New Committee on Supplier Ratings (COSR) · 2016. 2. 29. · company-level environmental, social...

© 2016 BrownFlynn Ltd. All Rights Reserved. © 2016 Industrial Economics, Incorporated. All Rights Reserved

Do Good. Do Well. Win.™ Transitional Webinar / February 9, 2016

Committee on Supplier Ratings (COSR)

/ 2 © 2016 BrownFlynn Ltd. All Rights Reserved. © 2016 Industrial Economics, Incorporated. All Rights Reserved

Agenda

§ Welcome: Jason Pearson, Executive Director, Sustainable Purchasing Leadership Council (SPLC)

§  Introductions: ▫ Tim Hopper, Microsoft ▫ Anastasia O’Rourke, Industrial Economics, Inc. (IEc) ▫ Mike Wallace, BrownFlynn

§ Market Dynamics: Mike Wallace §  Procurement Perspective: The opportunity for COSR – Tim Hopper § Market Based Solution: Anastasia O’Rourke §  Action Items/Next Steps

© 2016 BrownFlynn Ltd. All Rights Reserved.

Perspective from SPLC Jason Pearson, SPLC

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W W W. S U S TA I N A B L E P U R C H A S I N G . O R G

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The largest professionally-managed demand signal driving the global economy.

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A huge opportunity for collective influence.

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Multiple purchasers send fragmented, “similar but different” demand signals.

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Professionals lack access to common resources that would encourage alignment.

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Which causes confusion for suppliers, slowing market transformation.


Introductions


Today’s Presenters

Jason Pearson, Executive Director, Sustainable Purchasing Leadership Council (SPLC)

Tim Hopper, Responsible Sourcing Manager, Microsoft

Dr. Anastasia O'Rourke, Special Consultant, IEc & Board Chair, SPLC

Mike Wallace, Managing Director, BrownFlynn


Market Conditions Mike Wallace, BrownFlynn


Market Conditions

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Market Conditions


Market Conditions

Sustainability Surveys §  IBM §  Airbus §  Kaiser Permanente §  Siemens §  Marathon Oil §  British Telecom §  Boeing §  Ingersoll Rand §  Volvo §  United States Postal Service §  Wal-Mart §  BMW §  Johnson Controls

Sustainability Training §  Nike §  Puma §  Apple §  AT&T, Inc. §  Mattel §  Bristol-Myers Squibb §  Campbell’s §  Intel


Market Conditions


Market Conditions

CIO $91 billion Procurement $6 billion

Procurement $9 billion

CIO $283 billion

CIO $188 billion


Market Conditions

The evolution of the market:

https://www.greenbiz.com/blogs/enterprise/shift-happens


Procurement Perspective: The opportunity for COSR

Tim Hopper, Microsoft


the solution

ü Stakeholder developed framework reflects ARISTA Standard for sustainable investments research, EPA draft Guidelines for Ecolabels and standards; GISR Principles, GRI G4 Principles, IIRC Principles, ISEAL Credibility Principles, Sustainable Purchasing Leadership Council Principles, SASB Principles

ü  Framework covers areas such as if the rater is impartial, their processes and innovation. The framework also reviews if their rating criteria is relevant and assessable. Finally, the framework provides an inventory of the raters coverage (regions, sectors, and companies) as well as other capabilities.

ü Publication of framework and rater evaluation results will enable procurement professionals to yield the following impacts.

the problem There is missing guidance for professional purchasers to navigate 3rd party company-level environmental, social and governance (ESG) sustainability ratings. The absence of this guidance has led to additional survey fatigue and associated buyer/supplier costs, as well as an inability to determine if companies have achieved credible sustainable ratings.

Enterprise-level ESG Evaluation Framework and Results for Global Public/Private Procurement Professionals

the impact

ü Decrease Risk – by promoting credible 3rd party enterprise level ESG performance ratings for professional procurement

ü Decrease Cost – by reducing survey fatigue and other resources required to dramatically scale procurement developed rating systems

ü Increase in Stakeholder Satisfaction - by embracing credible, independent assessments of company-level sustainability ratings

V2.0 Framework

COSR Overview


ORGANIZATIONS

Conveners

Advisory Committee

Participants

Over 30 organizations participating to date..

Sponsor Chair Technical Consulting

COSR: Multi-stakeholder Involvement


Market Based Solution Anastasia O’Rourke, IEc


COSR hypotheses

1.  Procurers assess the ESG performance of suppliers in the context of their overall spending in much the same way that investors analyze the ESG performance of companies in their investment portfolios

2.  A company’s ESG performance in a “sustainable” investment portfolio could be relevant to its assessment part of a procurer’s “portfolio” of suppliers.

Could organizations leverage ESG research and ratings to support strategic sustainable procurement?


We set out to:

1. Understand the current landscape of ESG research and ratings products 2. Explore applying existing ESG ratings research in strategic sustainable procurement 3. Develop a framework to assess their application 4. Pilot and apply the framework, with lots of feedback along the way.


October November December January February March

Our approach


V2.0 Framework

20 Interviews & AC input

Analysis of ratings & indexes Key

references

Inputs to Framework v2.0

V1.0 Pilot


Key references Principles and Standards §  ARISTA Standard for sustainable

investments research §  EPA Draft Guidelines for Ecolabels

and Standards

§  GISR Principles §  GRI G4 Principles §  IIRC Principles §  ISEAL Credibility Principles §  SASB Principles

§  SustainAbility Rate-the-Raters §  Sustainable Purchasing Leadership

Council (SPLC) Principles §  UN Principles for Responsible

Investment

ESG Indicators §  ARISTA standard for sustainable investments

research §  CDP §  CSRHub

§  EICC: Equivalence Assessment, Three Pillars. §  Global Impact Investing Network: IRIS §  Global Social Compliance Program §  Global Reporting Initiative: G4 §  Natural Capital

§  SA8000 Standard §  SASB Sector Guidelines §  SPLC Guidelines §  UN Global Compact §  Walmart Sustainability Index

§  World Federation of Exchanges (WFE) enhanced sustainability guidance.


