Case study: How Sadara promotes sustainability among its suppliers
Established in 2013, Sadara Chemical Company (Sadara) is a joint venture between Saudi Aramco and The Dow Chemical Company (Dow,) bringing together new technologies and other innovative processes in an integrated manufacturing complex. Sadara consists of 26 manufacturing plants, producing over 3 million metric tons of value-adding chemicals and plastics, and has developed a well-organised sustainability structure, which includes promoting sustainability along its supply chain.
This case study is based on the 2020 Sustainability Report by Sadara, 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
Sadara constantly verifies and monitors its suppliers through formal assessment and audit programmes, so as to make sure they share its values. Tweet This! In order to promote sustainability among its suppliers Sadara took action to:
- promote environmental sustainability
- protect suppliers’ workforce rights
- implement a Suppliers’ Code of Conduct
- assess suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) Sadara has identified;
- How Sadara proceeded with stakeholder engagement, and
- What actions were taken by Sadara to promote sustainability among its suppliers
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What are the material issues the company has identified?
In its 2020 Sustainability Report Sadara identified a range of material issues, such as emergency and crisis planning, business ethics, natural resources management, environmental protection, process safety. Among these, promoting sustainability among its suppliers stands out as a key material issue for Sadara.
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 Sadara engages with:
To identify and prioritise material topics Sadara engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Owners | · Quarterly meeting |
| Regulators & Governmental Entities | · Weekly, monthly, quarterly and yearly meetings · Official communications |
| Employees & Families
| · Town hall meetings · Engagement surveys · Social programmes |
| Community
| · Market disclosures · Social programmes · Events & campaigns |
| Media
| · Official contacts · Disclosures · Media conferences |
| Lenders & Insurance Auditors | · Weekly, monthly, quarterly and yearly meetings
|
| Licensors | · Official communication channels |
| Customers
| · Monthly, quarterly and yearly meetings · Marketing campaigns · Business analysis and surveys |
| Suppliers
| · Weekly, monthly, quarterly and yearly meetings · Constant support · Development frequent meetings |
| Neighbouring Industry
| · Periodical meetings · Best practice exchange meetings · Emergency response support |
| Associations
| · Emails · Meetings · Conferences |
| 3rd Parties Contractors
| · Memberships · Development meetings · Annual surveys |
| Competitors
| · Professional meetings · Forums and conferences · Associations meetings |
What actions were taken by Sadara to promote sustainability among its suppliers?
In its 2020 Sustainability Report Sadara reports that it took the following actions for promoting sustainability among its suppliers:
- Promoting environmental sustainability
- Sadara suppliers agree to use their best efforts to prevent, and take all reasonable precautions to avoid, pollution or contamination of the land, air or water arising from them or their subcontractors’ activities. Also, Sadara’s Procurement Department obligates suppliers to comply with regulations issued under or by international environmental conventions and regulatory bodies that Saudi Arabia adopts.
- Protecting suppliers’ workforce rights
- It is a condition in Sadara’s standard contracting template that suppliers must promptly pay their personnel their salaries and benefits and that those suppliers shall submit a letter with each invoice to Sadara’s representative in an acceptable format certifying that all the suppliers’ personnel have been paid their full salaries and benefits under the terms of their agreements with the suppliers for the preceding month.
- Implementing a Suppliers’ Code of Conduct
- Sadara has developed its Suppliers’ Code of Conduct (or “Suppliers’ Code”), which specifically addresses areas where the company requires complete and continuous compliance and for which it will exhibit no tolerance of violations. The Sadara Supplier’s Code is intended and designed to provide the company’s suppliers with guidelines on what Sadara requires as appropriate ethical conduct in the marketplace and in dealing with other business entities and government agencies. The Supplier’s Code does not replace the supplier’s contractual agreements with Sadara, or company policies or applicable laws, but rather augments those obligations and provides suppliers with a focus on key areas where Sadara requires full compliance. Compliance with the provisions of the Supplier’s Code is a contractual obligation that suppliers are required to enter when being considered for doing business with Sadara.
- Assessing suppliers
- Sadara verifies and monitors its suppliers by means of formal assessment and audit programmes. Assessments administered through the Pre-qualification Committee consist of a cross-functional team that can holistically assess a supplier’s suitability to be approved as pre-qualified for a goods/service grouping. The EHS (environment, health and safety) assessment programme is one of the main assessment tools for the pre-qualification committee, focusing on: HSE Policy Statement, HSE SMART Objectives, HSE Training Matrix, HSE Audit Procedure, and Copies of ISO 9001, ISO 14001 or OHSAS 18001 relevant to the company.
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 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria 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
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References:
This case study is based on published information by Sadara, 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.sadara.com/en/About/Citizenship
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