Responsible supply chain management

Responsible supply chain management

We embed environmental and social standards into our sourcing and procurement activities. Our responsible supply chain management (RSCM) framework is based on identifying, assessing and monitoring supplier practices in the areas of human and labor rights, the environment, health and safety and anti-corruption, in line with our commitment to the UN Global Compact and the UBS Environmental and Human Rights Policy.

We aim to ensure that our social and environmental values are being followed throughout the supply chain. Since 2008 a firm-wide guideline has provided systematic assistance on identifying, assessing and monitoring supplier practices in the areas of human and labor rights, the environmental protection and corruption. A central component of this guideline is the UBS Responsible Supply Chain Standard to which our direct suppliers are bound by contract. The standard defines our expectations towards suppliers and their subcontractors regarding legal compliance, environmental protection, avoidance of child and forced labor, non-discrimination, remuneration, hours of work, freedom of association, humane treatment, health and safety and anti-corruption issues. 

We identify high-impact suppliers of newly sourced goods or services based on their provision of goods and services that have either a substantial environmental and social impact or are sourced in markets with potentially high social risks. Such high-impact suppliers are requested to fulfill further requirements and are assessed against the UBS Responsible Supply Chain Standard. If this assessment reveals any non-compliance with our standard, UBS defines and agrees, together with the supplier, on specific improvement measures which we monitor. Lack of improvement may lead to the termination of the supplier relationship. We also regularly screen active suppliers as part of our environmental and social risks process.

The framework is operated by experienced and specifically trained procurement and sourcing specialists, supported by a centralized team of responsible supply chain management experts.

In 2013, we refined and strengthened the RSCM framework by introducing an impact assessment of newly sourced goods and services and accordingly trained our procurement and sourcing specialists globally. Within this new framework, we assessed and categorized all purchased goods and services with regard to potential environmental and social impacts along their lifecycle. From this categorization, we define the potentially high-impact suppliers.

Our screening showed that 197 suppliers of newly sourced goods or services have potentially high impacts. These suppliers were requested to conduct a self-assessment on their responsible management practices with corresponding evidence. Actual and potential negative impacts that have been considered in the impact assessment of purchased goods and services included:

  • Adverse environmental impacts due to inefficient use of resources (e.g. water, energy, biomass) and emissions during the lifecycle of the product
  • Hazardous substances, emissions, pollutants and limited biodegradability of products, adversely affecting people and the environment
  • Unfair employment practices, e.g. low wages, excessive overtime, absence of occupational health & safety measures
  • Risks for consumer health and safety, e.g. low indoor air quality, inappropriate warning signage
  • Procurement and use of materials with a strongly negative environmental and/or social impact during complete lifecycle, e.g. wood from illegal or unsustainably managed sources
  • Insufficient management of subcontractors regarding sustainability aspects

As a result of our assessments, 23% of the assessed direct suppliers were identified as in need of improving their management practices. Specific remediation actions were agreed with all of them and the implementation progress has been closely monitored.

We also screened all our significant active suppliers for environmental and human rights issues and 103 suppliers with potential material risks were referred to a specialized environmental and social risk unit for enhanced due diligence. In 2013, only one UBS supplier relationship was terminated as a result of RSCM assessments. This can partly be related to the fact that we assess the supplier's potential risks before signing a contract.

Case studies

Hong Kong local offices rely on a local printing company for a wide range of printing services. An assessment conducted along the UBS RSC Standard revealed that this company only showed limited commitment towards actively managing the social and environmental impacts of its operations. Based on these findings, UBS and the supplier agreed on an improvement process, which, inter alia resulted in a public commitment of the supplier to maintain Corporate Social Responsibility. This commitment will enable UBS and local stakeholders to drive further improvements regarding working conditions.

Moreover, UBS imposes substantial minimum requirements concerning the environmental performance of commissioned print products and is working closely with the supplier to ensure that these requirements are met. For instance, processed paper components typically have to be Forest Stewardship Council (FSC) certified

UBS engaged with over a dozen suppliers of construction services throughout the United States in order to establish long-term framework agreements. In this context, UBS aimed at strengthening the responsible business practice of the selected suppliers, especially regarding the integration of social and environmental criteria in their sourcing and subcontractor management practices. With this collaborative effort between UBS and its key suppliers in the US construction sector, the working conditions and the environmental performance at construction sites in the United States can be expected to further improve - not only on UBS premises. 

100% of the electricity UBS sources in Switzerland are from renewable sources, such as hydro power stations. In addition, UBS assesses the responsible management practices of all electricity suppliers before entering a new agreement. Following such an assessment, UBS engaged with a key player in the Swiss energy market, requested an improvement of their sustainable sourcing practices and mutually agreed on the implementation timeline. This interaction accelerated the supplier’s internal development towards more sustainability. As a result, the supplier explicitly integrated environmental and social criteria in its sourcing policy, established for the first time a Supplier Code of Conduct and publicly committed to implement both guidelines. The case shows that UBS environmental and social standards effectively influence the practices in the bank’s supply chains - a multiplication of the aspired positive impacts.