Case study: How PALFINGER promotes sustainability across its supply chain
Established in 1932, PALFINGER stands for the most innovative, reliable and cost-effective lifting solutions for use on commercial vehicles, ships and stationary equipment. PALFINGER has practiced sustainability across its entire value chain for years Tweet This!, taking appropriate steps at its own production plants and in product development as well as when dealing with its business partners.
This case study is based on the 2019 Integrated Annual Report by PALFINGER 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
PALFINGER takes an active interest in whether suppliers pay attention to environmental protection and to their social responsibility and makes sure new suppliers are reliable in upholding quality and sustainability standards, such as human rights and prevention of corruption. In order to promote sustainability across its supply chain PALFINGER took action to:
- survey suppliers
- audit suppliers
- implement a Code of Conduct
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With this case study you will see:
- Which are the most important impacts (material issues) PALFINGER has identified;
- How PALFINGER proceeded with stakeholder engagement, and
- What actions were taken by PALFINGER to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2019 Integrated Annual Report PALFINGER identified a range of material issues, such as product safety, innovation in production, energy efficiency and climate protection, viability of business model, employee development. Among these, promoting sustainability across its supply chain stands out as a key material issue for PALFINGER.
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 PALFINGER engages with:
| Stakeholder Group | Method of engagement |
| Employees
| · Direct contact and dialogue · Performance reviews · Events · Employee magazine PIN · Intranet & blog · Social media network · Yammer Surveys · Works council · College programme · Code of Conduct · Newsletter |
| Local environment & society
| · Direct contact and dialogue · Local media relations · Events · Plant tours · Voluntary investments in public welfare · Memberships · Partnerships |
| Suppliers & partners
| · International supplier meeting · Direct contact & dialogue · Visits to PALFINGER · Supplier & quality assurance agreements · Code of Conduct |
| Investors
| · Continuous & transparent communication · Annual General Meeting · One-on-one talks & dialogue · Conferences · Trade events · Roadshows · Conference calls · Stock exchange days · Trade fairs |
| Supervisory Board
| · Direct dialogue · Supervisory Board meetings |
| Customers & dealers
| · International dealer conference · Direct contact & dialogue · Newsletter & surveys · Training & instruction · Involvement in continuous process of improvement · Dealer standards · Events & trade fairs · Plant tours · Code of Conduct |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics PALFINGER engaged with its stakeholders through an intensive stakeholder survey.
What actions were taken by PALFINGER to promote sustainability across its supply chain?
In its 2019 Integrated Annual Report PALFINGER reports that it took the following actions for promoting sustainability across its supply chain:
- Surveying suppliers
- PALFINGER systematically conducts surveys among all strategic partners and most of all among suppliers of environmentally relevant materials (such as paint shops, disposal contractors, and cleaning and linen rental companies) on their environmental management systems and analyses the results using an evaluation scale. This means that suppliers’ environmental management has an active impact on their ranking in the quarterly supplier assessment. According to their own assessments, the environmental management pursued by PALFINGER’s suppliers has improved continuously in recent years. In 2019, 75 percent (2018: 70 percent) of suppliers had a very good or a good environmental management system in place (Eco1 and Eco2), and the proportion of suppliers with a very good environmental system was 49 percent (2018: 51 percent).
- Auditing suppliers
- As a matter of principle, all of PALFINGER’s new suppliers have to undergo an initial audit. In 2019, PALFINGER conducted a revolving audit of just under half of its 200 strategic suppliers. The main focus – as in previous years – was on inspecting the quality of the processes. The suppliers’ own assessments of their environmental management systems are verified specifically in on- site audits. In recent years, PALFINGER auditors who perform supplier audits received additional training on environmental aspects and human rights. In 2019, the sustainability audits resulted in no objections in the environmental or social area and no imposition of mandatory improvement measures. No such severe misconduct was observed that should have resulted in a termination of the contract with the supplier.
- Implementing a Code of Conduct
- The sustainability aspects within PALFINGER’s audit process are based on the PALFINGER Code of Conduct, which all strategic suppliers agree to follow. The PALFINGER Code of Conduct applicable in 2019 included the following:
- Human rights: prohibition of child labour, free choice of employment, prohibition of discrimination, freedom of association, and a proactive approach to health and safety
- Environmental standards: environmental responsibility in general, environmentally friendly production, and manufacturing environmentally friendly products
- Business ethics: active corruption prevention and compliant conduct in accepting gifts, hospitality, and invitations
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 PALFINGER, 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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