Case study: How Telstra promotes sustainability among its suppliers

What are the material issues the company has identified? 

In its 2021 Sustainability Report Telstra identified a range of material issues, such as ethics, values and governance, customer experience, privacy and data security, climate change, diversity and inclusion. Among these, promoting sustainability among its suppliers stands out as a key material issue for Telstra.

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 Telstra engages with: 

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Telstra reached out to over 70 of its key community stakeholders, as well as over 100 domestic and foreign institutional investors, to get their view of its most material sustainability topics.

What actions were taken by Telstra to promote sustainability among its suppliers?

In its 2021 Sustainability Report Telstra reports that it took the following actions for promoting sustainability among its suppliers:

• Assessing suppliers
• To help make more informed purchasing decisions, Telstra continues to refine its Supplier Governance Framework, which assesses suppliers against twelve categories of risk. Telstra considers labour practices, environmental practices, health and safety, and bribery and corruption risks to be sustainability risks and assesses these risks as part of its selection and contract renewal process using a combination of due diligence reports, questionnaires, documentary review and, where warranted, onsite audits. A supplier’s ability to meet or exceed Telstra’s minimum standards set out in Telstra’s Supplier Code of Conduct (SCOC) is a key consideration for Telstra when it makes purchasing decisions. Since 2020, to help it gain a more in-depth understanding of its suppliers, Telstra has engaged a third party to perform an Enhanced Due Diligence (EDD) screening over 1,100 suppliers that it engages regularly, representing approximately 83 per cent of Telstra’s total spend. As part of Telstra’s EDD screening, suppliers are screened against public records, such as company registry records, media reports and civil litigation, regulatory, criminality and bankruptcy checks. In FY21 Telstra completed EDD screening of 1,317 suppliers, including 100 per cent of the 1,100 suppliers it committed to screen at the start of the EDD programme, as well as a further 217 suppliers as part of its selection and on-boarding process.

• Implementing a Supplier Code of Conduct
• Telstra’s Supplier Code of Conduct (SCOC) sets out the minimum standards Telstra expects from its suppliers and forms part of its standard purchasing terms. Through its policies, Supplier Governance Framework, training and audit programme, Telstra works with its suppliers to assess whether they are meeting its standards. Telstra’s SCOC is aligned with 10 universally accepted principles of the UN Global Compact, Responsible Business Alliance (RBA) Code of Conduct, and Joint Audit Cooperative (JAC) Supply Chain Sustainability Guidelines, as well as legislative obligations such as the Modern Slavery Act (UK) 2015 and the Modern Slavery Act 2018 (Cth). The SCOC was updated in June 2021 to include enhanced requirements in relation to resource efficiency, employee wages and identifying, mitigating and addressing forced and compulsory labour. A copy of the updated SCOC was communicated in June to all 4,900 suppliers engaged in FY21. All suppliers engaged subsequently receive the updated SCOC as part of Telstra’s standard purchasing terms. In 2021, Telstra hosted a forum with a number of its top 100 suppliers to discuss its expectation from its suppliers in the SCOC on climate change. Suppliers’ ability to meet or exceed standards detailed in the SCOC is considered by Telstra when making procurement decisions. This happens regardless of whether the SCOC has been formally incorporated into a particular contract with the supplier. In addition to the SCOC, Telstra may also include more specific social, environment, and/or ethical requirements in its contract terms based on the inherent risk of the agreement.

• Promoting compliance
• Telstra works with its suppliers to assess whether they are meeting the SCOC in a number of ways. This includes conducting governance meetings, reviewing reports and public records, monitoring adverse media alerts, and undertaking questionnaires and audits. The approach Telstra takes is based on the nature of the risks, and the category of the goods or services being provided. At Telstra, sustainability risks are more likely in ICT (information and communications technology) products and services, and construction and physical network infrastructure maintenance categories, which are also Telstra’s two largest categories of spend. Within the remaining categories of spend, Telstra has identified branded apparel and merchandise manufacturing, agriculture, and cleaning and waste management as categories warranting specific attention. Telstra focuses on these areas in the remaining categories due to the use of low-skilled and low-wage labour, together with the potential for environmental damage within these industries’ supply chains. Telstra monitors sustainability risks through a combination of internal and external questionnaires and site audits. In 2021, 64 of Telstra’s higher risk suppliers were selected to complete detailed questionnaires and provide evidence to support their responses. These questionnaires were designed using internal and external supplier sustainability experts and are aligned with industry standards. In some cases, a site audit is required in addition, or instead of, a questionnaire.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken

2) Disclosure 414-2 Negative social impacts in the supply chain and actions taken

Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.

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 Telstra, 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://1u0b5867gsn1ez16a1p2vcj1-wpengine.netdna-ssl.com/wp-content/uploads/2021/09/Telstras-Bigger-Picture-2021-Sustainability-Report-1.pdf

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