An important element of the overall company CR strategy is how we manage
the supply chain. The focus has been to manage risk, ensuring that we prevent financial or reputation loss for Severn
Trent and damage to people or the environment.
At the same time we seek to be a force for good, positively raising our standards to improve how people and the environment are treated.
In 2005/06, external consultants conducted a review of the businesses' corporate responsibility supply chain assessments against a best-practice framework. The review assessed processes in each business rather than performance; it focused on policies and management responsibilities within the procurement function and tools applied to measure, track and improve supplier performance. The review covered five areas of corporate responsibility concern: human rights, health and safety, environment, bribery and corruption, and working with minority or small and medium size enterprises (SMEs).
The review identified examples of good practice in all the Severn Trent businesses, as well as a number of priority actions and recommendations. Group businesses are now further developing their corporate responsibility supply chain assessments to include recommendations made by the review. In addition to our membership of the Basic Services and Human Rights network, we are also working with the Achilles Utility Vendor Database (UVDB) to develop industry-wide assessments and standards on human rights.
Severn Trent Water has long taken a robust approach to assessing health and safety issues for its significant suppliers, and checking environmental qualifications and performance. Recently, it has developed a more comprehensive framework for managing CR in the supply chain, which includes the following areas:
- Environment
- Health and safety
- Human rights
- Bribery and corruption
- Supplier diversity
Delivery of the activities is led by Severn Trent Water's Purchasing and Supply Chain department in close partnership with the CR team.
In order to enhance its existing supply chain assessments, and standardise the way they are carried out, Severn Trent Water has developed Risk Assessment Tools for health and safety and environment. These have been launched into the business for use in the contract award process. A similar approach is being adopted for human rights and bribery and corruption, and it is anticipated that the tools will be available for use by the end of March 2008. The drive to enhance environmental accreditation for suppliers continues.
In terms of diversity, Severn Trent Water's focus is not on managing risk but on inclusion and the ability of small and medium-sized enterprises (SMEs) and ethnic minority businesses (EMBs) to compete. This contributes to local economic development as well as reflecting in the supply chain the communities that it serves. To this end, Severn Trent Water continues to be a member of Minority Supplier Development UK, a not-for-profit organisation which aims to facilitate business links between corporate organisations and minority businesses.
Severn Trent Water has drawn up an action plan for all of the CR Framework elements, for delivery throughout 2007/08.
There has been a wide range of supplier assessment practices in WTS' businesses. Many of those business have ISO 9001 and/or ISO 14001 certification and perform supplier assessments as part of that.
In 2006/07 WTS began to implement a programme to ensure that at least 60% of current suppliers (by spend) undergo a basic corporate responsibility assessment. Each business was asked to determine the extent of their supplier assessment programme; to determine what percentage of suppliers they expected to complete a basic CR assessment in 2006/07; and to outline their action plan for achieving the 60% target.
Some business units have already exceeded these targets, and they include Severn Trent Services International's four Italian businesses; Coast to Coast Services; Severn Trent Labs; Severn Trent Metering Services; and Severn Trent DeNora's Texas operations.
In WTS Operating Services US, purchasing of materials and services is done mainly at regional and plant level, with facilities often buying from local and regional vendors. The large number of plant locations throughout the US means the vendor base is very large and spending with individual suppliers is relatively small. In November 2006, the business carried out an analysis of key spending areas subject to supply chain assessment, and it developed an action plan to implement a basic CR assessment for 60% of vendors subject to assessment. The action plan included development of procedures for supplier assessment, as well as a questionnaire. These have both been completed.
