Assessment of Environmental or Social Sustainability from a Supply Chain Perspective - Case Study Example

ANZ social consideration based on GRI criteria Insert Name of the Student Insert Name of the Instructor Insert Name of the Course Insert Code of the Course Insert Submission Date Executive Summary This report assesses the human rights social considerations of the Australia and New Zealand Banking Group Limited (ANZ) based on the Global Reporting Initiative (GRI) Criteria. The disclosure on management approach describes the management measures undertaken by the institution. The approach outlines the remuneration procedures, forced labour, child labour, equal rights and non-discrimination, freedom of association and collective bargaining. These regulations are in line with the international human right laws such as the UN Guiding Principles. The policy considerations outline the key guidelines adapted by ANZ in relation to human rights and the strategies used to ensure implementation across the supply chain. The policies include Global Sourcing Policy and Supplier Code of Practice among other international policies. Goals and performance of the human rights in the organisation are outlined and performance indicators used to assess the whether the goals are achieved. The performance indicators used are Non-discrimination, investment and procurement, and indigenous rights. The responsibilities are distributed among the senior level staff from the CEO to the Corporate Social Responsibility Staff at the country level. Some of the managerial staff such as category purchase managers and relationship managers undergoes training to handle the human rights issues with ease. Like any other procedure, some assessment tools monitor the success of the program. The study will then carry out an assessment of the implications on the supply chain and the recommendations addressed henceforth. Contents Executive Summary 2 Introduction 4 Disclosure on management approach 4 Investment and procurement practices 5 Remuneration 5 Forced Labour 5 Child Labour 5 Equal rights and non-discrimination 6 Freedom of association and collective bargaining 6 Training and Awareness 7 Policy 8 Goals and performance 9 Non-discrimination 9 Investment and procurement practices 10 Indigenous rights 10 Monitoring, follow up and remediation 10 Assessment of the implications on the supply chain 10 Recommendations 11 Conclusion 12 Introduction The ANZ was established in Sydney over 175 years ago but the headquarters were shifted to the current location, Melbourne, Australia. The institution seeks to offer affordable financial services to citizens spread over 30 countries in the Asia-pacific region, America and Europe. The services also include wealth management, institutional, corporate and commercial banking. It has an estimated over 40,000 stakeholders, 8 million customers, 50,000 employees, and 15,000 suppliers. Other than offering financial services, the bank is committed to social and environmental responsibility (Koulias, n.d., p. 2). This paper will explore the social considerations based on the GRI criteria. The GRI criteria provide a generally accepted framework for assessing the environmental, economic, and social consideration in an institution regardless of size (Seuring & Muller, 2008, p. 2). Social considerations under the GRI criteria are categorised under labour practices and decent work, human rights, society, and product responsibility (Sustainability reporting guideline). This paper will however, explore social considerations under human rights. Disclosure on management approach The Social Policy and the Organisation for Economic Cooperation and Development Guidelines for Multinational Enterprises and the International labour Organisation concerning Tripartite Declaration Concerning Multinational Enterprises and Social Policy provide the basic guidelines for this category (Sustainability Reporting Guidelines, p. 33). The management should disclose exclusively the management approaches they undertake in line with the human right procedures as outlined: Investment and procurement practices ANZ has a sourcing policy that lays out the expectations of all people involved in the procurement sector binding them to safe and responsible dealings. It also has sustainability guidelines in specific sectors such as legal services, IT, advertising and corporate wardrobe. The guidelines reflect the institution’s corporate responsibility framework and code of conduct and ethics. In addition, the institution ensures that it only deals with suppliers who uphold high governance and internal systems (Our approach to sustainable sourcing, 2013). Remuneration ANZ requires all its suppliers to compensate their employees as per the country of operation’s wage laws such as minimum wage requirements, overtime pay, bonus pay, and other legal benefits. Secondly, the suppliers are to communicate clearly to the employees the terms of payment before commencement of duty. Thirdly, the working hours should be compliant with the legal minimum in the respective country and provision of at least one day off per week. Lastly, any wage deductions due to disciplinary failure should also be compliant with the local law (Supplier code of practice, 2011, p.5). Forced Labour ANZ requires that no suppliers should be involved in or support forced labour throughout the supply chain (Supplier code of practice, 2011, p.5). Child Labour The company does not tolerate the employment of children and does not involve itself with organisations that support child labour. It also requires that organisations relating with it should state clearly their position on the subject matter in their company policy. In addition, all supply chain stakeholders should comply with the international and domestic laws governing the same (Supplier code of practice, 2011, p.5). The United Nations Convention on the Rights of the Child specifically bars children from either formal or informal employment (Bessell, 2011, p. 564). Equal rights and non-discrimination All workplace relations should be non-discriminatory and free of any form of harassment. Potential employees and employees should be discriminated based on medical examinations such as HIV/AIDS and pregnancy tests. All supply chain stakeholders should employment