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DNV GL © SAFER, SMARTER, GREENERDNV GL ©
Sustainability Overview & Global Best Practices in Supply Chain
1
M&M Supplier Training
RAMESH RAJAMANI – SUSTAINABILITY & BUSINESS EXCELLENCE
NEW DELHI
DNV GL ©
Today’s agenda
1. Sustainability overview & Global Best Practices
2. Sustainability @ Supply chain
3. Best practices and businessbenefits
4. Leadership Speak
5. Q&A
DNV GL ©
We are DNV GL
DNV GL is a world-leading classification society and risk management company, driven by our purpose of safeguarding life, property and the environment. We enable organizations to advance the safety, efficiency and sustainability of their business. Our origins stretch back to 1864, and our reach today is global. Operating in more than 100 countries, our 15,000 professionals are dedicated to helping customers make the world safer, smarter and greener.
Our Purpose
To safeguard life, property, and the environment
Our Vision
Global impact for a safe and sustainable future
Our Values
We build trust and confidence
We never compromise on quality or integrity
We are committed to teamwork and innovation
We care for our customers and each other
We embrace change and deliver results
15,000Professionals
100+Countries
350Officesglobally
£2.1bn2015 revenues
OsloHeadoffice
1864Year founded
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Focused on your future
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We help you build Sustainable
Business Performance through our
global certification, verification,
assessment and training services.
Tomorrow’s successful companies
will create value by meeting the
world’s social, economic
environmental needs.
and
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Organizations today face a broader set of challenges
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Stakeholders
Complexity
Sustainability
Demands and expectations on products and services.
Global supply chains, new legislation, technology, etc.
Demands for more sustainable business performance.
Fundamental lack of trust.Trust
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A broader set of challenges…
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Globalized supply chain and expectations of social responsibility.
Rapid changes in competitive business landscape as well as in geo-political & environmental conditions.
Sustainable business performance expected by investors, regulators, consumers and broader stakeholders (e.g. NGOs).
Transparency, accountability and independent assurance
Intangible assets as primary source of value (e.g. brand/reputation)
…demands a broader view.
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Increasing complexity
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Disruptive technologies
Stakeholder demands &
expectations
Supply chain management
Brand Management
Keep Skilled Staff
Transparency & Reporting
Increased Accountability
New Product Demands
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Sustainability – the capacity to endureAs defined by the Brundtland Commission (UN)
sustainable development is development that meets the needs of the
present without compromising the ability of future generations to meet
their own needs
– It is usually noted that this requires the reconciliation of
environmental, social and economic demands - the "three pillars" of
sustainability (http://en.wikipedia.org/wiki/Sustainability)
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How DNVGL looks at Sustainability
It is a business approach to
achieving long-term value for
shareholders and broader
stakeholders through
sustainable environmental,
social and governance
practices.
It is an active process of
managing risks and seizing
opportunities arising from
environmental, social and
governance practices, at both
strategic and operational
levels.
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Three Arenas of Performance
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-----3Ps of Sustainability
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Sustainable business performance
How do you create value?
Managing your challenges today
while being here tomorrow.
Not something you have, you
build it over time.
Start by learning what is material
(most important to you and your
stakeholders)
How does it affects the outcome
of your long-term business
targets?
It is a step-by-step journey
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SBP
Environment
Quality
IT management
Business Continuity
Energy Efficiency
Information Security
Health & Safety
Supply Chain Management
SourcingPeople
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Benefits of Sustainability for Suppliers
Better Economic results ( more profits)
Improved environmental performance (natural resource optimization)
Reduction in the GHG emissions (sustainable earth)
Improved social Performance ( Balanced Society)
Support to National development goals
Brand Building on the Global level
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‘Voice of society’ New regulations
Supply chain responsibility or pressure
Investor pressure
Demands for increased disclosure and transparency
Industry peer pressure
Sustainability
Sustainability drivers
Competitive product markets
Risk management needs
Managing reputation and brand
Stronger ethical/moral views
Threat of litigation
Competitive labor markets
Others?
