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For a company to fully understand its economic, environmental and social impact, it needs to understand the impact of, and the opportunities provided for, its supply chain.
It must be recognized that sustainability issues cannot be solved by any one company acting on its own. Instead, it takes a collective effort including with suppliers who have a critical role in addressing the major challenges facing society and the opportunities available to address these issues such as transitioning to a clean energy economy, reducing greenhouse gas emissions, reducing water usage and improving labor practices
We believe it is important to understand more about the social, economic and environmental performance of our suppliers, and we expect our suppliers to share our commitment to citizenship and sustainability.
We believe that, given its reach, the supply chain is an area where we have an extraordinary opportunity to streamline operations and reduce long-term costs, while simultaneously limiting our environmental impact and positively influencing social equality.
AT&T has established key supply chain sustainability goals reaching out to 2020 and 2025. This issue brief describes these goals.
- 2025 Target: Establish clear, agreed-upon industry sustainability metrics.
- PROGRESS: AT&T is currently working with organizations including CDP and QuEST Forum towards the establishment of common measurements for benchmarking, tracking and improving the performance of companies in the industry.
- 2025 Target: Promote the use of these metrics in industry sourcing.
- PROGRESS: AT&T suppliers are currently using CDP Supply Chain metrics to measure and report their greenhouse gas emissions. This is providing our company and the other participating companies the necessary means to benchmark supplier emissions and work with suppliers on making improvements.
- 2025 Target: Develop and follow an industry roadmap toward truly sustainable performance.
- PROGRESS: AT&T is moving its suppliers along an industry roadmap with CDP Supply Chain and QuEST Forum to continuously improve measurements, benchmarking and results in sustainable supplier performance.
- The C&S Principles of Conduct for Suppliers outline fundamental expectations for working with AT&T.
- The sustainability scorecards are based on key weighted data from the annual supplier surveys, and they increase the accountability of our suppliers. The scorecards use data that we have been gathering since 2009 with our annual surveys. Results are incorporated into the overall quality scorecards used in performance reviews with strategic suppliers.
- Officer-Level Supplier Sustainability Scorecards were introduced in 2014 that elevate visibility and motivate suppliers to improve sustainability performance toward our “80 by 2017” goal.
- AT&T is working with suppliers to assess their labor practices and human rights policies and performance.
- AT&T proactively works with our top suppliers on tracking and setting goals on their greenhouse gas emissions.
- AT&T is a member of the U.S. EPA SmartWay Transport Program. This helps us in our continued efforts to reduce transport-related emissions.
- AT&T’s standard materials and services purchase agreement template contains a clause specifically addressing citizenship and sustainability.
- AT&T trains contract managers, more than 200 sourcing professionals, about sustainability in the supply chain and is providing the tools necessary to engage our strategic suppliers on sustainable business practices.
- AT&T is working with industry groups on developing a sustainability measurement model that provides a data-driven process to empower companies to share and apply best practices.
- AT&T works with the Alliance for Telecommunications Industry Solutions (ATIS) to set industry expectations for network equipment energy efficiency.
- Working with suppliers, AT&T is using innovation to reduce size and environmental impact of packaging.
- DIRECTV has worked with its manufacturers to develop multipack solutions for its products, dramatically reducing the amount of packaging and reducing our logistics footprint.
- Annually, AT&T recognizes suppliers that are leading the way.
DIRECTV and AT&T
In 2015, DIRECTV and AT&T were operating as independent entities until the acquisition of DIRECTV by AT&T in July. AT&T has started to integrate the best practices of DIRECTV and its suppliers into the AT&T supplier framework and expects to include DIRECTV suppliers in AT&T’s common commitment to sustainability.
C&S Principles of Conduct for Suppliers
We outline our C&S expectations in our Principles of Conduct for Suppliers, which cover topics including sustainable business practices, diversity, conflict minerals, ethics and labor rights. Every year suppliers are required to acknowledge these principles as part of the annual supplier sustainability survey. Additionally, every new contract agreement with suppliers requires that they acknowledge the principles.
AT&T uses a Supplier Sustainability Scorecard that measures the performance of our strategic suppliers on their adherence to sustainable business practices. Suppliers must accomplish at least the following to achieve acceptable sustainability scores:
1. Create policies for at least these areas:
- Energy efficiency
- Environmental protection
- Health and safety
- Labor practices and human rights
2. Establish and publicize performance goals
3. Extend policies to their suppliers and assess them
4. Track, report and have goals related to greenhouse gas emissions
The sustainability scorecard is based on key data from the annual supplier surveys that have been conducted since 2009. The annual survey and scorecard represent about 80 percent of annual spend, and cover about 500 suppliers.
