Seeing the Value in Real Estate Supply Chain Sustainability

Do the companies you partner with – your supply chain – understand your approach to ESG issues, and can work with you to meet your goals?

Supply chains can often be global, highly complex and of significant scale. Historically, technical quality, cost-effectiveness, speed of delivery and reliability has been the focus. Sustainability has now been added to the procurement and sourcing criteria because of operational, financial, regulatory and reputational risk drivers.

Real estate organisations are encouraged to embrace resiliency and responsibility in their supply chain management to adapt to externalities such as geopolitical conflicts, changing weather patterns and new legislation in areas such as modern slavery; and to improve their impacts on the workforce, local communities and the environment in the places where they develop, manage and invest. By improving ESG performance throughout their supply chains, organisations can enhance processes, save costs, uncover product innovation, achieve market differentiation and have a significant impact on society.

As organisations apply a sustainability lens to the design, development, management and marketing of their buildings and services, the inputs, construction methods, labour conditions, workforce health and safety practices, and environmental and community impacts of these processes will be under growing scrutiny.

The continuous improvement process expands supplier relationships significantly beyond auditing and monitoring, investing in training and incentivising top performers. Organisations share commitments with suppliers in order to achieve their sustainability goals. Procurement process preference is given to suppliers who can help them achieve these goals.

Leading organisations recognise that the sustainability attributes of their assets can offer market differentiation, resulting in increased lettability and stronger and long-term relationships with tenants.

They achieve competitive advantage in the supply chain through establishing meaningful, collaborative dialogue between themselves and their suppliers, alongside technology innovation, greater efficiency and supplier diversity. Suppliers are viewed as an extension of their business with a shared sustainability ethos integrated seamlessly throughout.

Maturity model - supply chain
Figure 1 – Maturity model supply chain

EVORA provides consultancy support for the development and implementation of an effective strategy to endorse sustainability within supply chains, including:

  • Assessment of materiality to focus on the most pressing issues
  • Development of sustainability criteria and alignment with the procurement process
  • Providing training and knowledge sharing capabilities across the organisation and with suppliers
  • Stretching existing sustainability goals beyond direct operations, to include tiers of the supply chain
  • Advice on deploying technology to increase accountability and transparency through comprehensive supplier performance metrics
  • Guiding participation in industry collaborations and initiatives to leverage buying power and influence towards supply chain sustainability
  • Disclosure of supply chain information within integrated reporting, beyond stand-alone sustainability reporting mechanisms.

Contact us to speak to a member of the team.

Slavery: A Very Modern Problem

Almost two centuries since slavery was abolished across the British Empire, slavery has remained an issue. Although slavery has now been abolished globally, it continues to be practiced in many forms and presents a challenge to supply chain management.

The term ‘Modern Slavery’ itself encompasses slavery, servitude, human trafficking and forced or compulsory labour. The Global Slavery Index estimates that nearly 45.8 million people in 167 countries are in some form of modern slavery, this rises further when statistics relating to human trafficking are included. However, it is widely believed that these statistics underestimate the true scale of the problem.

In October 2015, the UK government introduced the Modern Slavery Act to assist in tackling this. The Act includes a transparency in supply chain provision whereby businesses with an annual turnover of £36m or more must produce a statement each year setting out the steps they have taken in the last 12 months to address instances of modern slavery in their supply chain. A link to the statement must be publicly visible on the business’ homepage and be signed by an appropriate senior person in the business.

Interestingly, a recent review by the Business & Human Rights Resource Centre of 75 company statements found that only 22 met the minimum legal requirements such as a director signatory and a link to the statement on their website’s homepage. Of those that met the minimum requirements only 9 reported on all 6 criteria suggested by the Act. However, this is likely indicative of the stage many companies are at in addressing risks from Modern Slavery.

This is the first year in which companies are publishing statements, and the government acknowledges that it is not a level playing field for all companies. Many companies had already left the starting block with sufficient policies and checks in place to meet the requirements of the Act. However, for many others their first statements show they are starting to act on the issue and the steps they plan to put in place to address supply chain risks.

To comply with the Act, we recommend the following six steps are taken:

  • Scope your supply chain and assess key areas for risk
  • Establish policies to address modern slavery
  • Embed Modern Slavery within existing due diligence processes
  • Engage and seek assurances from service providers and/or contractors
  • Audit responses
  • Publish a Transparency in Supply Chain Statement each year

We are already helping some of our clients with the transparency in supply chain component of the Modern Slavery Act.

If you have any questions, please don’t hesitate to get in touch.

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