Sustainability along the HOCHTIEF supply chain
The procurement of material and subcontractor services plays an important role for HOCHTIEF: These accounted for total expenditure of EUR 17.4 billion in 2018—a proportion of 68 percent measured against the Group work done. In light of this, effective procurement processes are of great significance for the Group’s success. Sustainability criteria and transparency along the supply chain are becoming increasingly important too.
We have three questions on this subject for Nikolaus Graf von Matuschka, Member of the Executive Board of HOCHTIEF Aktiengesellschaft, who is also in charge of Corporate Responsibility.
Mr. von Matuschka, how well does HOCHTIEF know its partners?
We have already been working closely with many of our partners for years. Naturally, we know these suppliers and subcontractors very well. We carefully scrutinize potential new partners: At HOCHTIEF we take an integrated, multi-level approach which allows us to assess the performance of partners in advance. This includes a detailed prequalification process during which contractual partners must demonstrate that their products and services meet our economic, ecological and social standards. Owing to HOCHTIEF’s own growing requirements, and those of our stakeholders, as well as statutory provisions, we have set ourselves the goal of further increasing transparency along the supply chain, and enshrining sustainability even more deeply in procurement processes.
Are measures to achieve that already in place?
Yes, very specific ones. In 2018, for example, we launched a pilot project with the ratings agency EcoVadis—making us the first major company in the construction industry to do so. EcoVadis evaluates companies using the sustainability criteria of environment, labor and human rights, fair business practices, and supply chain.
As our first step, we are currently having our most important suppliers and subcontractors in Europe evaluated by EcoVadis. We are asking these key partners to participate voluntarily in the program. Where shortfalls are identified, we will be working with our partners to develop special measures known as corrective action plans. We get the sense that our partners are very interested, but that they also have great reservations in places. Our Procurement staff are having a lot of conversations, doing groundwork, and helping to win our partners over. In this way, we are making a very active contribution within the industry to promote an understanding of sustainability through dialog.
Is HOCHTIEF also pursuing a concrete goal?
Overall we are working with our partners, as well as within the industry, to achieve a shared understanding of sustainability. One building-block here is the Code of Conduct for contractual partners which we set out in greater detail in 2018. It contains an undertaking on the part of our partners to observe human rights, as well as labor, social and environmental standards, and to demand the same in turn from their contractors.
A solid evaluation of our partners’ performance is a prerequisite for choosing subcontractors and suppliers. At HOCHTIEF, this is based on internal assessment of performance on completion. These results flow into prequalification for future projects.
The sustainability evaluation of our partners by EcoVadis benefits our supplier and subcontractor management because, ultimately, it is also about measurability. In the medium term, we want to establish the CR performance of our partners as a fixed criterion for prequalification.