AT&T engages suppliers on sustainability at multiple levels including:
- Officers: We introduced quarterly officer-level supplier sustainability scorecards in 2014 that elevate visibility and motivate suppliers to improve sustainability performance. Scores of 80 or higher are considered good. We continue to work with suppliers to reach our “80 by 2017” goal.
- Global Supply Chain: Our team of professional contract managers also engages suppliers directly to improve their sustainability performance and build capacity. Our contract managers receive annual sustainability training.
- Business Units: Our business units (including real estate, fleet operations, technology operations and labs) engage our suppliers on a daily basis. Through these engagements, we encourage our suppliers to provide increasingly efficient and sustainable services and products.
With the annual assessments, scorecards and our direct engagement with suppliers, our suppliers continue to improve and in many cases excel in their performance. This is reflected by the increased average 2015 sustainability score for suppliers of over 74, which is up from 63 percent the previous year. We are on track toward our “80 x 2017” goal. We incorporate results into the overall quality scorecards used in performance reviews with strategic suppliers. Sustainability is part of strategic supplier assessments alongside other governance metrics including quality, financial viability, supplier diversity and business continuity.
Additionally, we gather data and sustainability information from CDP Supply Chain (https://www.cdp.net/en-US/Programmes/Pages/CDP-Supply-Chain.aspx) and from EcoDesk.
As reflected in the AT&T Principles of Conduct for Suppliers, we take issues around human rights and labor practices in our supply chain seriously.
AT&T addresses human rights throughout our supplier engagement. AT&T supply chain has developed a Supplier Human Rights and Labor Practices Program. As part of that program, suppliers accounting for 80 percent of our spend receive the AT&T Supplier Sustainability Assessment annually. Because we are a non-manufacturing service carrier, we look to our product manufacturers to demonstrate that they have rigorous human rights programs and labor practices in their manufacturing operations. The annual AT&T Supplier Sustainability Assessment discussed above is a key tool to obtain this important information. Specifically, our assessment requests suppliers to attest that they have policies that
- prohibit child labor,
- prohibit involuntary labor,
- protect freedom of association,
- prohibit discrimination,
- prohibit physical coercion,
- limit the number of working hours, and
- address wages and compensation.
The assessment also collects the following important information from suppliers:
- Global human rights and labor practice standards recognized by the supplier
- If the supplier has a formal audit process to enforce requirements in the facilities where they and their subcontractors manufacture products and equipment
- Whether the audits are performed by an independent third party
- The interval between audits
- The audit process documented corrective action and remediation process
- Whether corrective action plans include a process to ensure that violations do not reoccur
AT&T also communicates its human rights policy directly to suppliers, and expects them to recognize and abide by it. It is posted on AT&T’s Supplier Portal, along with other policies and materials that explain our supply chain sustainability approach.
AT&T continues to proactively work with our suppliers to advance sustainable business practices throughout our supply chain. An important part of this effort is our work with our top suppliers on tracking and setting goals for their greenhouse gas emissions:
- We have achieved and exceeded our goal that, by the end of 2015, a majority of spend with strategic suppliers would be with those who track greenhouse gas (GHG) emissions and have specific GHG reduction goals.
- We are on track to meet our goal that by the end of 2017, achieve an average score of 80 percent or higher for top suppliers on the balanced Citizenship and Sustainability Scorecard. At the end of 2015, the average score for top suppliers was more than 74 percent, which is up from 63 percent in 2013.
AT&T, working with CDP Supply Chain, annually reaches out to about 500 of its suppliers – representing approximately 80 percent of its spend – to report on greenhouse gas emissions. Using industry-accepted methods, we gather and analyze data on these suppliers’ emissions, reduction goals and progress. As a result, in 2014 we were able to report for the first time an estimate of our supplier emissions in our greenhouse gas emissions reporting.
Additionally, we score three key greenhouse gas criteria in our overall AT&T Supplier Sustainability Assessment and Scorecard — namely, whether the supplier: a) tracks its GHG emissions, b) sets GHG reduction goals, and c) reports to CDP. These scores roll directly into a supplier’s sustainability scorecard, which in turn is used with supplier evaluations. With the scorecards used as a measurement tool, suppliers are encouraged to improve performance in greenhouse gas emissions reductions as well as other key sustainability areas.
Use of minerals from the conflict zones of the Democratic Republic of Congo and surrounding areas is an important human rights issue that requires increased transparency in our supply chain. AT&T is a member of the Global Electronics Sustainability Initiative (GeSI) and participates in the Conflict Free Smelter Initiative (CFSI). AT&T also has signed on with the Private-Public Alliance (PPA) for Responsible Trade with the U.S. State Department. These organizations are developing standard processes to address issues relating to conflict minerals. Our Principles of Conduct for Suppliers address conflict minerals and confirm AT&T’s expectations that the products we sell will not contain conflict minerals that directly or indirectly finance or benefit armed groups. We reserve the right to suspend or terminate suppliers who fail to demonstrate commitment to this expectation. Read more about our efforts on conflict minerals.
