Case study: How the KION Group promotes sustainability across its supply chain
Across over 100 countries, the KION Group is among the world’s leading suppliers of industrial trucks and supply chain solutions. The KION Group sets out sustainability requirements for its suppliers in the form of specific guidelines and regulations, so as to effectively promote sustainability principles among them.
This case study is based on the 2020 Sustainability Report by the KION Group, 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
The KION Group expects its suppliers to comply with both environmental and social standards Tweet This! and has, accordingly, set out relevant principles with which it requires its suppliers to comply. In order to promote sustainability across its supply chain the KION Group took action to:
- implement the Principles of Supplier Conduct
- assess suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) the KION Group has identified;
- How the KION Group proceeded with stakeholder engagement, and
- What actions were taken by the KION Group to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2020 Sustainability Report the KION Group identified a range of material issues, such as climate and environmentally friendly products and solutions, occupational health and safety, sustainability management and stakeholder engagement, climate change mitigation. Among these, promoting sustainability across its supply chain stands out as a key material issue for the KION Group.
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 the KION Group engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Regular customer visits · Service helpdesk · Customer audits · External assessments (e.g. EcoVadis) · Complaints management · Customer events · Trade fairs and in-house exhibitions · Consulting · Customer magazines · Internet · LMH Product Clinic · Image brochures and one-pagers for key account customers · Online stakeholder survey · Sustainability Report and sustainability brochures |
| Distributors
| · Distributors’ Board · Regular meetings (annual kick-off and year-end events) |
| Employees
| · Management and employee survey · KEEP employee participation programme · Suggestion scheme · Employee magazine · Intranet · Online stakeholder survey · Sustainability Report · Instruments and committees of co-determination for in-depth exchange |
| Financial market
| · Section on Sustainability in the Annual Report · Answering questions in the context of investor discussions and inquiries from financial analysts · Assessment by rating organisations · Online stakeholder survey · Sustainability Report |
| General public
| · Journal articles · Social media · Campaign days · Section on Sustainability in the Annual Report · Sustainability Report |
| (Industry) associations
| · Participation in symposiums and working groups · Membership of numerous associations such as ISO, DIN, VDMA, FEM |
| Legislative bodies/policy makers | · Dialogue with authorities · Association work |
| Local communities
| · Local events such as the StaplerCup federal state preliminary rounds · Training Day · Regular exchange with local authorities at the locations · Participating in the local Agenda 21 committee |
| Media
| · Section on Sustainability in the Annual Report · Press events · Sustainability Report · Social media |
| Non-governmental organisations | · Dialogue forums with NGOs (e.g. Linde China)
|
| Science and research
| · Collaborations with education institutions · Research projects · Information days · Internships · Collaboration with students on dissertations and theses |
| Suppliers
| · Supplier negotiations · EcoVadis supplier assessments · Supplier audits · Online stakeholder survey |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics the KION Group engaged with its stakeholders through a global survey of the most important stakeholder groups.
What actions were taken by the KION Group to promote sustainability across its supply chain?
In its 2020 Sustainability Report the KION Group reports that it took the following actions for promoting sustainability across its supply chain:
- Implementing the Principles of Supplier Conduct
- The KION Group Principles of Supplier Conduct, approved by the Executive Board in 2015 and focused on the most important procurement markets, are available in seven languages and set out clear environmental and ethical guidelines for supplier management activities. They also comprise the expectation of all suppliers to respect human rights and uphold international social standards, including the ban on child and forced labour in accordance with International Labour Organization (ILO) conventions, as well as the enforcement of statutory minimum health and safety standards. The KION Group was not notified of any significant violations of these principles in the reporting year. If the KION Group becomes aware of violations of these principles, such as through audits or notifications, this can lead to the barring of the supplier concerned.
- Assessing suppliers
- The KION Group relies on EcoVadis as a supplier management tool to objectively and reliably evaluate the sustainability performance of its most important suppliers. This assessment platform offers a means by which to check whether strategically important suppliers have implemented effective management systems to ensure compliance with international standards across Health, Safety, Environment (HSE), anti-corruption and anti-bribery, product-related environmental protection and monitoring of upstream supply chains. Compliance with human rights, labour rights and employment standards at suppliers is also checked in this way. If weaknesses are uncovered, corrective action is put in place and progress reviewed at the next EcoVadis assessment. This way, the KION Group aims to increase the transparency of its suppliers’ sustainability performance and manage risks and opportunities in a more targeted way with regard to the sustainability of their supply chains. As proof of the effectiveness of this strategy, in the financial year 2020, 65 percent of suppliers reviewed improved their EcoVadis rating compared with the previous year. The KION Group’s goal is to cover at least 25 percent of the purchasing volume of each operating unit through the EcoVadis assessment by 2022. In 2020, LMH EMEA, for example, achieved more than 20 percent coverage. On top of that, a third of the KION Group’s top 100 suppliers have already undergone the evaluation process. In 2020, the KION Group’s global supplier base was assessed and categorised from a sustainability perspective to identify particularly risky suppliers. This involved applying the EcoVadis assessment of country and industry risks and applying it to the KION product groups.
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 the KION Group, 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:
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