seminars on sustainable mining and metals processing

Potential future employees ·      Careers website and social media channels

·      Recruitment events

·      Student cooperation

·      Internships

·      Hosting visitor groups

Local communities

 

·      Joint social programmes with customers

·      Support for local initiatives

·      Volunteering programmes

Industry associations and NGOs ·      Active membership in industry associations

·      Employee volunteering work

·      Dialogue on circular economy and sustainable processing of minerals and metals

Media ·      Interviews with Outotec managers and experts

·      Quarterly media briefings

·      Audited/assured reporting

·      Success stories on the website

·      Active use of social media

·      Excursions to Outotec sites

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Outotec carried out a public web survey among all stakeholders about the topics that were most important and impacted stakeholders’ decision making regarding Outotec, also interviewing representatives of employees, customers, suppliers, investors and academia.

What actions were taken by Outotec to promote social and environmental responsibility among its suppliers?

In its 2019 Sustainability Report Outotec reports that it took the following actions for promoting social and environmental responsibility among its suppliers:

  • Carrying out supplier environmental assessments
  • In 2019, Outotec screened 99 suppliers, equalling 14% of all new suppliers, using environmental and social criteria. Additionally, Outotec audited 71 suppliers, equalling 33.6 % of all key suppliers, using environmental criteria. Screening is a spot check on certain topics, and Outotec selects the companies for environmental screening from the high and medium risk categories, based on information collected with a supplier self-assessment questionnaire. The questionnaire includes 12 questions related to environmental aspects, hazardous substances, and waste management. In case any risks are identified based on the received information a detailed environmental assessment is included in the audit, which is either performed by phone interview or site visit. Audit results and findings are reported as an official audit report in Outotec’s Supplier Data Management system. Audit findings are categorised into observations and deviations. In Outotec’s supplier audits, none of the audited suppliers were identified as having significant negative environmental impacts. Outotec evaluated suppliers’ approach to waste management and environmental controls and the audit teams reported that suppliers were making strong efforts to minimise their negative environmental impacts.
  • Combatting child, forced and compulsory labour
  • Outotec does not tolerate any child labour or forced or compulsory labour, as stated in its Code of Conduct and Supplier Policy. According to Outotec’s human rights self-assessment made in 2017, no notable risks related to the use of child labour, or forced or compulsory labour, were identified in Outotec’s own manufacturing units. The main sustainability-related risks in the supply chain, identified in Outotec’s internal workshop consisting of its global supply team, included bribery and kickbacks, occupational safety, protecting information and reporting misconduct. Child labour is, however, a recognised risk in any supply chain, and Outotec has taken steps to reduce the possibility that its approved suppliers utilise child or forced labour. Outotec identified three countries in its supply chain, namely China, India and Mexico, with potential risks regarding child labour or hazardous work. In 2019, 5.6% of Outotec’s suppliers were based in China, 1.7% in Mexico, and 1.1% in India. To mitigate these possible risks, Outotec’s dedicated supply personnel in each of its Market Area offices assesses suppliers according to Outotec’s approval process and makes observations during audits and other visits.
  • Carrying out supplier social assessments
  • As the majority of Outotec’s manufacturing is sourced from external suppliers, there are potentially more human rights-related risks in the supply chain than in Outotec’s own operations. Outotec has categorised its suppliers into three risk categories. Country risk is one criterion in determining the scope of the supplier assessment. To mitigate social sustainability related risks, suppliers are required to commit to Outotec’s Supplier Policy, which reflects the principles of the company’s Code of Conduct. In 2019, Outotec audited 33.6% of its key suppliers on quality, health and safety and human rights-related issues. The long-term target is to audit all key suppliers with these criteria regularly, with supplier development actions drawn up according to audit findings. In supplier selection, Outotec screened 123 suppliers, in a combination of field and desk assessment. This included reviewing human rights and labour practices criteria. Screening is a spot check on certain topics, and Outotec selects the companies from the high and medium risk categories based on information collected with a supplier self-assessment questionnaire. The questions relate to social programme accreditation, respect for human rights of employees, prohibition of child labour, health surveillance, incident management and occupational safety. All the screened companies qualified as new suppliers, as none of the companies were identified as having significant potential negative human rights or social impacts. Suppliers that Outotec does not normally screen are for example, one-time indirect suppliers, such as consultants. Some of these non-screened suppliers have, however, signed Outotec’s Supplier Policy. In Outotec’s supplier audits, four suppliers, equalling 5% of the audited suppliers, were identified as having potentially negative health and safety impacts. However, none of those were considered significant and improvement measures were agreed with these suppliers. Audit findings were related to missing health and safety practices and equipment, and wrong storage of chemicals causing a potential risk for employees. No relationships were rejected because of health and safety findings in Outotec’s supplier audits and there were no incidents filed through formal grievance mechanisms related to Outotec’s suppliers’ human rights impacts, impacts on society or labour practices.

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 408-1 Operations and suppliers at significant risk for incidents of child labor

4) Disclosure 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor

5) Disclosure 414-1 New suppliers that were screened using social criteria

6) 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 408-1 Operations and suppliers at significant risk for incidents of child labor corresponds to:

  • Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
  • Business theme: Abolition of child labor
  • 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: Abolition of child labor

Disclosure 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor corresponds to:

  • Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
  • Business theme: Elimination of forced or compulsory labor

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.



 

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

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

 

References:

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