AT&T strives to minimize the environmental impact of transportation by designing and optimizing its transportation and distribution network via route planning, consolidation and shipping full truckloads when possible. AT&T’s involvement in the SmartWay program requires us to benchmark and measure progress in our transport emissions management. This helps us further integrate energy efficiency, air quality and climate change initiatives into our transportation decision-making process. The program will also provide support to identify potential additional carbon reductions and cost savings opportunities in our distribution network.
AT&T views its participation in the EPA SmartWay program as an avenue to effectively reduce carbon emissions and to partner with carriers that have committed to reducing their carbon footprints. Within AT&T this work has included better route planning and transportation optimization, consolidation of network field technician deliveries, ensuring full loads and avoiding empty trips, and incorporating alternative-fuel vehicles. In 2015, more than 99.8 percent of the miles covered by AT&T Transportation Control Center were done by carriers that participate in the EPA SmartWay program. We also use SmartWay participation as a factor when evaluating potential carriers, and in 2014 increased the number of carriers that we use that participate in the program. To learn more, read about our company fleet and transportation initiatives.
DIRECTV also participates in the SmartWay program as a shipper. AT&T has started to integrate DIRECTV and its suppliers into the AT&T SmartWay program and expects to include DIRECTV suppliers in its supplier engagement report from 2016 moving forward.
All of our model supply chain-managed material and services agreements contain a standard Citizenship and Sustainability clause that requires the suppliers to align with AT&T’s Principles of Conduct for Suppliers, and to respond to sustainability-related information requests from AT&T. The clause is standard in all new master agreements as of 2011; AT&T has executed thousands of agreements that contain the clause. We also have several clauses in our contract library that cover sustainability considerations such as energy efficiency.
We train our contract managers – more than 200 sourcing professionals – about sustainability in the supply chain and are providing the tools necessary to engage our strategic suppliers on sustainable business practices. We focus on how the contract managers can work with suppliers to ensure that the suppliers respond to our sustainability assessment, with intention to help suppliers improve their performance and scores. As a result, we are seeing greater awareness and participation by our suppliers
Standardizing Supply Chain Sustainability Measurements
We are working with QuEST Forum on developing a sustainability measurement model that is focused on sustainability-driven business improvement and profitability. The model provides a data-driven process that empowers companies to share and apply best practices. The goal is to provide the industry benchmarking methodology with holistic sustainability measures to drive business improvements and control costs.
We continue to work with our major network suppliers to establish goals to improve the efficiencies of next-generation network equipment and we work with the Alliance for Telecommunications Industry Solutions (ATIS) on using the Telecommunications Energy Efficiency Ratio (TEER) metric. We are already seeing results collaborating with strategic network suppliers with TEER baselines and goals in our agreements.
AT&T continues to address packaging opportunities in its supply chain for innovative solutions to both reduce packaging materials and environmental impact. For more on packaging reductions, please see the packaging section in our Product Life Cycle issue brief.
The AT&T Supplier Sustainability Awards honor suppliers that make outstanding contributions to our sustainability efforts. In 2016, we honored four suppliers that helped us advance our sustainability commitment in 2015 in the areas of process improvement, energy efficiency, the environment and packaging:
- Fujitsu – Process Improvement
Fujitsu provided AT&T with significant network energy savings through the release of 2 new transponder modules using Green Chip DSPs. DSPs are Digital Signal Processors. These modules boost network capacity and lower power requirements, which saves costs.
- Optelligent – Energy Efficiency
We installed Optelligent’s Enterprise Building Management System solution. This improved energy efficiency and cut maintenance costs through the remote monitoring of equipment at critical sites.
- Fortune – Environmental
In 2015, we chose Fortune Group to support transportation, recovery and recycling strategy. They helped process 54 million pounds of AT&T electronic waste..
- Motivating Graphics – Packaging
Motivating Graphics improved the environmental sustainability of our GoPhone packaging. They helped with plastic reduction, better transportation cubic efficiency, U.S. kitting and reducing overall carbon footprint.
Read more about previous AT&T Supplier Sustainability Awards winners:
- 2015 Supplier Sustainability Awards (click here)
- 2014 Supplier Sustainability Awards (click here)
- 2013 Supplier Sustainability Awards (click here)
- 2012 Supplier Sustainability Awards (click here)
- 2011 Supplier Sustainability Awards (click here)
Updated on: Aug 1, 2016