Sustainable Supply Chains

NSG's commitment

NSG Group aspires to use its significant economic influence to improve standards and reduce carbon emissions across its extensive supply chain for the benefit of the planet and society. This is in support of NSG Group's vision of "Changing our Surroundings, improving our World".

Supplier Development

We are committed to working with suppliers that share our values and help us to reach the highest standards in our supply chain, whilst achieving wider social, economic and environmental benefits.

By measuring the performance of our suppliers against Key Performance Indicators (KPI's) we strive to continually improve the sustainability of our supply base. By increasing the coverage of ESG assessments through our partner EcoVadis and engaging with suppliers through Improvement Action Plans we aim to shape and improve our supply base in the areas of Environment, Labour & Human Rights, Ethics & Sustainable Procurement.

The assessment of key suppliers has increased steadily in terms of weighted average spend over the past 3 years as illustrated in the Figure 1 below. Last year's result was 60% compared to the target of 65% for 2024. We will monitor our suppliers of materials with a potentially high environmental impact, and in accordance with our Supplier Performance and Risk Management Procedure require them to be certified to ISO14001 or a recognized national equivalent.

Figure 1

In FY 2023/3, in addition to working toward increasing EcoVadis assessments of our supply base, we continued to focus on low scoring suppliers to work on actions to improve their performance.

An overall increase in the average score from 59 to 61 as well as a decrease in the number of low scoring suppliers highlights our strategy is delivering continuous improvement. As can be seen from Figure 2 below our supplier’s score distribution continues to exceed the results for all suppliers in Ecovadis database.

Figure 2

We saw an increase in low scoring suppliers in the key EcoVadis theme of Environment (ENV) but an overall reduction driven by increased scoring in themes of Labor & Human Rights (LHR), Ethics (ETH) and Sustainable Procurement (SUS) as can be seen in Figure 3.

Figure 3

In addition, we pay particular attention to suppliers who potentially have a High Environmental Impact (HEI). Our aim is to ensure that these suppliers minimise their potentially negative impacts and work positively on environmental initiatives. 13 of our material categories fall within the scope of HEI including for example, wooden packaging, batch materials, waste management, contractors and chemicals. We expect that all suppliers in these categories sign and adhere to our Supplier Code of Conduct and have internationally recognised environmental certification such as ISO14001 or national equivalent and/or EcoVadis assessment. In the case of wooden packaging, paper and cardboard, we look for a recognized chain of custody through FSC or PEFC certification in regard to the raw material supply, therefore striving to minimize the negative environmental impact of these suppliers. Environmental compliance is measured through ISO 14001 certification, forestry certification, and EcoVadis assessments together with Quality Management certificatsions IATF 16949 and ISO 9001. Status shown in Figure 4.

Figure 4

ESG Targets & Training

The NSG Procurement team, from Executive Officer through all levels of the organisation, are set S.M.A.R.T (Specific, Measureable, Achievable, Realistic, Timely) objectives related to the above mentioned ESG and compliance requirements. To support our Procurement team we provide continuous education and training. Procurement team members are considered Key Roles to ensure NSG business is compliant and conducted ethically with integrity. Regular on-line training including built in Knowledge Tests are mandatory for the majority of Procurement roles and include education in NSG's Code of Ethics, Anti-Bribery & Corruption (ABAC), Competition Compliance and more recently Fraud & IS Security.

In addition to the regular Group on line training modules the first training specific to Procurement processes was delivered to all non Procurement Managers within NSG’s global operations. Managers outside the Procurement function are often directly involved in assessment of suppliers and tender evaluations and so providing education and awareness of Procurement’s processes and the "do’s and do not's" when working with suppliers will help deliver benefits in many areas not least competitiveness and compliance. Figure 5 illustrates the functional areas completing the training module in FY2022/3.

Figure 5

Strategic Approach to Sustainable Supply Chains

In 2022 NSG established a new Procurement mission fully aligned with the Group’s mission "Changing our Surroundings, Improving our World". The Procurement mission "Leveraging our Supply Chains, Improving our World" recognizes the vital contribution that our supply partners can make to the planet and society and also to NSG’s own goals in the area of Sustainability. This section of our Integrated Report will set out NSG’s ambitions in this area and provide some examples of the initiatives we are working on in partnership with our suppliers.

• Align the Supply Chain Sustainability Strategy with the NSG Group's Sustainability objectives
• Ensure that NSG is recognised as a leader in sustainability in the supply chain
• Assist in attracting and retaining NSG personnelFollow international standard, ISO 20400: Principles of sustainable procurement

As a first step, we have published in September 2023 a Supply Chain Charter outlinings our long term aspirations and commitments as part of establishing and developing a fully sustainable Supply Chain. The Supply Chain Charter will also list the corresponding commitments expected of our suppliers and the KPIs we will use to measure their progress.

The Supply Chain Charter identified the following eight key sustainability impact themes as having the greatest impact on the supply chain.

For each theme, we have set four key elements: commitment / expectations of suppliers / joint aspirations, which is what we and our suppliers aim to achieve together / KPIs to measure progress. We also conduct risk heatmap analysis to establish priority themes by procurement category and region.

In parallel we are accelerating our efforts to reduce our Scope 3 carbon emissions in line with the publicly announced 30% target. The maturity of Procurement ESG objectives is illustrated in Figure 6.

This activity has a strong cross functional governance in place, reporting directly into the Group's overall Sustainability Committee, chaired by the CEO.

Figure 6

External evaluation in FY2023/3

We are very pleased to announce that as in FY2022/3 we were again recognised for our efforts in working with our suppliers to improve in areas of ESG. We have been recognized by CDP in their most recent evaluation for CY22 as a Leader in Supplier Engagement. This places us amongst the top 500 companies (out of a total of more than 13,000+ assessed businesses) around the world, including 105 companies in Japan.

CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts on climate change, water security and deforestation.

We use EcoVadis to cover and assess not only our procurement base, but also the requirements of our customers and investors. On the subject of 'sustainable sourcing', we have managed to raise our score from 60 to 70 out of 100 points. This places us in the top 3% of the glass industry.

NSG Group has also taken the step in FY2023/3 to join the League of Champions within the Sustainable Procurement Pledge (SPP) organization. This network of individuals and companies is driving the agenda on Sustainable Procurement and Supply Chains. NSG is proud to join this group to help drive the program for Sustainable Procurement forward with even greater speed.

Sustainable Procurement Pledge - Let's drive change.Together. (spp.earth)