G1-2 – Management of relationships with suppliers

🗂️ ESRS G1 Business Conduct, page 4

The undertaking shall provide information about the management of its relationships with its suppliers and its impacts on its supply chain.
The objective of this Disclosure Requirement is to provide an understanding of the undertaking’s management of its procurement process including fair behaviour with suppliers.
The undertaking shall provide a description of its policy to prevent late payments, specifically to SMEs.
The disclosure required under paragraph 12 shall include the following information:

(a) the undertaking’s approach to its relationships with its suppliers, taking account of risks to the undertaking related to its supply chain and of impacts on sustainability matters; and

(b) whether and how it takes into account social and environmental criteria for the selection of its suppliers.

Application Requirements

AR 2. For purposes of this standard, management of relationships with the undertaking’s suppliers may include the following:

(a) how the undertaking’s practices, including activities to avoid or minimise the impacts of disruptions to its supply chain, support its strategy and risk management;

(b) training of the undertaking’s procurement/supply chain workforce on engagement and dialogue with suppliers as well as incentives of its procurement workforce including whether such incentives refer to price, quality or sustainability factors;

(d) the inclusion of locally based suppliers in its supply chain and/or suppliers with certification;

(e) how the undertaking’s practices deal with vulnerable suppliers;

(f) the undertaking’s targets and actions with regard to communication and management of relationships with suppliers; and

(g) how the outcomes of these practices are evaluated, including supplier visits, audits or surveys.

AR 3. ’Vulnerable suppliers’ includes suppliers that are exposed to significant economic, environmental and/or social risks.