Supplier
management
Suppliers chain
Good practices are encouraged throughout the production cycle
102-9 | 103-2 | 103-3: Procurement practices | Environmental evaluation of suppliers | Diversity and equal opportunities | Human rights evaluation | Social evaluation in suppliers
In 2017, MRV allocated R$1.7 billion to 8.5 thousand suppliers of materials and services for worksites and administrative areas. From the total amount, 73% were directed to companies based on the same states in which the enterprises are located, which has been contributing to regional development. 204-1
In order for suppliers to comply with the technical and legal requirements demanded by the company, several actions are undertaken. In the approval process, all are required to submit documents that demonstrate compliance with labor and environmental requirements, as well as compliance with specific qualification standards, which vary based on the services to be performed. In the qualification process, several training courses are promoted to reinforce the importance of meeting requirements and important clarifications are made as to the procedures for operation in worksites.
MRV’s Code of Conduct is widely disclosed to suppliers, from the beginning of the relationship, and is described in contracts and available on the company’s website. The contracts contain specific clauses regarding the Code of Conduct, the Anti-corruption Act, prohibition of child labor or labor analogous to slavery, among others related to human rights. 412-1
On a monthly basis, suppliers receive a newsletter that seeks to disseminate and stimulate good practices related to sustainability. Since 2017, the information has also been sent to suppliers of suppliers, which reinforces the company’s objective of expanding knowledge of sustainable practices throughout the supply chain.
A direct communication channel with the Supplies area (e-mail: sup.sustentavel@mrv.com.br) is also made available to send suggestions, comments or complaints that contribute to the improvement of business and the appropriate management of the environment.
Technology and innovation are aspects encouraged among suppliers, which often results in positive joint experiences. An example is what occurred in the city of São Paulo, where some waste from the worksite, such as dry mortar, concrete and concrete blocks, which would be deposited in dumpsters, started to be accumulated in specific containers of a block supplier, who returned them to its factory for reprocessing and reuse in the production process. MRV obtained a reduction of costs with the lease of fewer dumpsters, and the supplier reduced its expenses with inputs, which also benefited the environment.
To ensure integrity in all stages of the relationship with suppliers, the Supplies area acts in close synergy with the Risk Management area, both in identifying procedural and documentary failures and any misconduct. In this case, joint investigations are conducted to clarify the facts and identify those involved and subsequent action.
At the same time, processes are constantly reviewed and improved to mitigate possible failures, not only within the scope of the Supplies area, but also involving all those that interact with suppliers and service providers. As a reinforcement of these practices, there is a system of accesses segregated by areas and functions, in which requests for services and materials go through different bodies for approval.
Furthermore, among employees in the Supplies area there is rotation in procurement portfolios, so that everyone can acquire experience in negotiation and procurement of materials and services and avoid excessive familiarity with suppliers. Suppliers, in turn, are encouraged to resort to the company’s Confidential Channel whenever there is the slightest indication of an attempt to obtain advantages by any employee, of any area.
The process of qualification of services and materials includes the qualification of suppliers in environmental legal requirements during the selection process, with application of HSE qualification tables. They determine the environmental legal requirements applicable to the supplier and indicate their situation of compliance. These are the minimum requirements for the supplier to work with MRV. However, not all products and services are qualified, only those that have significant environmental aspects for the company’s activity. In 2017, 76% of suppliers were covered by the qualifications of legal requirements. For the other 24%, environmental requirements do not apply. As to materials that demand environmental legal requirements, 100% of suppliers are served. 308-1
MRV will begin next year the CDP Supply Chain Program, which allows companies to meet the demand for environmental information from different stakeholders by means of a single questionnaire, which avoids duplicity of efforts through a standardized process of collection and systemization of information and evaluation and construction of indicators that guide investment decision and risk management. This project helps both customers and suppliers to expand knowledge and experiences in relation to climate change, management of water resources and deforestation.
On average, more than 50% of companies’ emissions come from their value chain. In sectors such as retail and information technology, impacts are even more distributed, so that suppliers may represent more than 60% of the carbon emissions of an organization. Thus, emissions management throughout the value chain is necessary to protect and generate value for the business. The Supply Chain Program allows us to design strategies for engagement of suppliers by means of analysis of risks and opportunities associated with climate change and management of GHG emissions. It also provides a collaborative and innovative approach that contributes to the sustainable development of the value chain, an assistance to customers and suppliers to expand knowledge and experiences in relation to climate change and water management.
Another program, the Forest Stewardship Council (FSC), aims at presenting the set of actions coordinated by FSC Brazil that will support the development of suppliers with FSC certification in strategic locations for MRV with a view to reducing the risk of consumption of products without guaranteed origin. The company has a corporate policy for management of suppliers to ensure respect for human rights and compliance with environmental laws for wood products. To ensure compliance with this policy, targets for consumption of products with certified origin were established.
FSC Brazil submits the proposal to support the achievement of MRV’s targets with respect to consumption of certified origin materials, acting in the development of suppliers that are capable of providing certification to the company as a guarantee of origin and responsible management. The institution will conduct the mapping, engagement and technical support so that suppliers may obtain FSC certification in the Chain of Custody category, which happens after forest management and involves the entire processing of the material until its final origin. At the company’s request, FSC presents a proposal to support its objective, with mapping and engagement of suppliers, as well as a diagnosis of strategic locations. Thus, it promotes certification in the regions identified by MRV, in addition to aligning employees with respect to compliance with requirements and validation in purchases, which ensures responsible consumption indicated in the targets.
Sustainable processes
The initiatives and procedures of sustainable nature, as well as the stimulus to their multiplication, are disclosed by MRV in the Sustainable MRV section of its website (www.mrv.com.br). In dealing with suppliers, in addition to disclosing the channel, employees seek to stimulate the exchange of experiences.
In this direction, in 2017 the largest suppliers with national operation were surveyed regarding the manner in which they control their consumption of water, energy and fuel and what actions are adopted to reduce such consumption. From the descriptions, best practices were identified and disseminated among companies, in addition to awarding those who stood out in the aspects of sustainability: economic, social and environmental. The initiative will continue in 2018 and will also involve medium-sized and small-sized suppliers.
Another action in 2017 reached five service providers in São Paulo, involved in awareness-raising on subjects such as financial management, strategy and fight against corruption.
With the creation of the Compliance area, in the year, MRV sought to identify some risks related to the integrity of its suppliers, subjected to completion of a questionnaire that serves as basis for their classification based on risks: low, medium and high.
Suppliers classified with a high risk go through an integrity due diligence process that aims to seek evidence to serve as basis for MRV’s level of exposure when maintaining commercial relations with them and allow the company to make a decision to discontinue dealings between the parties. As a result of this procedure, a large supplier was removed from the register for being politically exposed and for having in its management an officer indicted for corruption practices.