opportunities to marginalised persons in their respective countries (Supplier code of practice, 2011, p.6). Freedom of association and collective bargaining ANZ encourages the management and workers to exercise mutual open communication to solve any workplace problems without fear of harassment, intimidation, and reprisal. Workers are free to join trade unions and other associations that support their rights and the management supports the union representatives and staff (Supplier code of practice, 2011, p.6). Organisational responsibility According to Harvey & Richey (2001, p. 106) most supply chains fail due to incompetent managers and lack of clear responsibility breakdown. The ANZ bank however has a good managerial structure to handle human rights. The CEO Mike Smith realised the need to forge good relations with the banks customers, suppliers, and employees and is the visionary behind the bank’s commitment to human rights. Julie Bisinella the Group Head of Culture and Engagement oversees the institution’s approach to respecting people and community through collaborating with indigenous communities of Australia, financial inclusion of other Asia Pacific countries, employee diversity including women, and employee-customer engagement (Koulias, n.d, p. 5). The institution closely collaborated with the United Nations in coming up with the human right guiding principles that formed the ANZ framework. The institution then involved the services of Vanessa Zimmerman, a legal advisor of the professor who drafted the principles. This provided deeper insight into the values and strategies involved. In addition, it has relationship managers who ensure that the human rights of individual customers are observed and in consistency with the domestic and international laws. Specialist bankers who execute complex financial transactions such as lending to corporate customers then support the relationship managers (Koulias, n.d, p. 6). The two handle decisions such as lending money to a customer to construct a dam that has the potential to displace a community and infringe their right to livelihood. Lastly, a corporate responsibility team in each country tailors the institution’s principles to fit into the domestic law of the respective country because human rights applications differ across cultures. Training and Awareness ANZ provides training for its category purchase managers who deal in the Responsible Sourcing Program in all its global centres. The program deals with areas that the management deems risky such as human rights, social and environmental related fields in collaboration with the supply chain stakeholders. The program is also involved in the auditing of corporate social responsibilities of its suppliers to ensure that the social sustainability goals are in harmony. Another high-risk area in the financial sector is security and thus ANZ is collaborating with other security services partners in the Asia Pacific region to address human rights risks of the employees and supply partners (Koulias, n.d., p.11). ANZ also trains its specialist bankers and relationship managers to deal with customers. These training enable them to assess the customer’s awareness and management of social concerns (Osikuminu, 2013, p. 316). The institution recognises the risk involved in dealing with customers who do not appreciate social responsibility. Such customers can taint the image of the institution if involved in unscrupulous dealings thus the need to have trained employees (Koulias, n.d. p. 12). Policy The institution is a signatory of the Global Compact Network Australia (GCNA) and the United Nations Global Compact (UNGC). The UNGC lays out ten principles that the institution adheres. The principles relevant to human rights include respecting and supporting international human right laws, non-compliancy with human right abuses, addressing human rights infringement promptly, and the responsibility to uphold International Labour Organisation’s Declaration on Fundamental Principles and Rights at work and the International Bill of Human Rights (Koulias, n.d. p, 6). To ensure that all stakeholders adhere to the above principles, the institution deployed a corporate responsibility team in every country who translated the bank’s human rights standards into various languages such as Indonesian and Vietnamese. The institution also reviewed over 200 previously held people policies and harmonised them to approximately 100 policies. These new policies are now applicable globally. They cover employee benefits such as annual leave, harassment, and equal opportunity entitlement (Koulias, n.d, p. 10). To address its business customers, ANZ has implemented Sensitive Sector Policies. The external stakeholders to cover social risks formulated these policies in line with the product and services offered at ANZ. Through these policies, ANZ encourages customers to improve their social responsibility, observe international standards, and apply a balanced approach to managing the social risks. It liased with the Uniting Church of Australia for example, and took a stand not to finance the purchase of controversial military equipment. To strengthen these policies, the institution trains relationship and specialist managers as explained above (Koulias, n.d, p.11). The Global Sourcing Policy seeks to form a common basis for the over 15,000 global suppliers by outlining principles that govern the procurement personnel involved in external outsourcing. The Supplier Code of Practice outlines the expectations of conduct for the institution’s suppliers. To ensure that the policies are applied, ANZ trains Category Purchase Managers as explained above (Koulias, n.d, p. 10). Goals and performance ANZ has operations in 32 countries, serving 400,000 shareholders and over 15,000 global suppliers and thus its goal is to operate profitably and at the same time responsibly. The goal stems from the various international human right laws it is partisan to such as United Nations ‘Protect, Respect and Remedy’ Framework and Guiding Principles on Business and Human Rights (Guiding Principles). Achievable indicator protocols are used to show whether the goals set have been achieved after a financial period (Fonseca, McAllister, Fitzpatrick, 2012, p.2). Non-discrimination The goal is to reach 