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Exemplar: BNZ

This exemplar shows how a business can influence its upstream value chain.

BNZ is committed to sustainability to help create a high-achieving New Zealand – now and for the future. For BNZ, sustainability is about helping New Zealanders be good with money, working with communities, and preserving the planet for future generations. It aims to deliver sustainability in everything it does, most importantly in its relationships with customers, people, across the supply chain, the environment and with the communities it operates in.

Improving upstream sustainability

BNZ has been engaging with suppliers about sustainability issues for many years. But BNZ wanted to find a way to collaborate more with suppliers with the potential to have a major impact on the bank's sustainability. Its aim was to reduce its supply chain risk and look for new ways to create value.

In 2010 it introduced a way it could actively support suppliers to assess their own value chains and implement efficient and effective change.

Figure 1.  BNZ's value chain

BNZ's value chain

BNZ developed the Supplier Sustainability Principles which it has been using, and improving, ever since. The Supplier Sustainability Principles – now used by the wider National Australia Bank (NAB) Group as well – focus on BNZ's upstream value chain. In mid-2014 BNZ ran a Supplier Sustainability Workshop, bringing together suppliers who were not yet compliant with the Supplier Sustainability Principles and those who were already demonstrating best practice.

The focus was on environmental management, setting environmental targets and supply chain management. The workshop acted as an engagement tool, allowing peer to peer information sharing, rather than BNZ dictating how things should be done. Creating an environment where suppliers could learn from other suppliers who had started out in a similar position – in essence questioning the value of sustainability to their business – was incredibly useful. For many companies the road to sustainability can seem a daunting one, and knowing that tools and support exists can help them take the first step.

Opportunities Risks

Increase understanding of sustainability issues within the supply chain.

Improve the sustainability performance of suppliers.

Give recognition to those suppliers doing fantastic things in the sustainability space.

Upskill BNZ's own relationship managers on the importance of sustainability.

That suppliers wouldn't find the speakers relatable or compelling.

That suppliers wouldn't attend due to prioritising other things.

That the journeys and messages of speakers wouldn't be relevant to the business model of suppliers attending.

Solutions Key Success Factors

Continued development and improvement of Supplier Sustainability Principles.

Hosted a workshop bringing together suppliers not yet compliant and those demonstrating best practice.

Held follow-up meetings with key suppliers to support further action.

Engaged suppliers who debated and discussed the issues in the session.

Improved supplier performance off the back of the session.

Speakers found the exercise a good use of their time.

Results

Suppliers left the session with a better understanding of the importance of sustainability and with practical tools for embedding it into their business.

A small group of suppliers were engaged in the workshop, which allowed open discussion and dialogue to take place. Speakers represented a range of businesses – from a large organisation with a big carbon footprint that was well down the sustainability road to a small organisation that had only recently embraced sustainability, but was already seeing the benefits. This ensured that the suppliers who attended could see that sustainability isn't just a big company issue – it is just as important for small companies with small impacts.

Feedback after the workshop from the participants was positive and, following the workshop, BNZ met with some of the suppliers who were keen to discuss their particular areas of non-compliance. BNZ regularly monitors suppliers through a due diligence process and since running the workshop has seen a number of improvements in the sustainability of its upstream value chain.

Example

Russell Investments was one of the suppliers who attended the workshop. Head of Investor Services, Fiona Lintott said: "I found the workshop particularly helpful in not only meeting our obligations as a supplier to BNZ but also in assessing our workplace in terms of sustainability. Listening to other suppliers and the practical steps that they took was definitely the highlight. We have appointed a staff member to look at improving the office environment and working with our suppliers in terms of their sustainability. Without the workshop I doubt little, if any progress would have been made."

As a result of the workshop and the subsequent changes made by Russell Investment, the company was upgraded to compliant for all Sustainability Principles in March 2015.