Support Suppliers (SRM)

Develop a supplier support strategy

Create a strategy to boost suppliers' sustainability capabilities, focusing on trust-building and relationship management for long-term benefit. Use the planning stage to target the right suppliers. Support strategies should clearly link to the content and timing of supplier objectives, define your support actions, and set clear indicators for review. The resources for supporting the suppliers will also be based on the type of contract – are you likely to have a long-term relationship or is this a one-time purchase? Initiate new suppliers to your sustainability mission and values, and work closely with existing, strategic suppliers to set support objectives. Building trust with suppliers through clear communication, fairness, mutual respect, long-term shared commitments, and supportive feedback is crucial. Establish mechanisms for two-way feedback so that suppliers have an opportunity to raise concerns and provide input on how you can improve.

EXAMPLE: Migros supports suppliers to meet its Eco standard¹

Migros introduced its Eco standard in 1996, to ensure environmentally friendly textile production and healthy working conditions. The company set up a strategy to help existing and new suppliers to produce textiles in accordance with the Eco standard through training and education. For example, workshops are held in supply locations such as India, Hong Kong, China and Switzerland.

Cultivate relationships that foster open dialogue and shared sustainability goals

Establish cooperative relationships with suppliers centered on transparency and shared sustainability goals. Start by understanding each other's perspectives and expectations, particularly with strategic suppliers. Guide them through your sustainability reports and engage in open discussions about collective sustainability performance during contract talks. Avoid focusing solely on audits and instead, emphasise the importance of sustainable practices. Recognise that risk and sustainability objectives evolve within the contract's lifespan. Some of your suppliers may need a bit more engagement and clarity when it comes to certain topics and practices - organise regular Supplier Days to discuss topics such as waste reduction, energy efficiency, and upholding human rights. Include suppliers in important decisions, such as jointly planning risk management or co-designing development programs. Consistently enforce minimum sustainability standards while nurturing a collaborative environment for continuous knowledge sharing and improvement.

EXAMPLE: Fast Food chain helps suppliers share sustainability knowledge

A fastfood chain has organised supplier led “sustainability councils” for each of its key commodities to enable thought and knowledge sharing between suppliers. For instance, when the buyer requested that all suppliers report to CDP, suppliers began assisting each other in filling out the CDP form.²

Provide support through training and expertise

Assist suppliers with contextual and engaging training, sharing resources, and extending expertise ensuring mutual understanding of sustainability requirements. This includes access to e-training portals for areas like health and safety, environmental management systems, or labour and human rights. Foster two-way knowledge exchange, understanding their local systems and challenges. Provide technical resources like funding factory audits for energy use reduction. Explain the rationale behind sustainability requirements, acknowledging regional differences in regulations and potential solutions. Address power imbalances by sharing the costs of such support, especially when mandatory training is required for projects. The goal is to create a mutual understanding and commitment to sustainable practices.

EXAMPLE: HP Inc. training suppliers on key sustainability topics

HP provides training to suppliers through Science Based Targets workshops, Responsible Recruitment 101 training, industry-specific water management and reporting training, and two-day on-site worker well-being ambassador training.³

Offer targeted support for suppliers with need

Consider targeted support for suppliers facing significant challenges that prevent them from meeting their sustainability commitments, especially those most impacted by crises or climate change. This can involve financial aid via favourable payment terms, sustainable investment financing, or direct funding like insetting or paying a living wage differential. Leverage your network to connect like-minded suppliers and facilitate their knowledge exchange through events or referrals, ensuring support is embedded in the procurement lifecycle.⁴

EXAMPLE: Fairphone pays a living wage differential

Fairphone is supporting its tier-1 suppliers in paying a living wage to employees, by paying the factory a premium of 0.33% of the product retail price. These funds are then paid to workers as a bonus that tops up their current wages. The funds are enough to pay a living wage to the workers on Fairphone’s production line. However, to prevent unequal treatment the bonus is distributed to all eligible factory workers. If the factory’s other customers paid the premium as well, the workers would receive a living wage.⁵

EXAMPLE: Danone is insetting through Livelihoods Fund

Danone has implemented an insetting program called the Livelihoods Fund, which invests in projects within its own supply chain to improve the sustainability of its operations. The projects include reforestation, agroforestry, and renewable energy projects.

EXAMPLE: Ikea helps suppliers negotiate renewable power purchase agreements (PPAs)

Ikea uses its influence and expertise to help smaller suppliers access renewable energy by negotiating affordable PPA contracts with renewable electricity providers.⁶

EXAMPLE: Joint supplier development in the chemicals sector

Together for Sustainability (TfS) is a collective of 33 member organisations in the chemicals industry sharing knowledge on practices that support responsible methods. In 2022, the group launched the TfS Academy, a free educational resource for its members in the industry and selected suppliers. The e-learning platform holds more than 240 courses on common topics of sustainable practices specific to the chemicals industry, such as water and waste management, protecting biodiversity, and preventing forced labour, plus various case studies.

Recognise and award best performing suppliers

Foster proactive sustainability actions by providing recognition, awards, or rewards, while adhering to contracting terms. Publicly spotlight their efforts and promote peer-to-peer knowledge sharing, especially within multi-supplier contracts.

EXAMPLE: Pirelli Supplier Awards Programmes includes sustainability

Pirelli has 10,000 suppliers and recognises a handful of them annually through its awards programme. It is awarding suppliers that have become true partners and are making Pirelli’s products more high value or have shown a potential to do so. Traditionally focused on innovation and quality factors, the company introduced a sustainability award in 2019 recognising the alignment between sustainability and its High Value strategy.