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Sustainability …………………….Connecting stakeholders ?
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Economic and social development
Quality and Environment friendly products & services,
Health and Safety
Responsible sourcing
Different approaches ??
Build a solid chain of trust !
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Sustainable Manufacturing
Carbon Footprint
Renewable Energy
Water footprint
Waste to Wealth
Green Projects
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Sustainability Megatrends – Footprint diagram
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Sustainability Megatrends
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Global Trends
Climate risk management on the riseCDP data shows that suppliers are becoming better at managing climate change
risk. The percentage of suppliers setting emissions targets – a crucial and advanced
component of climate risk management – is showing a steady upward trend. In
2014, 48% of suppliers set targets, up from 44% in 2013 and 39% in 2012.
Regulation remains crucial to supply chain resilienceA supportive regulatory and policy environment is critical to effective water and
climate action. Across a range of factors and metrics, regulation and policy
leadership proves to be a key predictor of supply chain climate resilience.
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Global Trends (contd.)
Water risk remains a concern despite its potential for
shocksWater risk assessment is, generally speaking, less advanced than climate risk
management. As a discipline, it is more novel, and it is arguably more complex to
assess water risk than it is to analyze carbon exposures.
Collaboration along the value chain is lackingCollaboration between suppliers and their customers in addressing climate risks and
opportunities is fundamental to making supply chains more resilient and more
efficient. It is only through collaboration that companies can tackle climate risks
that lie outside their direct control.
20
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Global Trends (contd.)
Suppliers are embracing low-carbon energy
The percentage of those suppliers reporting emission reduction initiatives who are
implementing low-carbon energy projects is holding steady at 22% this year, the
same level as in 2013. Across the world, the falling cost of wind and solar power is
encouraging companies to shift away from fossil fuel energy.
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Sustainable Development
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World Commission on Environment and Development (WCED 1987):
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”
Basic key characteristics:
- ecological sustainability
- development
- equity between generations
- equity within the same generation
Our Common Future
(Brundtland Report)
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Corporate Social Responsibility
Business' commitment to contribute to sustainable
economic development, working with employees, their
families, the local community, and society at large to
improve their quality of life.
World Business Council for Sustainable Development (WBCSD) defined the following as the ‘pillars of sustainable development’:
- Economic growth - Ecological balance- Corporate Social Responsibility (CSR)
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Accountability is key to Sustainability
An organisation (+ supply chain) should be
accountable for its impacts
–on Society and
–the Environment
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Sustainability as part of risk management
How will our business decisions and operations affect our ability to create or destroy value for our company?
How are we protecting our company’s value through our current risk management practices?
Are we protecting our reputation and our brands?
Are we looking after our people so they can do their job well?
Are we managing environmental resources in a sustainable way?
Are we communicating with our stake-holders?
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Supply chain sustainability is attracting increasing
attention, especially after tragic incidents such as “Rana Plaza”, in April 2013,
in Bangladesh
With globalization, a secure and defendable supply chain has
become just as important as the quality of the products
Businesses are making concrete efforts to take sustainability
issues into account
Introduction
Identifying and managing
potential risks is key for the
companies (because supply chain
sustainability is becoming increasingly
important both to customers and to the
business)
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Supply Chain Sustainability
“…Modern businesses depend on supply chains stretching around the globe. They
appreciate that floods thousands of miles away, or drought striking a distant
watershed, can make the difference between their own profit and loss.
Forward-looking companies – such as the 66 members of CDP’s supply chain program
– also appreciate that successful, resilient suppliers are good for
business.
Suppliers that are better able to tackle sustainability challenges, such as climate
change and water risk, are simply better business partners…
… By Working together with suppliers, (multinational companies) have used their
influence to improve the sustainability performance of entire supply chains.
In turn, suppliers have come to realize that
improved performance can confer competitive advantage –
not only making them more efficient, but also more attractive
to sustainability inclined customers.
- Christiana Figueres, Executive Secretary, UNFCCC
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Initiatives promoting Sustainability Reporting
A broad spectrum of initiatives assist businesses with their sustainability strategy and
reporting by providing guidelines, management tools, and reporting standards.
