Improving CSR risk management during the sourcing process
Compliance with the Responsible Sourcing Charter
Since April 2017, the CSR clause included in all contract templates of the Sourcing Division in France sent to suppliers invited to tender includes a reference to the Responsible Sourcing Charter. This charter is a joint initiative by French companies of the "Banking & Insurance" sector1 who want to associate their suppliers in the implementation of due diligence measures in their Corporate Social Responsibility initiatives (CSR).
The mutual commitments provided in the Responsible Sourcing Charter are based on the fundamental principles of the UN Global Compact, in the field of human rights, working conditions, the environment and the fight against corruption.
The Know Your Supplier plan
Since May 2020, the Know Your Supplier (KYS) checks implemented as early as 2016 by the Sourcing Division with suppliers in their supplier relationship management program, have been strengthened and extended to all the suppliers of the Group who represent significant spending or provide critical services. Suppliers are evaluated against international standards and those of the Societe Generale group relating to:
- regulatory risks due to non-compliance with international regulations (relating to money laundering and terrorist financing, sanctions and embargos; fight against corruption and influence peddling; the duty of care Law of 27 March 2017 and the UK Modern Slavery Act of 2015, etc.);
- reputational risks on environmental & societal issues, particularly those related to respect for Human Rights and governance.
The operational risk is also evaluated through the assessment of suppliers' financial situation and default risk.
In addition, for the most critical suppliers2, an assessment of performance in the areas of the environment, social practices, business ethics and subcontacting by an independent third party is also required.
Introduction of mandatory environmental and social criteria in Requests for Proposals
In 2006, the Group designed the first map of environmental and social risks (E&S) to assess the intrinsic CSR risks of every sourcing category. A global revision of this map of E&S risks was carried out between 2017 and 2018 in consortium with 3 other French banks and the support of a specialized consulting firm. This map covers more than 150 sourcing sub-categories. Four levels of risk have been defined: low, moderate, high and very high. To mitigate and control the risks when purchasing products or services pertaining to risky categories, the Group includes environmental and social requirements in the requests for proposals when it is appropriate and according to the risks identified in the map. The minimum weighting of E&S criteria used to select suppliers can vary from 5% to 15% for very-high risk categories such as Waste management and building Works.
Audits and/or corrective action plans in the event of underperformance
The Sourcing Division requires its most risky suppliers to engage in continuous progress and provides support in the implementation of corrective action plans. Since 2015, on-site CSR audits can also be triggered for some suppliers. These audits are performed by specialising external providers and are the starting point for the implementation of closely monitored corrective action plans.
As an example, in 2024 the Group undertook four supplier audits jointly with its banking sector peers. This sector-based approach meets the recommendations set out in the duty of care law. These four CSR audits were conducted on strategic or major suppliers for activity across banking networks.
Trust and sound billing practices to optimise payment times
As part of our Corporate Social Responsibility (CSR) commitment, we are keen to promote responsible business practices in the relations we have with our suppliers.
As such, we strive to pay our invoices as early as possible in accordance with the contractually agreed payment deadlines, and in accordance with applicable laws.
Our “No PO, No Pay” policy (we only pay an invoice if it is accompanied by a purchase order reference), as well as invoices being sent directly in electronic format, are key elements that help improve the efficiency of payments to our suppliers.
We encourage dialogue with our suppliers to quickly resolve any payment difficulties and ensure continuous improvement of our practices.
Inclusion of a CSR clause in agreements
A CSR clause is included in all the contract templates of the Sourcing Division in France and gradually deployed internationally. Through the clause, the supplier agrees to comply with the requirements laid out in the Code of Conduct and the Responsible Sourcing Charter, and to produce a non-financial evaluation (targeted suppliers only). The CSR clause also specifies that Societe Generale reserves the right to conduct supplier CSR audits.
Raising the buyers' awareness on CSR issues
A specific "Responsible Sourcing" course is included in the internal training programme for newly employed Sourcing Function buyers.
In addition, all the buyers of the Sourcing Division have CSR targets in their annual roadmap.
1On April 1st, 2017, signatories are: ALLIANZ, CNP ASSURANCES, CREDIT AGRICOLE S.A., NATIXIS, and SOCIETE GENERALE. the updated list of signatories of the Charter, as well as the Charter itself, are available on the website of every signatory.
2Suppliers having a high reputational risk with Societe Generale, either due to their preferred business relations, or to the use of the Societe Generale brand in the products and/or services they offer.