Intergrating sustainability into the supply chain: Anglo American's journey

In 2008, Anglo American identified the need to effectively engage and integrate its supply chain to drive sustainable development.

They focused on a series of areas, including increasing workplace safety, upholding human rights within the supply chain and protecting worker rights.

This was the start of a journey which sought to inspire broader social change through driving influence with suppliers.

Anglo American were driven by a very simple vision: its entire supply chain embracing and sharing its commitment to sustainable development.

To achieve this vision Anglo American created and followed a multi-step process.

Leadership and resourcing

The identification of company-wide sponsors, experts and interested stakeholders was a first critical step. Through a thorough consultation, which also brought in external experts, an overall approach was agreed and commitment made around resourcing an internal “Supply Chain Sustainable Development” (SCSD) team.

The Journey Model

With a project team in place, a Journey Model was developed. This was inspired by a similar tool in use for safety risk management, already familiar to Anglo American management.

The journey model was formulated by benchmarking industry peers, index requirements and leading companies in other industries. It sets out management indicators in progressive steps, from Basic through Reactive, Compliant and Pro-Active stages to the final status of Resilient.

Policy and Code

The development of the sustainable development codes and policies represented major milestones, as they provided internal and external clarity on the ambitions and scope of the approach. The codes were developed against recommended standards including the International Labour Organisation (ILO).

Integration into Procurement Practices

A key challenge in any supply chain is to integrate sustainable development into the strategic decision-making of category teams and the procurement processes. A transformative approach was needed to integrate sustainability as a measure into the global supply chain.

Performance Appraisal

To ensure the SCSD approach was being put into practice, indicators were incorporated into the supply chain’s Balanced Score Card which is regularly reviewed by the supply chain leadership team and linked to the employee bonus scheme.

The initial indicators were basic, such as whether suppliers had been informed about the policy and code and these will become more sophisticated as internal and supplier capability increase.

Supplier Engagement

As part of the supply chain transformation, contracts in key categories were reviewed and renewed, including with new suppliers in emerging economies, such as China. This provided an opportunity to ensure that SCSD concerns were included in this process.

The first steps taken by Anglo American, was to categorise the organisations large number of suppliers according to risk and then identify what sort of action would be needed to obtain SCSD information from suppliers.

This was achieved by:

  • Informing suppliers of policies and procedures through contracts and online resources.
  • Assessing suppliers through a compulsory Self Assesment Questionnaire (SAQ).
  • Verifying suppliers through assessment and audits.
  • Developing corrective actions for suppliers if they fell short of standards.

An escalation procedure is in place for where improvements are not made, or are made inadequately, and it is clear that Anglo American are willing to take such action should it be required.

Reporting

Internal reporting on the SCSD program is contained within the annual Sustainable Development Report. External reporting includes the DJSI, ICMM and various other indices.

Looking ahead

While Anglo American leads the SCSD approach within the mining industry, there is a need to evolve the programme in order to drive further external acceptance of the approach and increase the scalability.

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