Treating suppliers fairly

Part of our corporate responsibility involves treating our suppliers fairly and using our purchasing power to make sustainable procurement decisions.

Our supply chains

We use a high number of suppliers, ranging from small and medium-sized enterprises (SMEs) to multinational corporations, who in turn have their own suppliers.

Approximately two thirds of our procurement spend falls into a generic services category – including mailing, marketing, security services, debt recovery, credit scoring and professional services (e.g. legal and accountancy). Our second largest spend relates to our IT infrastructure (hardware, software and support).

Our corporate procurement policy states that our procurement processes “must involve due consideration of the corporate responsibility practices of the supplier to ensure that there are no conflicts with group culture, relevant policies and the group’s core values”. The group’s corporate human resources policy supports this, ensuring the respect of all fundamental human rights in the conduct of the group’s business, and that we remain guided by the provisions of the United Nations Universal Declaration of Human Rights and the International Labour Organisation’s core standards.

Our procurement teams assess the CR performance of our direct suppliers using a self-assessment questionnaire. This enables us to manage risk, and engage with them to ensure that they comply with our policy requirements and meet legislative requirements such as the Modern Slavery Act.

Prompt payment of suppliers

We are committed to making prompt payments to our suppliers as we recognise that late payments can cause serious cash flow problems, especially for small businesses. We endeavour to pay our suppliers in accordance with agreed payment terms – which are individually negotiated with each supplier and typical of those in the wider market.

In 2015, the group became a signatory of the Prompt Payment Code. This code sets out standards and best practice for payment and is administered by the Chartered Institute of Credit Management. Compliance with the principles of the code is monitored and enforced by the Prompt Payment Code Compliance Board. The code covers prompt payment, as well as wider payment procedures. Signatories to the code undertake to pay their suppliers within a maximum of 60 days and work towards adopting 30 days as the norm.

In 2016 the group's compliance with the Prompt Payment Code was 96%.

Assessing the CR performance of suppliers

The procurement teams within our subsidiary businesses assess the CR performance of the suppliers they engage with using a self-assessment questionnaire. This questionnaire is sent mainly to prospective suppliers at the ‘prequalification’ and ‘invitation to tender’ stage of the procurement process, although it is also sent to existing suppliers in some instances. The issues covered by the questionnaire include both environmental and social areas, including management of their supply chain.

The results of the questionnaires allow us to identify and act upon any potential sustainability risks, meet our requirements under the Modern Slavery Act, as well as to select products and services which have positive social and environmental impacts. The information is analysed to produce a score which is factored into procurement decision making, and helps us raise awareness of our CR commitments with suppliers and also improve their performance.

During 2016, the Consumer Credit Division’s procurement team launched an intranet that will enable all the data collected from suppliers (including CR, data protection and information security) to be recorded and tracked in one place.