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Business case for Sustainability
Manages strategic and reputation
risks from:
– Stakeholder pressure
– Peer pressure
Brand differentiation
Improves performance: we said,
we did, we will
Compliance: existing and potential
risk
– e.g. EU Accounts Modernisation
Directive
Helps business understand its
environmental & social impacts
29
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Value Creation Process/ Business Model
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Suppliers and its Stakeholders
Interested parties (internal & external)
Demands & expectations on your
services and products
External stakeholders’ expectations may
have to be managed differently.
Key to understand your organization and
its context.
Enables you to get a broader view of
your most relevant risks and thus
opportunities.
31
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Buzz Group
What are the key Sustainability drivers for a dealer & M&M
expectation?
32
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M&M - Identified Material Aspects in supply chain
Integrated Sourcing
Environmental & Social Compliance
New Vendor Development
Logistic Optimisation
Sustainable Logistics (e.g. Rail etc.)
Packaging Waste
Labour Scarcity
Supplier Satisfaction
Modularity in Design
33
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Analysis of Current scenario
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When choosing a supplier or making buying decisions,
96% of companies consider sustainability
aspects
Sustainable supply chain management
TOTAL
N= 2.061 N=
Q.2 To what extent does your company consider the sustainability aspects listed before, when making buying decisions?
31.5%
64.0%
4.5%
To a great extent
To some extent
Not at all
Leaders
68
83,8
16,2
-
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Relevant aspects for a supply chain:
Relevant aspects for a sustainable supply chain
Low environmentalimpact (56%)
Health and safetyof workers (51%)
Economicaspects (43%)
Ethics (29%)
55.6%
50.6%
42.8%
28.6%
25.6%
23.3%
17.1%
12.2%
10.5%
10.3%
9.0%
5.9%
3.9%
Low environmental impact
Health & safety at work
Strong financial management
Ethics
Fairtrade
Certainty of employment for
workers
Safe use
Human rights
Labour rights
Cause related marketing
Equal opportunities
Community investment
Philanthropy
TOTAL
N= 2.061
Q.1 In your opinion, what are the relevant aspects for a supply chain in order to be considered sustainable?
LEADERS: top positions don’t change much Health & safety at work (53%), Economic sustainability (49%) and Environmental impact (49%). Ethics comes immediately next (38%)
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16.3%
22.4%
39.7%
17.9%
3.7%
1 Beginner
2
3
4
5 Leader
Maturity in supply chain sustainability
42% of companies have a formal
supply chain strategy
contemplating sustainability aspects
On a scale that measures
maturity,only 22% rated their
companies as advanced
LEADERS are a minority 4%
37
Up to 4950 to 249
250 and more
456 595 760
25,0 34,1 56,7
Leaders
68
80,9
TOT
1.876
41,6
Q.3 Are sustainability aspects formally included in your company's supply?
Q.4 Where would you position your company on a 5 point maturity scale for supply chain sustainability, where 1 is beginner and 5 is Leader?
TOTAL
N= 1.867
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Main reasons for sustainable management
80% of firms experienced pressure to
demonstrate the sustainability of their
supply chains
Main drivers for more sustainable supply
chains:
38
Q.5 To what extent does your company feel under pressure to show it has a more sustainable supply chain?
15.8%
64.4%
19.8%
To a great extent
To some extent
Not at all
TOTAL
N= 1.867
Customers (80%)
Compliance with regulations (33%)
Corporate policies (30%)
79.5%
32.5%
30.2%
28.6%
26.9%
22.6%
14.8%
7.8%
6.5%
3.6%
1.9%
2.1%
Customers
Regulators and other authorities
Corporate leaders/policy
Suppliers
Competitors
Final consumers
Employees
Investors
Local community
Non-governmental organisations…
Unions
None of the above
Q.6 Which are the main drivers influencing your market/business in order to manage a more sustainable supply chain?
