Economic sustainability
Sustainable procurement and supply chain management
We include all aspects of sustainability in our procurement processes and this is a central theme of our procurement strategy for our supply chains and to support the regional economy. We are committed to investing in the region and building good relationships with local businesses. With the start of the K5 period that runs from 2010 to 2015 we introduced an innovative 'mixed economy' model to source our £705m1 capital programme. This means using a significant number of smaller local contractors to provide specialised services as well as long-term relationships with more major supply chain partners.
Recognising our suppliers' contribution by our supplier awards.
Our supplier assessment covers environmental, social and financial sustainability including suppliers' approaches to occupational health and safety, working conditions in the supply chain, corporate governance, sustainability of their products and services and attitudes to natural capital and the environment. We aim to work with the best companies whose forward-thinking approach to sustainability gives reassurance that their environmental, social and ethical risks are minimised. This approach also supports our business continuity objectives and our Key & Strategic Supplier risk review methodology.
Some indicators of our industry-leading approach are detailed below:
- the supplier questionnaire, used in all tender activity, now includes a carbon emissions reporting section. We collect key data annually from our major suppliers, partners and contractors for inclusion in the company's measurement of carbon emissions
- we encourage our suppliers to provide information and data on the embedded carbon of the products and services they supply. We have updated our standard Supplier Agreement with guidance for suppliers to this effect
- for part of our investment prioritisation programme for the K5 capital programme, we have adopted a methodology for the assessment of embedded and whole life carbon over an assumed asset life of 40 years. This project selection process uses the Government's 'non-traded price of carbon' to value emissions from potential investments in our cost benefit analysis models, thus ensuring that lower carbon option solutions are promoted
- all procurement tendering activity is now completed using e-sourcing software, which eliminates paper copies of tenders.
Third party credit information suppliers are used by the Company to monitor the financial health of major suppliers.
1At 2007/08 prices.