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How corporate reporting improved Microsoft's supply chain

<p>Here&#39;s a novel use of corporate reporting to gain insight into key suppliers&#39; management systems.</p>

In the past two years we’ve reported on the growing number of organizations using the GRI Reporting Framework and Guidelines to gain better insight into their suppliers’ social and environmental performance.

Microsoft helped lead this wave in October 2011 when the company asked approximately 20 key hardware suppliers and service providers to use GRI’s Disclosure on Management Approach framework to report on how they meet the standards in Microsoft’s Vendor Code of Conduct. The code includes coverage of environmental and social issues such as business ethics, labor and human rights and respect for intellectual property.

These new reports supplement Microsoft’s existing onsite supplier auditing program by helping provide the multinational software corporation with additional information about the management systems key suppliers have in place to meet the standards set out in the Vendor Code of Conduct.

Microsoft has integrated these disclosure reports into its information management systems for these categories of suppliers. More important, it has begun using the data to help enhance some of its training and capacity-building programs to help ensure that suppliers meet the Vendor Code of Conduct requirements.

The group that manages customer service and support call centers provides a good example of the business value of this reporting. The team analyzed the reports it received to score its suppliers’ level of maturity in their internal compliance systems. This information helped the group flag particular issues (such as protection of intellectual property) and highlight suppliers that need extra attention. “We already had a supplier auditing program in place, but the self-reporting project gave us some critical insights that were fundamental in planning for the next level of our work with service providers,” said Tim Hopper, Responsible Sourcing Manager at Microsoft.

Based on the successful rollout of the program, Microsoft is using a risk-based framework to extend these internal reporting requirements to some additional categories of suppliers. In addition to requiring this reporting by select categories of suppliers, for the past few years Microsoft has encouraged its suppliers to issue public reports using the GRI Framework (as Microsoft does itself).

It is now making this a requirement for a select set of suppliers. In one of the first examples of this, Microsoft recently put out a bid for operating call centers and other services that have a robust set of responsible sourcing requirements. Among these is a requirement that the suppliers chosen under the bid commit to publishing annual corporate social responsibility reports following GRI’s Guidelines.

Microsoft sought to base the responsible sourcing requirements for this bid on widely accepted third party standards and the GRI Framework was a natural fit to encourage greater transparency of the social and environmental performance of call center operators. 

“Aligning our metrics around GRI helps our suppliers efficiently report their progress to not only Microsoft but other stakeholders, too. The number one request that our suppliers have is to help them avoid a proliferation of unique requirements and GRI enables this for reporting,” said Hopper.

Since Microsoft’s supplier reporting announcement in 2011, we’ve seen Apple, HP, and other companies across the technology sector announce their initiatives to promote greater transparency among their suppliers, often by encouraging or requiring GRI reporting. Many of these companies are working together in the Electronic Industry Citizenship Coalition to consider how to promote greater transparency on an industry-wide basis.

The New York City Pension Funds played an active role in encouraging Microsoft and other technology companies to promote GRI reporting to their suppliers. Michael Garland of the New York City’s Office of the Comptroller noted, “We appreciate Microsoft’s openness to dialogue on this issue and their early and continued work to promote greater transparency and the GRI reporting framework among key players in the technology sector.”

Image by JARTDESIGN.NL via Shutterstock

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