Supplier Engagement Case Study - Salesforce
As part of Salesforce’s engagement initiative to decarbonize its supply chain and reduce scope 3 emissions, the company is incorporating a requirement to set science-based targets into its contracts with suppliers. It offers resources and support in the process. Salesforce takes a three-step approach to supplier engagement —require, enable and incentivize— that can serve as a helpful model for companies looking to engage their suppliers.
What is Salesforce’s supplier engagement target?
Salesforce.com Inc. commits that 60% of its suppliers by emissions covering purchased goods and services, capital goods, upstream transportation and distribution, waste generated in operations, and upstream leased assets will set science-based targets by 2024. See the company's full target language on the SBTi’s target dashboard.
How does Salesforce select the right suppliers to cover its target?
Salesforce is prioritizing its suppliers based on relative emissions, climate impact, spend and other strategic business considerations. The company re-evaluates its supplier list each year to ensure its supplier engagement is both strategic and effective. Since Q2 2021, it has asked all suppliers to set science-based targets. Its aim is to cut its own scope 3 emissions and create a ripple effect of corporate climate action.
How does Salesforce secure internal buy-in to implement its supplier engagement program?
Salesforce leads its decarbonization efforts through its corporate sustainability team, and has operationalized sustainability throughout the company. In the case of supplier engagement, the company has a dedicated supplier sustainability leader within the procurement team. This leader works closely with the procurement, sourcing, legal and sustainability teams, as well as with other relevant business teams. Salesforce provides training and enablement resources to the procurement team, so that they can implement initiatives at scale. Sustainability is a core value for Salesforce, which is why there is top-down support for initiatives like engaging suppliers to set science-based targets. In fact, Salesforce has tied a portion of executive variable pay to performance on four ESG measures. One of these measures is increasing spend with suppliers who have incorporated climate-commitments into their contract with Salesforce through the Sustainability Exhibit – a set of provisions that introduces specific, binding climate obligations into the company’s supplier agreements.
How does Salesforce implement its supplier engagement target?
In late 2020, Salesforce first issued a survey to its priority suppliers to gauge their familiarity with science-based targets and potential barriers to target-setting. This survey found that most suppliers were already exploring setting targets, but differed in their readiness for doing so. Suppliers cited a lack of internal resources and data management tools, as well as limited control over their supply chain as key challenges. The company used input from this survey to craft its supplier engagement program. Salesforce also recognized that it needed to move beyond simply influencing suppliers to requiring action, introducing the Sustainability Exhibit in April 2021. One of the key requirements of the Exhibit is that suppliers set a science-based target and work to reduce absolute emissions to achieve it.
Salesforce encourages suppliers to get their targets validated by the Science Based Targets initiative (SBTi). However, aware of the resource constraints suppliers may face in this process, as an alternative to getting their targets formally validated, it has developed an attestation form based on SBTi’s criteria that suppliers can complete and sign - committing to setting targets that are SBTi-aligned, without being officially validated by the SBTi.
How does Salesforce enable and track supplier performance?
Since launching its supplier engagement effort, Salesforce has released a supplier guide outlining its expectations and providing access to resources. It has also developed tools and programs including an Introduction to Net Zero Targets and a “Sustainability Accelerator” training program tailored to small- and medium-sized enterprises (SMEs). To streamline supplier reporting requests, Salesforce has become a CDP Supply Chain member through which it asks suppliers to disclose GHG and other environmental data which allows the company to track progress against its own emissions reduction goals.
Salesforce also tracks supplier performance by monitoring SBTi’s Target Dashboard to identify which suppliers have set science-based targets or have committed to set targets. The company also engages directly with its highest priority suppliers to regularly check-in on progress and help address potential blockers.
Salesforce incentivizes supplier target-setting by emphasizing the importance of climate action in its relationship with suppliers. This includes considering sustainability performance and commitments in its supplier selection process and in supplier business reviews.
How does Salesforce monitor and report its target progress?
Salesforce monitors which suppliers have set science-based targets and which have committed to do so, and calculates progress towards its target on an annual basis. This calculation is reviewed by a third-party, and progress is reported in Salesforce’s annual Stakeholder Impact Report and in its Schedules of Selected Environmental and Social Metrics.
As a pioneer in supplier engagement, Salesforce shares its approach to supplier engagement openly with others by speaking at conferences and with peers, in an effort to support others on the journey.
This case study is an example provided by the company and does not constitute endorsement from the SBTi.