Driving ESG change in our supply chain

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Our firm

Driving ESG change in our supply chain

We support our suppliers to accelerate environmental, social and governance action.

Working with key suppliers as part of our Sustainable Procurement Programme, we are driving change in their organisations and beyond.

With 1,800 active suppliers, the impact and reach we can have if we harness our influence is vast. Our Sustainable Procurement Programme is ESG-focused and backed by science-based targets. It drives improvements in areas such as sustainability and inclusion, diversity and equity, by encouraging our supplier organisations to become more transparent on their ESG performance and to make commitments to improving this performance. To support our suppliers on this journey, we share our own insights on best-practice and run training sessions too.

Championing the transition to Net Zero

Environment

When setting our own science-based targets, we made a bold commitment to significantly reduce the carbon impact of our supply chain. Our supply chain accounts for a significant proportion of our firm's environmental footprint and we know we have a responsibility to help our suppliers on their journey and work collaboratively with them to share best-practice.

We ask our suppliers to report their carbon data, helping us to measure, and encourage, progress. In 2021, there was a 24% increase in supplier responses to the annual CDP disclosure. In same year, were named on the CDP Supplier Engagement Leaderboard, recognising our efforts to reduce carbon emissions and minimise energy consumption throughout our supply chain.

To help share best-practice, we facilitate roundtables, workshops and webinars for organisations in our supply chain. These have covered: the importance of reducing emissions; what good reporting looks like; and the approach to setting science-based targets. We also facilitate events for suppliers and industries that need extra support - for instance, in 2020, we brought together suppliers from across the hotel industry to share ideas on the collective action they could take to tackling the environmental impact of their sector.

Percentage of suppliers who have committed to set a Science-Based Target / 49%* 2021 CDP supplier disclosures (2020: 42%)
Percentage of suppliers who reduced their emissions last year / 70%* 2021 CDP supplier disclosures (2020: 46%)
Percentage of suppliers reporting an emissions reduction initiative / 77%* 2021 CDP supplier disclosures (2020: 69%)

*Based on 88 supplier responses

Inspiring positive environmental change

Since working with KPMG, we've learned what it means to be part of your business – including shared values and shared commitments. Every year, we complete KPMG's CDP questionnaire to monitor our environmental impact.

As a result of KPMG's influence, going green has become a board level initiative, with CEO sponsorship, project governance and science-based targets (soon to be released). As a Group, we have calculated our environmental impact across scope 1, 2, and 3 emissions sources in the UK and we have begun to rationalise our property portfolio to invest in eco-friendly infrastructure. In addition to carbon neutrality, we are also committing to greater education and communication for our 2,500 people as well as flowing commitments down to our own supply chain.

We have been inspired by KPMG's clear targets, project-based approach, and work with your value chain, as well as c-suite sponsorship and employee engagement on the ground.

Lorien / Human Resources Supplier

Social

Living Wage

We encourage our suppliers to pay a Living Wage salary and pursue accreditation and we are proud to have one of our colleagues as the Chair of the Living Wage Foundation Advisory Council. As an accredited Living Wage Employer, we require that sub-contracted and supplier staff working in KPMG offices are paid the applicable Living Wage or London Living Wage by their employers. Since the increase in Living Wage in November 2021, KPMG has been engaging with suppliers who provide personnel to work in our offices to confirm salaries have been increased in line with the update.

Inclusion, Diversity and Equity

We work with our strategic suppliers to create and promote inclusive environments. Our Sustainable Procurement tender questions and Supplier Code of Conduct reiterate our expectation on suppliers to promote inclusion, diversity and equity within their businesses.

Roundtable: Addressing racial inequality

Following the momentum of the Black Lives Matter movement in 2020, we organised our first roundtable on Addressing Racial Inequality. Focusing on seven of our most important Facilities suppliers, we explored the issue of Racial Inequality through a Facilities industry lens. In addition to representatives from each of the suppliers, KPMG subject matter experts and our relevant Sustainable Procurement Supplier Managers also attended.

