Procuring responsibly

We work with our suppliers to acquire the right products and services that best meet our business needs in a cost-effective manner, while maintaining a high level of integrity and ethical standards.

Material Topic : Procurement Practices

Working in partnership

We understand that our responsibility lies beyond our operations and extends across our value chain. Our preferred suppliers are those who are ethical and committed to sustainable development, and share the same values as we have. Read more on our procurement practices.

For all major assets in Hong Kong, Mainland China, Australia and India, we purchased from 5,536 suppliers a total of HK$30.9 billion in 2017. Some 82% of this amount was from local suppliers in these four regions, supporting the local community, while meeting CLP’s business needs.

Strategic procurement

Guided by the CLP Group Procurement Standard (GPS), we have launched several strategic procurement initiatives in 2017 across the Group.

We conducted a comprehensive review of our third-party spend across products and services received, resulting in the formalisation of group-level categories of spend governed by Category Councils. Each Council is comprised of subject matter experts providing supply market insights and knowledge of business stakeholders’ future requirements. Category Business Plans are developed in consultation with internal business stakeholders to identify and realise group leverage opportunities, and achieve best value for CLP and for our customers.

The relationship with our suppliers is critical to our long-term business success and so we take a collaborative approach in regularly engaging with them across the different levels of our organisations. We have developed a Supplier Relationship Management (SRM) framework for our key strategic suppliers to jointly review delivery performance, continuous improvement and innovation opportunities. This enables us to strengthen and align our business relationships, mitigate supply chain risks, drive continuous improvements in the areas of Sustainability, Health, Safety, Security and Environment (HSSE), Quality and Innovation, and optimise value from a Group perspective.

In 2017, we also appointed a Director of Procurement for the Group to enable deeper analysis of our spend and better leveraging of our Strategic Relationship Management framework with key suppliers.

Material Topic : Supplier Social Assessment
Material Topic : Supplier Environmental Assessment

Responsible procurement

A significant share of our third-party spend is with local suppliers, which support the local community while meeting CLP’s business needs. They should be compliant with legal and business performance requirements and maintain internationally competitive pricing. All purchases performed should also be in line with CLP’s values as specified in our codes and guidelines.

We perform segmentation of the supply base annually, considering both CLP’s value of buy to our suppliers and the criticality of suppliers’ products/services to CLP’s operations, where sustainability is one of the critical aspects assessed. This supplier segmentation helps to identify CLP’s key suppliers. We have Supplier Risk Assessment and Supplier Relationship Management Frameworks, under which key suppliers are evaluated, based on various criteria including CLP’s value of buy to our suppliers, criticality of suppliers’ products/services to CLP’s operations, supply chain risk to CLP, as well as their sustainability capability. We then work collaboratively with the related suppliers to develop appropriate action and mitigation plans to address the identified issues or potential risks.

In the past year, we have assessed 78 key suppliers against sustainability requirements and conducted follow-up site visits with 3 key suppliers to verify responsible procurement practices.

In addition to existing suppliers, suppliers for critical projects awarded in 2017, which constitute the majority of our project bases in the year, are assessed on their relevant sustainability status and practices through self-declaration, tender evaluation, site visits or checks, and two-way performance reviews as appropriate. Based on project need, we define requirements on sustainability aspects including safety, health, labour practices, environment and quality, as applicable.

Our overall assessment and monitoring mechanisms have confirmed there no were significant risk findings related to our Responsible Procurement Policy Statement (RePPS) in 2017. No supplier relationship was terminated due to the assessment and monitoring result. Given the nature of our business, we collaborate with suppliers in managing environmental impact during operations. Our business operation involves construction and site work, for which subcontracting is a common practice in the industry. We have engaged some critical sub-contractors in Hong Kong to understand their sustainability status and practices in 2017, and will continue such engagements in 2018, with the aim of further uplifting their sustainability capabilities.

We keep abreast of the external trends and latest development on sustainable procurement, such as the ISO Guide on Sustainable Procurement (ISO 20400:2017), that provides guidance to organisations on integrating sustainability within procurement, for continuous improvement purposes. We also proactively seek opportunities to advocate responsible procurement to peer companies through organised practice and experience sharing activities.

In addition, we are committed to protecting the company’s intellectual property rights, as well as all applicable laws and regulations, including observing the intellectual property rights of our suppliers and vendors.