Case study: How Royal Mail promotes sustainability across its supply chain

What are the material issues the company has identified?

In its 2020-21 Corporate Responsibility Report Royal Mail identified a range of material issues, such as climate change and emissions reduction, customer service, health, safety and wellbeing, community impacts. Among these, promoting sustainability across its supply chain stands out as a key material issue for Royal Mail.

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 Royal Mail engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Royal Mail engaged with its stakeholders through one-to-one interviews, surveys and an external stakeholder panel.

What actions were taken by Royal Mail to promote sustainability across its supply chain?

In its 2020-21 Corporate Responsibility Report Royal Mail reports that it took the following actions for promoting sustainability across its supply chain:

• Implementing a Responsible Procurement Code of Conduct
• Royal Mail sets clear environmental, social and ethical expectations for its suppliers in its Responsible Procurement Code of Conduct, which requires suppliers to comply with internationally recognised standards, such as the UN Global Compact Principles on topics covering human and labour rights, anti-corruption and environmental protection. The GLS Supplier Code is based on the same UN framework. GLS expects suppliers to respect the standards laid out in the Code, implement them using appropriate measures, and adhere to them in their business activities. They must also take appropriate measures to ensure that the standards are met by their own supply chain.

• Assessing supply chain risks
• Engaging new suppliers poses potential reputational, financial or legal risks to Royal Mail. The level of risk is therefore assessed during the on-boarding of new suppliers using a number of factors. Royal Mail pre-screens all potential suppliers before asking them to participate in a tender. During invitation to tender it asks additional questions about their CR performance. Risks associated with the supplier are assessed based on the geography, size, business sector and scope, and recorded on the Procurement Risk Register. Risks are reviewed weekly to assess whether additional risk mitigation measures are required. Critical risks may be escalated to the Board or Board members for approval. Royal Mail’s Procurement Risk Register outlines its most critical supply chain risks as well as the risks most relevant to each of its supplier categories. The risks Royal Mail identified that are most prominent to ensuring responsible business operations are the following: reputation, probity, compliance (legal and regulatory), safety, environmental and materials provenance and equality, fairness and diversity. Royal Mail regularly reviews the Register to make sure that it is identifying new risks and setting out mitigating actions.

• Screening and auditing suppliers
• The large majority of new suppliers state their compliance with Royal Mail’s Responsible Procurement Code, which aligns to the UN Global Compact Principles. Where suppliers do not confirm compliance with Royal Mail’s code, Royal Mail undertakes additional screening by reviewing the supplier’s own policies and business standards where available, and undertakes additional screening through the GAN Integrity screening service. This service provides Royal Mail with information related to previous investigations that may have been conducted on a supplier as well as any convictions or adverse press. In some cases, Royal Mail may require third-party audits. During FY2020-21, a programme of on-site audits took place with 16 subcontractors. The results, including the remediation plans and evidence of completion were reported via the Supplier Ethical Data Exchange (Sedex) platform. Sedex allows Royal Mail to track its suppliers’ ESG (environmental, social and governance) performance as well as conduct third-party audits to ensure their accuracy of disclosure. In the event that a supplier fails to meet Royal Mail’s standards, it takes decisive action such as removing them from its supply chain. GLS expects the same high standards of ethical practice in its supply chain that it follows in its own business. Every GLS employee involved in selecting business partners and suppliers is responsible for ensuring that the appropriate processes are followed. All GLS suppliers are expected to comply with its Supplier Code of Conduct.

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

78% of the world’s 250 largest companies report in accordance with the GRI Standards

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References:

This case study is based on published information by Royal Mail, 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.royalmailgroup.com/media/11488/royal-mail-group-cr-report-2020-21-interactive-final.pdf

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