Leaders
68
80,9
44,1
44,1
35,3
41,2
35,3
26,5
13,2
14,7
7,4
5,9
2,9
TOTAL
N= 1.867
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Key initiatives undertaken
Sustainability Audit of
suppliers is the most
common action. (41% have
undertaken one in the last
three years)
Communication
initiatives are central
(34% required suppliers to
provide information about
sustainability of products and
25% implemented and
communicated the policy)
39
45.8%
41.2%
36.0%
34.2%
30.6%
25.2%
11.6%
9.2%
4.6%
13.0%
23.1%
Implemented and communicated a sustainable supply chain policy+Information
from suppliers about sustainability
Directly undertaken an audit +External audit against your own audit protocol+ External
audit using a recognized audit methodology
Directly undertaken an audit of some suppliers
Required suppliers to provide information about sustainability
Undertaken dialogue with suppliers to share understanding of sustainability challenges
Implemented and communicated a sustainable supply chain policy
Commissioned an external audit of suppliers against your own audit protocol
Provided training for suppliers on sustainability management
Required an external audit of suppliers using a recognized audit methodology
Other actions
No actions undertaken
TOTAL
N= 1.867
Q.7 In the last three years, which of the following sustainability actions regarding your supply chain has your company taken?
if To a great extent OR To some extent in Q2Leaders
68
83,8
57,4
51,5
60,3
52,9
58,8
20,6
19,1
5,9
22,1
4,4
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Key initiatives undertaken
Initiatives are still limited and far from
widespread: 30% of firms take sustainability
actions across their entire supply chain. Two-
thirds of companies limit their initiatives to the tier
one suppliers only
40
Q.8 How far do the above mentioned actions, implemented by your company, extend across your supply chain?
if at least one action in Q7
42.9%
29.1%
22.6%
5.4%
A few tier 1 suppliers only
Across the majority of tier 1 suppliers only
Across the majority of tier 1 suppliers and some
interactions at all levels of trading partners
Complete penetration of all tiers of the supply chain
TOTAL
N= 1.425
23,7%
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Key initiatives undertaken
To improve sustainability, companies
focus on:
41
health and safety of workers (56%)
use of hazardous substances (44%)
assessments to understand sustainability risks along the supply chain (44%)
Q.9 Which of the following aspects has your company addressed in its own supply chain in order to improve sustainability?
56.4%
44.4%
43.9%
42.0%
39.7%
36.9%
36.6%
34.3%
27.1%
22.3%
17.8%
13.8%
13.4%
12.2%
10.8%
8.5%
8.3%
2.7%
2.1%
TOTAL
N= 1.425if at least one action in Q7
Health and safety of workers
Use of hazardous substances
Assessment to understand the sustainability risks in your supply chain
Energy use
Waste generation
Avoidance of corrupt business practice
Implementation of a code of conduct
Increase awareness of good environmentalor health and safety practice through
education programs
Water use
A fair price is paid throughout the supply chain
Undertaken a life cycle assessment to quantify product related impacts
Consumption of non-renewable or scarce resources
Conflict minerals
Climate change impacts
Investments in local communities
Donation to charities related to sustainability impacts
Creation of jobs in disadvantaged communities or promotion of equal
opportunities
Animal welfare
Trade in endangered species
+ 20
+ 19
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M&M - Identified Material Aspects for Supplier
Operation cost Vs Profit / Growth
Brand and repute
Customer satisfaction – Quality + Health and safety
Compliance – Environment + Labour + Social + Product + Product recall
Resources – No. + Product/ Service Knowledge + Motivation + communication
skill + Sales skill + Financing + Insurance
After sales service – Facility + Service level + time to service + quality
Marketing & sales
Promotions
Advertisements
Labelling
Green work shop – Energy + Water + Waste + e waste + used spares
Ethics
Customer privacy
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Sustainability Assessment Report Card
Good Practices
Objective:
• To establish carbon footprint and water footprint for selected dealers and potential for
improvement
• Identify areas of improvement under Energy, Water, Waste & Compliance, Fire Safety,
Workplace Safety
• There is visible Site leadership & to encourage employee site safety, initiatives are being undertaken.
