The LafargeHolcim Sustainable Procurement Initiative

Name of Company

LafargeHolcim

Country of Origin

Switzerland (Headquarter) and local presence in 90 countries

Sector

General

Region

Global

Issue Covered

General

Practices

Sub Categories

Background

The Sustainable Procurement Initiative is the global formal framework to establish responsible sourcing practices across the group and to drive consistency and transparency in execution.

Description of Program or Activity

The LafargeHolcim Sustainable Procurement (LH SP) initiative aims to addresses sustainability challenges beyond the boundaries of their operation and expects that products and services delivered by its suppliers comply as well.

For LH, it is critical to ensure that business is conducted with suppliers who comply with LafargeHolcim Group guidelines summarized in the supplier code of conduct, which includes requirements related to:

•           (Occupational) Health & Safety

•           Fair Business Practices and Group Compliance (bribery and competition laws)

•           Environmental management and performance

•           Corporate Social Responsibility practices.

This requires that suppliers comply with LafargeHolcim requirements, national and international requirements such as UNGC Principles and OECD Guidelines.

The framework of the SP initiative is established in the Sustainable Procurement Policy and integral part of related Group Policies (Procurement Policy, Environmental Policy, CSR Policy, Compliance Policy)

The LH 2030 Plan will  help LafargeHolcim achieve their sustainability ambitions by setting vision with clear targets and an agenda for action that goes beyond their business activities.

Sustainable Procurement initiative is implemented across the group following a structured approach consistent of 6 steps:

1.     Communicate the SP Policy to LafargeHolcim all relevant employees

2.     Communicate the Supplier Code of Conduct  to all current and potential new suppliers conducting business with LafargeHolcim

3.     Identify potential “High risk” suppliers  by prioritizing the supplier base following the methodology defined in the LH SP Recommendation

4.     Conduct supplier assessment by executing continuous evaluation of risk exposure through supplier self-assessment / fact finding / audits accordingly

5.     Mitigate identified risk(ultimately supply disruption and company reputation) adhering to the consequence management approach defined in the SP Policy Principles

6.     Monitor “supplier” sustainability performance. Report overall “country” sustainable procurement performance through the annual SP Scorecard.

Sustainability is integrated in the Procurement processes: “Source to Contract” and “Procurement to Pay”

LafargeHolcim establishes three levels of investigations to assess/verify supplier’s compliance with the LafargeHolcim Supplier Code of Conduct: Self-Assessment, Fact-Finding and Audit

Supplier assessments and risk mitigation are addressed by cross-functional teams established at Global, Regional and Country levels. Teams are driven by the Procurement function and composed by subject matter experts from related functions (H&S, Environment, Human Rights, Legal & Compliance) and by key internal users of procured goods and services.

Lessons Learned

• A tailored approach is needed for different audiences to ensure good understanding of “What” is Sustainable Procurement, “Why” responsible sourcing and what is the impact and contribution from the day-to-day activities to the overall company strategy.
• Suppliers: the engagement approach needs to be tailored to different markets across regions where we conduct business. While our group expectations are the same across the globe and embraces UNGC principles and OECD Guidelines, the compliance expected from suppliers is pragmatic, requiring more dialogue and development effort in less regulated markets.
• Procurement Category Management is the key role to drive implementation and compliance across the group.
• Group Internal Audit and Group Compliance functions are key partners to drive compliance in the implementation of our SP initiative.
• Supplier-prequalification process requires a relevant administrative workload for both, suppliers and our company. Support from a third party expert is necessary to make the process more efficient and to allow focus effort on addressing identified breaches.
• Communicate, communicate, communicate…there can never be too much!

Impact

• In LafargeHolcim first annual Sustainable Procurement Scorecard consolidated end 2015, figures reported by companies indicated a fair understanding of the SP process and a good level of implementation following Group guidelines:

• Companies shared good examples of sustainable procurement practices being implemented, Please find below LafargeHolcim Sustainable Procurement Initiative Examples:

• Collaborative initiative
- Ecuador
Together with UNICEF and Labor MinistryLH Ecuador launched an information campaign (training material and questionnaires) for suppliers to Eradicate Child Labor. Participation of this initiative is a compulsory requirement for all suppliers conducting business with LH Ecuador.
Partnership with the " Swiss Alliance " is formed with several companies, including suppliers of Holcim Ecuador, to promote education in Ecuador.
- Sri Lanka
In collaboration with IUCN, LH Sri Lanka launched a programme for quarry bio diversity.
- UK
AIUK partnered with the Supply Chain Sustainability School. With this organisation events are held to promote and discuss sustainability issues with suppliers. They provide an online system offering suppliers e-learning, self-assessments and action plans.

• Supplier Capacity Building
- Colombia
Holcim Colombia conducts training for contractors employees with The Colombian Safety Council, as the first entity of the Colombian private sector in the field of comprehensive occupational safety and health. http://ccs.org.co/salaprensa/
- Argentina
Holcim Argentina launched the "Programa Valor" to educate suppliers on sustainability topics. LH personnel deliverd training to suppliers in each regionof the country where they operate, engaging more than 300 suppliers in the sustainable procurement initiative

• Sustainability initiatives in the supply chain delivering business benefits
-Argentina
Optimization of the Sales Distribution network to reduce KMs, CO2 emissions and transportation cost. The initiative was implemented in 11 Operation Plants (delivering products to market). The business benefit is measured in "Net Efficiency Driven Kms" = (Kms Actual Year - Kms previous year) x Cost Kms Actual Year) and the financial benefit deliverd was in the order of 100 Mio ARS
-UK
A partnership with a supplier of non-hazardous waste management to audit all sites to ensure that the correct containers and collection schedules are in place. Where possible General Waste receptacles have been removed to improve on site segregation. Following the audit a communication pack and training is provided to site. All locations are being audited.
This initiative Improved awareness of waste streams across the business and assoicated benefits of reycling.
Improved customer perception of AI. Reduced disruption to sites caused by incorrect services being provided.Reduced risk of health and safety incidents from overloaded containers due
In addition to the qualitative benefits, the initiative contribute to reduced costs: In 2015 we saw benefits of £55,000 from optimisation of containers and collection schedules. In addition there were benefits of £30,000 from metal rebates. It is forecast that our Bardon Hill Quarry site will see benefits in 2016 of nearly £20,000 in 2016 following a recent site project.