Case study: How ST promotes sustainability across its supply chain

What are the material issues the company has identified?

In its 2021 Sustainability Report ST identified a range of material issues, such as health & safety, human rights, GHG emissions, ethics, energy efficiency. Among these, promoting sustainability across its supply chain stands out as a key material issue for ST.

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 ST engages with:

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics ST conducted a survey among its nine categories of stakeholders, collecting 344 survey results.

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

In its 2021 Sustainability Report ST reports that it took the following actions for promoting sustainability across its supply chain:

• Assessing suppliers
• ST’s Responsible Supply Chain programme is based on the Responsible Business Alliance (RBA) methodology, adopted in 2005 and deployed progressively in its supply chain since then. It comprises three main steps:
  • Suppliers declare their commitment to ST’s RBA-based standards.
  • Suppliers complete an RBA self-assessment. The results enable ST to identify areas that require attention.
  • Suppliers receive an RBA audit to monitor and control compliance and address areas of non-compliance.
• Overall, for both direct and indirect suppliers, 95% of eligible tier 1 suppliers have signed a commitment letter (step 1). In total, since the start of the programme in 2015, ST’s suppliers have undergone 265 RBA-based audits (step 3), +49% compared to 2019. In addition, ST regularly evaluates its suppliers’ performance on social, environmental, and health and safety criteria, and deploys specific programmes to address environmental and safety topics.

• Protecting vulnerable workers
• In every action it instigates in its supply chain, ST’s priority is to detect and address the most severe impacts for vulnerable workers. ST has a zero-tolerance policy towards forced labour and maintains strict control of working hours and wages to ensure decent living conditions and avoid any risk of coercion. In 2020, ST focused on addressing some of the most impactful risks it had detected:
  • Impact of lockdowns on foreign migrant workers in Malaysia due to the pandemic: ST communicated with direct manufacturing suppliers to verify that salaries were maintained to ensure basic needs and that annual leave entitlements were not affected.
  • Recruitment fees for foreign migrant workers in Taiwan: ST launched a zero-recruitment fees campaign with five suppliers to accelerate their adoption of a zero-fee recruitment policy.
  • Supplier corrective actions for priority findings on forced labour: ST closely monitored the corrective actions for priority findings involving foreign migrant workers, such as reimbursing fees, payment of incomplete wages and contract substitution, requiring suppliers to complete their closure audits within the year.
• Addressing such systemic and complex issues may be challenging, but ST has noticed an increasing willingness to collaborate and improve the overall situation from its suppliers.

• Supporting suppliers towards compliance
• ST is not only committed to controlling its suppliers, but also to supporting them in raising their awareness and capability to comply with required standards. ST’s aim is to help its suppliers improve their performance sustainably, through dedicated e-learning on risks in areas such as labour (including working hours and forced labour), ethics, health and safety, environment and management systems. Along with the customised supplier e-learning paths ST launched in 2019 through the RBA platform, its worldwide community of experts supports suppliers’ continuous improvement through ongoing dialogue and sharing best practices. For example, at ST Bouskoura (Morocco), after encountering difficulties in reducing the working hours of security services below 72 hours per week, ST launched a new bidding process that included criteria for working hours compliance. In 2020, ST chose a new service provider and, by working closely together, reduced working hours to 60 hours per week, with a strong positive impact on workers’ lives. ST also organised online meetings to share best practices between its sites in Malaysia and China and some major manufacturing suppliers. Topics included how to better manage working hours and how to organise supply chain controls.

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

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.

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• Identify your most important impacts on the Environment, Economy and Society
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References:

This case study is based on published information by ST, 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://sustainabilityreports.st.com/sr21/_assets/downloads/entire-st-sr21.pdf

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