State Street is a leading global provider of financial services to institutional investors, including investment servicing and investment management, operating in more than 100 geographic markets worldwide. State Street’s commitment to responsible governance extends to its relationships with the providers of products and services that State Street uses in its business – 4,700 suppliers worldwide.
This case study is based on the 2019 Corporate Responsibility Report by State Street 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.
Despite the fact that risks within its supply chain, such as human rights violations, are not directly material to State Street’s business model, State Street screens its suppliers to make sure their practices are consistent with its values and expectations. Tweet This! In order to promote sustainability across its supply chain State Street took action to:
- integrate diversity into its supply chain
- monitor human rights risks
- screen suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) State Street has identified;
- How State Street proceeded with stakeholder engagement, and
- What actions were taken by State Street to promote sustainability across its supply chain
What are the material issues the company has identified?
In its 2019 Corporate Responsibility Report State Street identified a range of material issues, such as climate change, ESG products and services, talent recruitment and retention, operational and cyber resilience. Among these, promoting sustainability across its supply chain stands out as a key material issue for State Street.
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 State Street engages with:
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics State Street implemented an employee survey and also interviewed, through a third-party sustainability consulting firm, five external stakeholders.
In its 2019 Corporate Responsibility Report State Street reports that it took the following actions for promoting sustainability across its supply chain:
- Integrating diversity into State Street’s supply chain
- State Street’s Global Procurement team purchased goods and services from 4,700 suppliers in 2019. This reach positions State Street to make an impact on diverse suppliers, which State Street defines as organisations that are at least 51 percent owned and controlled by an individual or group that falls within diverse business categories, including women-owned, minority-owned, veteran-owned, disability-owned or LGBTQ-owned (lesbian, gay, bisexual, and transgender). The supplier diversity programme helped State Street allot 7.2 percent of its annual US supplier spend to diversity-owned suppliers and 3.6 percent to women-owned businesses in 2019. State Street also continued its membership in the Boston Chamber of Commerce Pacesetters programme, which leverages the collective purchasing power of its members to scale opportunities for local, ethnic minority–owned businesses, and joined the board of directors for the Northeast Minority Council, an organisation that works to promote minority-owned businesses.
- Monitoring human rights risks
- As a company that procures goods and services from across the globe, State Street is diligent in its efforts to ensure that human rights risks are being monitored in its supply chain. State Street supports fundamental human rights principles as outlined in the United Nations (UN) Universal Declaration of Human Rights and is signatory to the UN Global Compact and supports the principles related to human rights abuses and forced labour. As part of its supplier compliance programme, State Street makes sure that its global procurement due diligence processes are in accordance with the United Kingdom Modern Slavery Act and any other laws, rules or regulations prohibiting human trafficking and/or slavery. This regulation requires that potential suppliers are asked to attest to whether they have a policy in place prohibiting child and/or forced labour, whether their policy extends to their own suppliers and subcontractors, and to provide tangible proof of the policy. State Street’s standard supplier agreement asks suppliers to provide information about their human rights policies as well as an annual slavery and human trafficking report, setting out the steps they have taken to ensure that slavery and/or human trafficking is not occurring in their supply chains or any part of their business. A supplier must notify State Street immediately if it becomes aware or has reason to believe that it, or any of its officers, employees, agents or subcontractors have breached or potentially breached any of State Street’s Service Provider’s obligations under this agreement.
- Screening suppliers
- To consistently screen its suppliers against their ESG (environmental, social, and governance) practices, State Street’s Master Services Agreement requires suppliers to answer questions related to environmental sustainability, human rights, fair labour practices, ethical sourcing practices, and other ESG-related issues. A mandatory Third-Party Risk Management (TPRM) and Anti-Bribery and Corruption Screening (ABAC) for purchasing are also critical screenings within State Street’s global sourcing process. Additionally, State Street’s Environmental Preferable Purchasing Programme (EPPP) provides guidance on prioritising vendors and choosing products and services that reduce State Street’s environmental footprint and tracks progress against environmental sustainability purchasing objectives.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
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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1) This case study is based on published information by State Street, 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:
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