- For annual performance, please refer to our Sustainability Report 2020.
Managing Our Supply Chain
We work with a wide range of suppliers and business partners. Dedicated to operating responsibly, we have developed a robust governance structure and are in the process of implementing a sustainable procurement programme to manage and mitigate our supply chain-related risks. The Commercial Management Department reporting to the Capital Works Director and the Procurement and Supply Chain Department reporting to the Deputy Director – Legal, Procurement and Supply Chain, jointly serve to monitor the overall implementation of sustainable supply chain initiatives across the Corporation with the key work areas focusing on:
We have set out corporate policies and guidelines to ensure ethical behaviour of our employees during procurement and tendering processes. Our Code of Conduct stipulates our commitment to a fair, transparent and competitive procurement process which meets the highest standards of ethical behaviour and complies with all relevant laws and regulations. Further entrenching sustainability into the procurement process, our Green Procurement Policy incorporates green specifications such as resource efficiency, recyclability and biodegradability into the decision-making process.
Extending our sustainability considerations beyond the Corporation, our suppliers are also encouraged to explore and implement environmental practices within their operations. The Supplier Code of Practice serves as a behavioural framework to guide suppliers on ethical standards, human and labour rights, and supply chain management. Full compliance is a prerequisite to collaborative supply chain relationships with the Corporation.
Regarding modern slavery, we have conveyed our commitment in the MTR Corporation Modern Slavery and Human Trafficking Statement that we will ensure we have systems in place to manage this issue. It is important that workers employed in our supply chain are treated fairly, humanely and equitably across all our operations.
Supply Chain Assessment
The quality of the services we provide and the infrastructure we build can be impacted by the reliability and quality of the products and services our suppliers deliver to us. Considering this, we have developed a set of supplier assessment procedures to help us build and maintain a sustainable supply chain network. We categorise our suppliers into three separate groups based on our major procurement categories in terms of total spend, namely transport operations, property management and railway extension projects and have identified respective key focus areas for monitoring. Percentage of spending by these supplier categories can be found in the Sustainability Report.
For all our new train purchases, we conduct lifecycle assessments on their performance, taking into consideration future energy use and maintenance costs over an average lifespan of 40 years in addition to upfront capital costs. Furthermore, we work closely with our train suppliers to monitor the quality of the manufacturing and assembly process and ensure all performance indicators are achieved. On an occasional basis, we incentivise suppliers who are able to meet their stated performance range.
Supply Chain Risk Management
Our supply chain risks are identified and regularly assessed through our Enterprise Risk Management System. The potential risks identified include delays to production and the delivery of goods owing to extreme weather events associated with climate change and potential higher insurance premiums for our infrastructure and property assets. To effectively manage these supply chain-related risks, we collaborate with suppliers to implement different risk mitigation measures. For instance, we secure the continuity of supply of goods and services by ensuring suppliers maintain sufficient levels of safety and service critical spare parts in stock. We also work with our suppliers to explore ways to develop alternative sources of supply for proprietary spares. Sustainability risks which may impact our critical suppliers are also identified through assessments which account for their business nature, geographic locations and past performance. Suppliers categorised as high risks are closely monitored and appropriate follow-up actions are taken to address them.
Aspiring to exercise responsible and sustainable practices beyond compliance, we maintain bilateral and constructive dialogue with our diverse suppliers. We invite them to participate in forums, seminars and site visits to benchmark their performance and share best practices. Our procurement teams also pay visits to suppliers' facilities to foster a culture of cooperation and mutual support. We believe engagement helps us in our quest for continuous improvement and encourages collaboration. As such, we conduct periodic supplier surveys with the goal of understanding how suppliers align with our Supplier Code of Practice and to assess the maturity of their sustainability policies, initiatives and monitoring systems in six areas including ethical standards, human and labour rights, environmental protection, consumer protection, supply chain management and conflicts of interest. The survey results help us identify areas for improvement, fosters collaboration, and assists in the development of future plans to further enhance sustainability practices.
Collaboration with Contractors
To extend our sustainability commitments to a wider set of stakeholders, we further monitor the impacts of our supply chain by requiring each supplier to ensure that their own suppliers, contractors and subcontractors fully comply with our Supplier Code of Practice. While contractors are obliged to adhere to stringent safety specifications and requirements, we also work closely with them to promote industry best practices for safety, environmental protection and quality and to help them improve their project delivery plans. These non-contractual partnerships with contractors are conducive to achieving our vision of being a responsible and sustainable business.