Sustainable Supply Chains
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".
We are committed to working with suppliers that share our values and help us to achieve 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 51.8%, almost the same as last year, 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.
In FY22, in addition to working toward increasing EcoVadis assessments of our supply base, we also focused on low scoring suppliers to work on actions to improve their performance.
An overall increase in the average score from 55 to 59 as well as a decrease in the number of low scoring suppliers highlights our strategy is succeeding as can be seen from Figure 2.
Improvement of supplier scoring in the key EcoVadis themes of Environment (ENV), Labor & Human Rights (LHR), Ethics (ETH) and Sustainable Procurement (SUS) can be seen in 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 High Environmental Impact 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 (e.g. FSC or PEFC) in regard to the raw material supply, and we strive to minimize the negative environmental impact of these suppliers. Their compliance status in terms of environmental aspects, such as ISO 14001, forest certification, and EcoVadis scores, as well as in terms of quality, such as IATF 16949 and ISO 9001 compliance status in terms of quality, such as IATF 16949 and ISO 9001, are shown in Figure 4.
ESG Targets & Training
The NSG Procurement team, from Executive Officers through all levels, 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. The figure below illustrates the list of training modules and progress.
In addition, assisted by our long-term partner EcoVadis, we run formal ESG awareness training sessions including practical help with platform functionality.
Strategic Approach to Sustainable Supply Chains
In 2022 we launched a project to transform the way we approach Sustainability in the Supply Chain.
The aims of this project are to:
- Align the Supply Chain Sustainability Strategy with NSG Group's Sustainability Goals
- As a minimum, meet our customers' expectations and comply with the legislative requirements for all territories in which we operate
- Ensure that NSG is recognised as a leader in sustainability in the supply chain
- Support attracting and retaining NSG talent
- To follow the principles of the International standard, ISO 20400: Sustainable Procurement
Accordingly, as a first step, we are working on a Supplier Charter that will outline our aims and commitments as part of establishing and developing a sustainable Supply Chain. The Supplier Charter will also list the corresponding commitments required from our suppliers and the KPIs we will use to measure our progress.
At the same time we are accelerating our efforts to reduce our Scope 3 carbon emissions in line with the publicly announced 30% target. 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.
External Recognition in FY22
We are very pleased to see that our efforts in working with our suppliers to improve in areas of ESG is supported by improved ratings from external parties. We have been recognized by CDP in their most recent evaluation for CY21 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.
As well as utilizing EcoVadis to assess our supply base we also complete an assessment on behalf of our customers and investors. Under the theme of Sustainable Procurement we increased our score from 60 to 70 points/100 representing a significant improvement of 16% in 12 months