Our suppliers were at different points in their journey, so for some, it was a great opportunity to learn from peers, whilst others provided useful insights on what had worked well in their business. Supplier Managers were then able to follow up with suppliers on an individual basis after the event to continue the conversation and learnings.

Following the positive response from the Facilities roundtable, we ran follow-on events for seven suppliers across our Professional Services, Technology and Travel industries. It was clear from the first event that to maximise discussion, the format of having smaller events that allowed all organisations to contribute was powerful and we will replicate this going forward.

Modern Slavery

As a professional services firm, our most significant risks in relation to modern slavery are in our supply chain.

99.4% of our procurement spend resides in the UK and the US. According to the Global Slavery Index, these geographies have a lower prevalence ranking for modern slavery, however we are acutely aware that slavery-like practices can and do occur in the UK and US in certain higher risk categories.

Of our six major categories of procurement facilities, technology and travel are exposed to the highest risks of modern slavery. The labour in these procurement categories tends to be base-skilled, manual labour and the workers tend to be vulnerable populations including migrant workers. These risks have been identified through our risk assessment processes and are managed through our rigorous due diligence procedures.

Suppliers that are rated as high and medium risk in the risk assessment process are subject to additional due diligence through a self-assessment questionnaire (SAQ). The SAQ is biannual and is based on the Modern Slavery Assessment Tool (MSAT) produced by the UK Government. The SAQ focuses on the key policies and procedures that suppliers have in place to identify, assess, and address modern slavery risk in their operations and supply chains. Of the 59 SAQ’s completed by our suppliers as part of our enhanced due diligence processes:

Suppliers with a Modern Slavery Statement (if required) / 100% * FY21
Suppliers with an Employee Code of Conduct / 81% FY21
Suppliers with a Supplier Code of Conduct / 73% FY21
Suppliers with Whistle-Blowing Mechanisms / 70% FY21

* Not all of our suppliers are required by law to produce a Modern Slavery Statement. Of those that are required to produce one, 100% confirmed they have met these legal obligations.

We are engaging with our suppliers who scored poorly in the SAQ to discuss their approach to modern slavery risk management further. Where necessary, we will provide these suppliers with recommendations on how to improve their modern slavery control environment.

Governance

Our policies Our Supplier Code of Conduct, which is underpinned by the United Nations Global Compact, describes the expectations we have of our suppliers to conduct business in a responsible manner. It is incorporated in our standard supplier terms and purchase orders. Suppliers are required to align their guidelines, policies, and practices with these expectations and to communicate and enforce the Code of Conduct provisions throughout their organisations and supply chains. If a supplier falls short of our standards, we will engage with them and provide recommendations on how they can improve their policies and processes. If a supplier fails to implement remediation processes within an acceptable timeframe, we will consider terminating the relationship.
Risk assessment and due diligence At the supplier selection stage, suppliers with estimated spend greater than £100k are requested to complete the Sustainable Procurement Questionnaire. Suppliers’ responses are reviewed and scored to assess the controls they have in place to mitigate potential risk, including of modern slavery. All suppliers also undergo adverse media screening at the on-boarding stage. Our suppliers, across all categories of spend, are risk-assessed into high, medium or low risk categories. Suppliers that are rated as high and medium risk are subject to additional due diligence through a biannual self-assessment questionnaire.
Training All members of our Procurement team receive Sustainable Procurement Practices training. This helps colleagues to understand the alignment of our sustainable procurement approach with our business strategy and our ESG commitments (Our Impact), and how their role within the Procurement team supports the achievement of these. The training covers our current sustainable procurement policies and processes, and our plans for evolving these in the future.
Internal governance The Sustainable Procurement Programme is led by our Chief Procurement Officer. Our Sustainable Procurement Steering Group, which comprises representatives from our Procurement, Corporate Responsibility and Inclusion, Diversity and Equity teams, oversees the implementation of the Programme. These members also represent the Programme on Working Groups, such as the Modern Slavery Working Group, which reviews the effectiveness of KPMG’s Modern Slavery Programme and drives forward our approach to tackling modern slavery.