KPMG's Supplier Engagement Programme was one of the 110 programmes to have its Big Tick Reaccredited this year after demonstrating continuing positive impact. Andy Horne, Supplier Management CoE Lead at KPMG spoke to us about the programme, how it's developed since it first gained its Big Tick in 2013 and what the next steps for it are.
Q. Tell us a little about the motivation behind KPMG’s Supplier Engagement Programme?
A. Building on existing initiatives and our Supplier Code of Conduct, we launched the Sustainable Procurement programme in 2011, focusing on deep engagement with around three key pillars of Environment, Living Wage and Diversity and Inclusion. We saw this very much as the Procurement function response to the KPMG Values. Of course we also recognise there are also issues around risk and reputation management, but its been primarily about the Values.
Q. How does it fit in within KPMG?
A. The programme reports into Christina Vasili (UK Head of Procurement) who sits on the senior level Responsible Business Leadership Committee and also represents Procurement on the Inclusive Leadership Board (chaired by Simon Collins, KPMG UK Chairman) which we launched in November 2014.
Naturally we work very closely with our colleagues in Corporate Responsibility, Diversity and Inclusion, Living Wage and Sustainability Services. It's very much a two way thing - we work with suppliers to deliver improvements in KPMG’s sustainability performance which aligns with their goals, and we can draw on our colleagues’ specialist knowledge.
Q. What effect do you think that KPMG’s own culture and expertise had on the way the programme was designed?
A. Our culture – and in particular our Values – have had a fundamental role in the way the programme operates. When we talk about seeking facts and providing insight as well as being committed to our communities in our statement of Values, that resonates really strongly with how we design and operate our Sustainable Procurement programme. It is also key for us to be open and clear in that we do not have all of the answers and that we can learn as much from our supply base about sustainability as they can from us. To succeed you have to collaborate, to succeed you have to communicate and be open and receptive to new ideas and new ways of working.
A. The programme has now reaccredited its original Big Tick for the third time. Over that time, what insights have you gained that weren’t obvious at the start?
Q. It's probably the sectoral differences that have been somewhat surprising. Some sectors, such as the utilities and telecoms are very advanced in their approach to carbon but less so on social issues like diversity, then it’s pretty much the other way round with some of our service providers. That's one of the reasons we set up roundtables, at which we hope to share learning across sectors.
Another observation would be that we are all at different stages of evolution, so whilst you can and should engage and communicate at a programme level it is key to develop an action plan at individual supplier level, making it real for them, and giving them individual targets to focus on.
Q. What have been the advantages of managing the programme from within Procurement rather than CSR?
A. It’s always been managed within Procurement – its built into our processes and systems and it’s something we think we should own and be responsible for. Of course, it is great having expertise close at hand and we have taken colleagues from Corporate Responsibility into Procurement roles, particularly as we tried to develop our own internal expertise in the form of having Sustainable Procurement Champions covering each of the Procurement buying categories. Having sustainability as part of our routine agenda is incredibly helpful since issues are picked up early and managed right through the contract lifecycle.
The main challenge is getting “sustainability” into the operating rhythm of our supplier interaction. Having it as a regular feature in our discussions with our key suppliers to ensure it remains a focus and that targets set are achieved.
Q. How has the programme changed how you work with suppliers?
A. The programme was designed with the explicit intention of working closely with strategic suppliers and its definitely helped in developing our approach to collaboration and innovation.
For example, we worked with one of our suppliers to develop a new lighting product which has now been fitted into our offices and which has reduced our electricity consumption significantly. The supplier can now of course also sell this innovative product to other customers.
Innovation can be driven from many areas though. Another example is in terms of process, as with our work on Living Wage with ISS which has demonstrated the business benefits that can be realised alongside the more obvious social gains. Overall, I would say working on a common purpose around sustainability with suppliers has been very helpful in developing our relationships.
Q. What have been the main challenges?
A. Initially I think some suppliers did wonder about how serious we were on sustainability – possibly because professional services isn’t often associated with high profile supply chain concerns. However the main challenge is most definitely trying to prove that action across our themes is not only giving environmental and social benefits but bringing business value as well.
It's perhaps easiest to demonstrate under our Environment pillar where lower carbon emissions means lower energy costs, but we also see it in Living Wage with increased employee engagement and reduced staff turnover (meaning lower recruitment and training costs and greater productivity).
Of course, demonstrating business value means we need to be good at measuring impacts and so the work of our Sustainable Services colleagues, who have developed our True Value methodology, is very pertinent. We see a huge available upside for the service sector in terms of sustainability and business benefits and want to encourage others to explore this potential.
Q. What are you most proud of about the programme?
A. Carbon management is probably the area where we have made most progress to date. We were the first professional services company to gather information from our suppliers through the CDP initiative and have introduced suppliers to carbon measurement and reporting as well as encouraging existing participants to seek improvement. We get good response rates (93% last year) and we are now starting to see good ideas for collaborations coming through as well.
Q. What’s next for the programme?
A. Three things:
Expansion, increasing the volume of suppliers who we engage with within the programme.
Embedding our new three-year roadmap. We’ve set quite challenging targets against each of our three pillars which we’ve already shared this with our suppliers and it is key that this is fully understood by all (internally and externally) in order that we set ourselves up to successfully achieve these goals.
Drive, with a particular focus on the Diversity and Inclusion pillar. This has been our biggest challenge to date and we are currently undergoing a major exercise to look at diversity within our supplier base. We are also working closely with our recruitment partners to support achievement of the publicly announced staff diversity profile targets.
In summary, we want to push the programme beyond the current network of strategic suppliers and also improve our communications. We have started a Sustainable Procurement newsletter and want to share as much good practice as we can. We want our Sustainable Procurement Programme to be a vehicle, a conduit for driving greater collaboration and innovation between KPMG and our supply base.