Framework Structure

In each category: • Factors • Indicators • Questions to raters • Possible evidence • Weightings • References

Rating Organization

& Process

Rating Criteria Coverage


Who is the rating organization and how do they rate companies?

1.  Impartial 2.  Track record 3.  Management 4.  Creation and maintenance of

rating criteria

5.  Research and ratings process 6.  Engagement of stakeholders 7.  Stewardship 8.  Innovation 9.  Scalable

Rating Organization

& Process



What are the rating criteria, are they relevant?

10. Relevant

11.  Assessable

12. Customizable

13. Transparent

ESG indicators, Materiality

Rating Organization

& Process



Where are the rated companies?

14. Coverage:

15. Accessible

16. Validated

17. Disclosure

Regions, sectors

Rating Organization

& Process



Example application in a purchasing context

Procurer asks suppliers:

Have you been rated by one of these?

Shortlist: - Rating 1 - Rating 2 - Rating 3…

Integrate into supplier assessment & engagement program

Ask supplier to get rated by one of these ratings products

YES

NO

Procurer reviews and selects ESG ratings products based on COSR profiles

COSR Profiles: - Rating 1 - Rating 2 - Rating 3…


Immediate Next Steps for COSR

1. COSR Report •  Project goals •  Methods •  Landscape of ESG ratings •  Framework factors •  Potential use cases •  Release late February 2016.

2. Assessments of ESG Raters •  Using Framework V 2.0 •  Profile ESG ratings systems (max.

10) •  Pilot-test application with Microsoft

Rating Organization

& Process


3. Share Results https://www.sustainablepurchasing.org/cosr/


Next Steps: Phase II

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W W W. S U S TA I N A B L E P U R C H A S I N G . O R G

SPLC Founders Circle

City of Portland, OR

City of San Francisco, CA

City of Washington, DC

State of California

State of Michigan

State of Minnesota

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U.S. DEPARTMENT

of AGRICULTURE

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SPLC Partners

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Ongoing recruitment

A Broad Coalition Federal purchasers:

DOE, EPA, GSA, USDA, LBL, PNNL State/local government purchasers:

Cities: Cleveland, Denver, Portland, San Francisco, Santa Monica, Municipal Collaboration for Sustainable Procurement, Sound Transit Counties: Alameda, Arlington, King, Multnomah, Snohomish State/Province: California, DC, Massachusetts, Michigan, Minnesota, Nova Scotia, NERC

College and university purchasers: American, Arizona State, Emory, George Washington, Michigan State, Portland Community College, Portland State University, Southern CT State, UC Santa Barbara, UPenn, UT Austin, Association for the Advancement of Sustainability in Higher Education

Corporate purchasers Accenture, Aflac, Allstate, Aramark, Belk, Best Buy, Bloomberg, Caesars, CBRE, CH2M, Citi, Edelman, EPRI, FedEx, Goodyear, Hilton, JCPenney, Interface, Lockheed, Mahindra, Microsoft, Office Depot, Pacific Gas & Electric, Sonoco, TD Bank

Environmental interest organizations: CalRecycle, CEGESTI, Center for Environmental Health, Ecoinstitut, ISEAL Alliance, MI DEQ, MN PCA, Practice GreenHealth, Sustainable Methods Institute, USGBC, US DOE, US EPA, World Resources Institute, WWF

Social interest organizations: Coalition of Immokalee Workers, CorpWatch, Equitable Origin, Fair Trade USA, International Campaign for Responsible Technology, International Labor Rights Forum, Canadian Aboriginal and Minority Supplier Council, Social Hotspots Database Project

Business associations: American Sustainable Business Council, American Chemistry Council, American Coatings Association, Business and Institutional Furniture Manufacturers Association (BIFMA), Consumer Specialty Products Association, Institute of Supply Management

Suppliers Accenture, Altenex, Apex Clean Energy, ASSA-ABLOY, Biosynthetic Technologies, BuildingWise, CarbonNeutral Co, Dell, Domtar, EcoLab, EcoVadis, Edelman, FedEx, Goodyear, Kuhn Associates, iFixIt, Lockheed, MindClick, Office Depot, PRé, RepRisk, Resource Recycling, SciQuest, Sonoco, Sphere E, Thinkstep, TreeZero, Trucost, Venable LLP, VitalMetrics, Waste Management

Product Certifiers/Standards Developers/Labelers: Center for Resource Solutions, CIPS Sustainability Index,

Equitable Origin, Fair Trade USA, Forest Stewardship Council, GreenCircle Certified, Green Seal, Roundtable on Sustainable Biomaterials, SCS Global Services, Sustainable Forestry Initiative, UL Environment, USDA, US EPA

Partners: ANSI, BSR, ICLEI, NASPO (National Association of State Procurement Officials), Product Stewardship Institute, Responsible Purchasing Network, Sustainable Food Lab

Today: >150 members; > $200bn in spend

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SPLC Next Steps

•  Confirm human/financial resources

•  Build workgroup

•  Explore more use-cases and test with more purchasers

•  Further refine framework

•  Assess more ESG research products

•  Collaborate with key groups

PROJECT WEBPAGE:

https://www.sustainablepurchasing.org/cosr/


Addendum 1: Public Sector Reporting of Supplier Activities


City of Cleveland


City of Chicago


City of Atlanta


State of Washington – Dept. of Ecology


U.S. Postal Service


U.S. Army

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