• There is satisfactory display of various safety related signage and instructions in most of the working areas.
• Ventilation is descent in workshop area and showroom as well.
• Lights, fans and ACs are turned off during the lunch hour (1:00 pm to 2:00 pm)
• Some Supply chain use nozzle guns fitted to hoses for vehicle cleaning to save water
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Sustainability Assessment Report Card
Improvement Initiatives
Energy WaterWaste &
ComplianceFire Safety
Workplace Safety
• CO2 Reduction (10%) = 8,820 tons ; equivalent to lighting 2600 homes for one year
• Water Reduction (10%) = 3,600 million litres, equivalent to 18,000 house-holds use for one year
1. Safety awareness
2. Hazard and risk assessment
3. Incident records
4. Work permit system
5. Safety rubber mats
6.PPE compliance
1. Fire hazard risk assessment
2. Fire extinguishers
3. Mock drills
4. Safety @ stores
1. Valid consents, fire NOC
2. Proper segregation and storage of waste
3. Workplace noise monitoring
4. Proper disposal of waste
1.Water Recycling
2.Rain water harvesting
3.Waterless car washing
4.Sensors for urinals
Use of :
1. Motion sensors
2. LED lights
3. Solar energy
4. More efficient appliances (AC, gen-sets, compressors)
Potential Impact (240 MDEP dealers): F19 roadmap
Rs. 8.6 cr. by F19
Back
Payback: 2.2 yrs
CO2 footprint = 88,200 tons
Water footprint = 36,000 million liters
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Material Aspects in Value Chain
45
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Leadership Speak
From the start, sustainability has been an idea that has
been transformative for us and the way we do business.
We are clear that sustainability is integral to business. In
fact it is a growth driver, fostering innovation, cost
competitiveness and brand equity
– Anand Mahindra: Chairman, Mahindra Group
46
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Mahindra’s Rise philosophy
The current narrative on sustainability emphasises limits -how
resources which were once in abundance are now limited; how we
have breached the limits of the natural ecosystems; how there are
limits to growth, limits to economies of scale, limits to human
productivity. In short, the focus is on conservation and reduction.
Our Rise philosophy however, urges us to accept no limits and to
use alternative thinking to drive positive change. This has
propelled us to think beyond just conservation, to rejuvenation
and a journey back to abundance
– Anand Mahindra: Chairman, Mahindra Group
47
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Future initiatives
Aspects to improve sustainability:
48
health and
safety of
workers (49%)
energy use (42%)
waste generation (39%)
use of hazardous substances (36%)
% PAST % FUTURE
43.9%
17.8%
13.8%
34.3%
12.2%
22.3%
27.1%
10.8%
8.3%
2.1%
42.0%
2.7%
39.7%
8.5%
13.4%
36.6%
36.9%
56.4%
44.4%
59.5%
26.6%
20.3%
39.4%
15.3%
24.8%
28.4%
12.1%
9.5%
3.0%
41.9%
2.4%
39.3%
7.6%
10.0%
31.9%
32.1%
49.3%
35.5%
0% 20% 40% 60% 80% 100%
Assessment to understand the sustainability risks in your supply chain
Undertake a life cycle assessment to quantify product related impacts
Consumption of non-renewable or scarce resources
Increase awareness of good environmental or health and safety practice through ed. prog.
Climate change impacts
A fair price is paid throughout the supply chain
Water use
Investments in local communities
Creation of jobs in disadvantaged communities or promotion of equal opport.
Trade in endangered species
Energy use
Animal welfare
Waste generation
Donations to charities related to sustainability impacts
Conflict minerals
Implementation of a code of conduct
Avoidance of corrupt business practice
Health and safety of workers
Use of hazardous substances
Sustainability risk
assessment (60%)
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49
Summing up -Corporate Responsibility – A new reality
The new reality:
Changing stakeholder expectations
Increased scrutiny
New regulatory requirements
Globalised production & markets
Focus on Supply Chain
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Question & answers
Anything to ask
©2016 DNV GL - Confidential
