RESPONSIBLE BUSINESS CONDUCT SUSTAINABILITY REPORT 2019 – BOSKALIS OUR SUPPLY CHAIN Our relationships with our suppliers are a fundamental element of our business success. We set high standards for our suppliers to meet and our expectations of their environmental and social performance are covered in our Supplier Code of Conduct. Each year we perform a scan at a selection of our contracted suppliers to monitor compliance with the Supplier Code of Conduct. Our central procurement office maintains relationships with approximately 1,502 direct suppliers. Of these, 74% are based in the Netherlands, 23% in other European countries and 3% outside Europe. The number of our suppliers varies from year to year based on the profiles of our current projects. In 2019, 260 of our suppliers were strategic partners, who together account for around 90% of central purchasing volume. This is fewer strategic suppliers than the 279 we had in 2018. HOW WE SELECT AND WORK WITH SUPPLIERS Besides selection criteria such as quality, delivery reliability and price, our central procurement department requires strategic suppliers to sign and comply with our Supplier Code of Conduct. Our approach incorporates the principles of the Dutch Expertise Network for Procurement and Supply Management (NEVI) Code of Conduct, which helps procurement professionals deal with the ethical dilemmas they face as part of the procurement process. SUPPLIER CODE OF CONDUCT Our Supplier Code of Conduct sets out our expectations of suppliers’ environmental and social performance. It mirrors our own General Code of Business Conduct, and is an integral part of our General Purchasing Terms and Conditions and of central procurement contracts. On signing a contract, suppliers commit themselves to the Supplier Code of Conduct. In 2019, 81% of our strategic supplier spend was subject to scans. In addition to the Supplier Code of Conduct, we work with our suppliers on a number of collaborative sustainability initiatives, such as: research, validation and implementation of cleaner engines environmentally friendly fuels energy savings sustainable dismantling of our vessels, and cradle-to-cradle and recycling concepts. Download the Supplier Code of Conduct and our General Purchasing Terms and Conditions from our corporate website.
IMPROVING SUPPLIER PERFORMANCE Boskalis commissions a third party to conduct annual scans at a selection of our contracted suppliers to verify compliance with our Supplier Code of Conduct. This is in addition to the normal pre-qualification process suppliers must complete. We believe this dialogue with our suppliers facilitates their compliance with our standards. The procedure comprises a sustainability questionnaire, an audit and a risk assessment result. The reporting format is based on the socially responsible procurement method of the Chartered Institute of Purchasing and Supply. IMPLEMENTATION SCANS This process involves a questionnaire based on our Supplier Code of Conduct, an onsite audit and a risk assessment. If concerns are identified at our suppliers, we use the results to encourage improvement in sustainability conduct. If there is insufficient progress, this can lead to termination of our relationship with the supplier. 2019 IMPLEMENTATION SCAN RESULTS This year 20 suppliers were reviewed. Of these, 15 were new suppliers and 5 were previously reviewed suppliers. This brings the total number of suppliers scanned to 118. Of the recurring visits we found that 4 suppliers had moderately or significantly improved their risk profile since our earlier scan. One supplier showed a slightly lower level of improvement but was considered within acceptable levels. As well as the overall risk assessment for each supplier, we receive a narrative report from our third-party auditors. This covers the steps our suppliers are taking to produce sustainable products or services themselves and how they are tackling the negative impacts in their production processes, such as their use of renewable energy. The reports also indicate how our business partners are ensuring sustainability with their own suppliers. In this way, we gain a more complete sense of risks and opportunities further up our value chain and the potential for closer business relationships with our suppliers in the future.