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Supplier management

With operations in 12 countries on five continents, we have a highly complex supply chain.

Maintaining close ties with local, regional and global suppliers is crucial for managing risks throughout our network; our suppliers’ behavior reflects on our own reputation and on that of our customers. We work together with our suppliers to ensure they meet our high ethical standards and to drive improvements in our supply chain.

Evolving towards a global purchasing program

Code of Ethics

The most basic requirement of our supply chain is that it be reliable and ethical. We have established robust internal standards and principles to guide our employees, business partners and suppliers to meet our expectations. Our diverse business partners include vendors, service providers, consultants, contractors, distributors and agents.

We share our Code of Ethics with all our suppliers and ensure they adhere to it through our Terms and Conditions, which include a clause establishing the ethical principles with which we expect our business partners to comply.


Performing due diligence

We see procurement as being central to business, legal and regulatory risks, and sustainability considerations. Between FY2015 and FY2016, we reviewed and analyzed 100 key distributors and agents through NAVEX Global’s RiskRate® to identify any potential risks posed. In FY2019, we extended the process to 9,366 – our entire supplier base. The process is now well established and runs automatically for all suppliers.

RiskRate® is an automated and continuous screening program, which performs efficient and reliable due diligence checks on companies, identifying any history of working in areas with trade sanctions and government watch lists, instances of fraud, bribery or corrupt dealings, cases of government investigations or convictions, or adverse media attention.

In FY2020, over 95% of our suppliers were highlighted by RiskRate® as being green. It marked 4.2% as yellow suppliers, while 0.6% were flagged as red. We are now working with those marked as yellow and red (medium- to high-risk) suppliers to improve their compliance measures. Enhanced due diligence is being performed for these suppliers through our Legal department. We have terminated 18 red-flagged vendors since September 2019 and cleared an additional 7 red-flagged vendors after conducting additional due diligence. Going forward, any vendor wanting to work with Birla Carbon must be flagged as green through the program, or be approved by our Legal department, before they enter our system.

Ensuring a sustainable supply chain

As we have developed our sustainability integration and reporting over seven years, we have continued to explore further ways to encourage best practices through our supply chain. Birla Carbon’s procurement process is generally decentralized and is managed at the local and regional levels. This promotes local sourcing of materials and services to meet our business needs, but it can also present a challenge in terms of risk management. Developing a robust global approach to procurement is key.

That is why we elected to increasingly engage with key suppliers (based on spend, criticality as per our IATF 16949 certification, reputation risk and other considerations) and encourage them to improve on their own environmental and societal impacts. We have partnered with EcoVadis to facilitate sharing of sustainability best practices and to assess the sustainability profile of our key suppliers as part of our Sustainable Procurement program.

In FY2020, all 278 of our critical suppliers were invited to participate in our EcoVadis screening program. EcoVadis screening is a voluntary program for our suppliers, and many have already shared their scores, which are split into four categories (Environment, Ethics, Labor & Human Rights and Sustainable Procurement). Our average supplier sustainability score is 50.3, significantly higher than the average of 42.6 throughout the EcoVadis database, which comprises over 55,000 companies worldwide. This suggests that, globally, our key suppliers are already performing above average in the four criteria. For instance, over 70% of our critical suppliers report on energy consumption and CO2 emissions; over 60% report on health and safety issues, have a policy on corruption and are ISO 14001 certified.

However, fewer than half are disclosing their carbon footprint through the CDP platform or have a certified safety management program. We expect these figures to improve over the coming years through best practice sharing. By continuing to roll this process out to more of our suppliers, we will be able to better recognize, and better select, sustainable and ethical suppliers to work with.

EcoVadis scores

A sustainable supply chain, recognized by EcoVadis.

Results based on a statistically significant number of assessed suppliers.

Birla Carbon’s first Global Purchasing Symposium

In an effort to align our purchasing processes on a global scale, in February 2019 the first Birla Carbon Global Purchasing Symposium was hosted at our headquarters in Marietta, Georgia, USA. During the three-day event, best practices were shared among our purchasing managers and key stakeholders globally and three key goals were highlighted:

  • To ensure all our suppliers were screened for compliance through NAVEX Global’s due diligence software, RiskRate®.
  • To foster sustainable procurement practices and profiling of our suppliers through the EcoVadis platform.
  • To drive consistency in our Terms and Conditions (T&Cs) of Purchase, which we share with our vendors worldwide.
Sustainable Development Goals

Making compliance more comprehensive

In FY2017, we worked with legal advisors in various regions to customize our T&Cs of Purchase to address the different local legal requirements. In FY2018, we began a similar process with our T&Cs of Sale. Our T&Cs of Purchase have now been translated into several languages, making them more comprehensive in all our operating locations.

Our Supply Chain and Procurement Policy, published in FY2018, guides each of our sites to ensure supply chain compliance with the relevant legislation and the Birla Carbon Code of Ethics. Standards we expect include promotion of resource conservation, use of alternative materials and renewable energy, water stewardship, safety, health, respect for human rights and elimination of child and forced labor across the supply chain. This policy is part of our wider Sustainable Procurement management system, which is deployed across all our buyers and our supplier base worldwide. Our internal Procurement Policies were updated in FY2020 to require due diligence screening of all suppliers and use of our Terms and Conditions of Purchase.

Supply Chain and Procurement Policy PDF, 0.5 MB

Response planning and preparedness

We strive to ensure that our sites and suppliers have up-to-date inventories available at all times. Challenging and unexpected global circumstances can impact inventory approaches for both ourselves and our suppliers. Our Business Continuity Plans and Crisis Management Response Guidelines provide solutions for sourcing raw materials and critical spare parts with minimal risk through our contract supplier agreements. We maintain an updated list of approved, assured and certified alternative suppliers for emergencies.

Business continuity plans

How we are supporting the SDGs

SDG 12

Responsible consumption and production

We support responsible consumption and production by ensuring that our feedstock comes from suppliers close to our facilities, which we are now screening for risk management purposes.

SDG 16

Peace, justice and strong institutions

Through our internal governance mechanisms, we prevent corruption and bribery from taking place in our business. This reinforces our own institutional accountability and transparency as well as that of our customers.

SDG 17

Partnerships for the goals

We encourage our suppliers to respect human rights through the Terms and Conditions on our contracts, which we have now translated into several languages.

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