40% women representation at the managerial level and in the recruitment and talent program. The company achieved 38.1%, 52%, and 44% women representation at the managerial level, graduate program, and generalist banker’s program respectively in 2012 (Brown & Nash, 2012, p. 13). Investment and procurement practices The goal is to report progress of the Human Rights Statement and the Sensitive Sector Lending Policy. The company managed to roll out the human rights program to all staff therefore a record rate of 100%. ANZ in New Zealand was 3% behind the second placed bank pushing it to number four in 2012 (Brown & Nash, 2012, p.10). Indigenous rights The goal is to provide 230 positions to marginalised communities. The company managed to employ 13 indigenous staff and 65 indigenous trainees (Brown & Nash, 2012, p.10). Monitoring, follow up and remediation ANZ has adapted the Reputation Risk Radar. This is a tool that helps monitor the social and governance issues involving a business customer. It enables detection of problems at an early stage and the relevant follow up action follows (Risk management). A supplier verification program risk-based approach monitors the suppliers. This means that an external audit is carried out on ISO 26000 specifications to assess the supplier’s risk. In addition, the suppliers are also given a self-assessment tool to enable them assess their performance at will. If suppliers fail to meet the ANZ standards, the institution collaborates with the supplier a remediation program to improve within a one-year period. The contract is reviewed if the supplier fails to comply (A global approach to responsible sourcing). Assessment of the implications on the supply chain Human rights issues differ across various states in Australia. For these reason uniform implementation across the supply chain is difficult. The business customer and supplier practices are a new practice and are thus most difficult to implement. The human rights issue is also heavily politicised and new policies receive resistance. Training on the human rights support modules is also proving difficult, as the stakeholders on the supply chain are reluctant. Focusing on human rights issues is also challenging due to the dual role of trusted advisor and service provider. The staffs are finding it difficult to balance the two roles (Koulias, p. 13). On the other hand, the management support of the program has greatly helped to increase awareness on human rights. The collaboration between different stakeholders has also strengthened the approach and more suppliers are warming up to the idea. According to Rasche (2012, p. 683) multi-stakeholder approach to social responsibility solidifies the overall industry and makes it easier for other players to contribute towards the same. By application of the Sensitive Sector Policies, the institution has successfully managed to construct a dam worth AU$ four billion. The dam displaced over 4,600 people. However, ANZ resettled them without infringement of their human rights. Recommendations The institution has very good policies on human rights however; there is no concrete evidence on the results of such policies. The company therefore needs to match their words with actions. ANZ needs to collaborate more with domestic human rights bodies. From the study, it is evident that the institution concentrated on the international laws. Collaboration with the local bodies will help sell the idea more to the customers and suppliers when they realise that the efforts are nationwide. According to ANZ’s Responsible Sourcing Manager, currently the employees lack incentives to perform. Implementation of the program involves creating awareness among customers. This necessitates assessment and teaching of which is an added responsibility. The management should therefore formulate an incentive scheme for the employees to give them morale. Conclusion The global reporting initiative provides a good framework for ANZ critically assess its social considerations. It provides a critical and wholesome analysis from the management approach, the goals and performance, organisational responsibility, policy considerations, training and awareness, monitoring, impact assessment, and monitoring, follow up and remediation. ANZ future looks bright following the bold policies and procedures it has in place. If all stakeholders adapt the program, it will serve to strengthen the industry. References A global approach to responsible sourcing, 2013, viewed 17 June 2013, http://www.anz.com/resources/d/5/d5c64f0047508cdab7c2bff55bff9ae9/ANZ_Global_Approach_Sourcing.pdf?CACHEID=d5c64f0047508cdab7c2bff55bff9ae9. Bessel, S 2011, Influencing international child labour policy: The potential and limits of children-centred research, Children and Youth Service Review, vol. 33, no. 4, pp. 564-568. Brown, G & Nash, J 2012, ANZ Corporate responsibility report: Interim report, viewed 17 June 2013, . Fonseca, A, McAllister, ML & Fitzpatrick, P 2012, Sustainability reporting among mining corporations: A constructive critique of the GRI approach, Journal of Cleaner Production, pp. 1-14. Harvey & Richey 2011, Global supply chain management: The selection of globally competent managers, Journal of International Management, vol. 7, no. 2, pp. 105-128. Koulias, C n.d., Building relationships you can bank on – ANZ’s approach to promoting the responsibility to respect human rights in its business relationships, pp. 1-18. Our approach to sustainable sourcing, 2013, ANZ, viewed 17 June 2013, . Rasche, A 2012, Global policies and local practice: Loose and tight couplings in multi- stakeholder initiatives, Business Ethics Quarterly, vol. 22, no. 4, pp. 679-708. Risk management, 2013, viewed 17 June 2013, < http://www.anz.com/about-us/corporate-responsibility/more-mike/risk-management/>. Osikominu, A 2013, Quick job entry or long-term human capital development? The dynamic effects of alternative training schemes, Review of Economic Studies, vol. 80, pp. 313–342. Seuring, S & Muller, M 2008, From a literature review to a conceptual framework for sustainable supply chain management, Journal of Cleaner Production, vol. 16, pp. 1699–1710. Supplier code of practice, 2011, ANZ, viewed 17 June 2013, . Sustainability Reporting Guidelines, 2011, GRI, viewed 17 June 2013, . Read More