Our supply chain

At Vicinity, we seek to build long-term relationships with partners who share our values and commitment to sustainability.

We recognise the need to reduce sustainability risks inherent in our supply chain and take an active approach to promote responsible practices with our suppliers. We also welcome the opportunity to proactively use our procurement decisions to drive positive outcomes in our local communities.

Vicinity engages a large number of suppliers to provide goods and services to successfully run our business.

Our supply chain activities are distributed across three key categories that represent different aspects of our business.

 

Business Activity

Suppliers Engaged

Developments and Refurbishments Builders, civil contractors, materials suppliers, design consultants and trades persons
Operations Suppliers of facilities management services such as waste management, cleaning, security, mechanical, landscaping and maintenance, vertical transport and essential services such as energy, gas, heating and cooling, sewerage and water
Corporate Offices Suppliers of information and telecommunication services, professional service consultants, travel, accommodation, events and marketing. 

 

Our procurement processes classify our suppliers into four main categories – major projects, strategic, functional and tactical – according to the level of impact the product and/or service provided has on our business with regards to guest experience, reputation, risk, cash flow (spend size), competitive advantage or regulatory compliance. The supplier classification provides a framework which guides how we engage with and manage our suppliers. When it comes to our strategic suppliers, we seek to build long-term stable contracts with the aim of creating mutually beneficial outcomes for Vicinity, our suppliers and the communities in which we operate.

 

Supply Chain Governance

Vicinity’s Procurement Standard serves as the overarching policy that governs the procurement of products and services by Vicinity and the ongoing management of supplier relationships. Promoting sustainable procurement is a key principle outlined in Vicinity’s Procurement Standard, to ensure that we apply the highest standards of business practices with regards to environmental, social and governance issues and that our suppliers understand our expectations of them.

We expect our suppliers to demonstrate their own commitment to sustainability, and work with us to realise the objectives of our Sustainability strategy.

Our Supplier Code of Conduct (The Code) communicates our commitments as to how we operate as a business and the expectations and minimum standards we place on our suppliers with regards to ESG risks and impacts.

 

Category-level risk assessment

In order to gain a deeper understanding of inherent sustainability risks, including those relating to modern slavery in our supply chain, Vicinity engaged an independent consultant to undertake a category-level risk assessment during FY18.

This assessment explored a range of risks, including environmental, health and safety, human rights and corruption as they relate to each category of product or service we procure at all stages of their lifecycle. Procurement categories were assessed and rated based on the severity and frequency of incidents in the relevant industry, both in Australia and in countries where goods and materials are likely to be sourced from. Additionally, the level of exposure of Vicinity’s business and reputation to the supply chain risk, as well as opportunities to achieve improved outcomes were considered to prioritise categories for immediate focus.

Priority categories identified for Vicinity included materials and services for our development projects, critical services for our shopping centre operations such as energy, security, cleaning and waste management, and procurement of marketing goods and giveaways.

Supplier Due Diligence

Vicinity’s suppliers are selected through a rigorous procurement process that considers a number of elements, including relevant sustainability risks. We use a Supplier Sustainability Questionnaire to evaluate our suppliers on their management of material risks and impacts related to the products or services they provide, during the procurement process and on an ongoing basis.

During FY20, Vicinity appointed 5 new suppliers (for categories representing 10 per cent of our operational spend) to provide pest control, electricity, gas and energy consulting services for our centres.

All of the providers reviewed during the supplier selection process were screened for material sustainability risks to ensure that the requirements in our policies, including our Sustainable Procurement Policy, were met.

Supplier contracts are a key avenue through which Vicinity ensures that our ESG expectations are met, and appropriate management strategies are implemented through our supply chain. The current service agreements with our strategic operational suppliers, such as cleaning and security service providers (deemed higher risk for modern slavery), include clauses related to subcontracting without prior approval, conducting routine supplier audits, and payment of modern awards to all workers.

These requirements were also integrated into contracts established with new and existing suppliers during FY20 where the risk is considered to be relevant (approximately 71% of new contracts), with the aim of minimising any potential risks of labour exploitation in our supply chain.

 

We actively manage our supplier relationships and monitor compliance with contractual obligations through regular contract management meetings. Engagement occurs at both operational and strategic levels to discuss company objectives, key performance metrics and improvement opportunities.

In 2017 Vicinity established an annual supplier audit program through an independent workplace relations expert organisation, to gain greater visibility into how our service providers are complying with their obligations as employers, including when engaging subcontractors and staff to work at our centres. During FY20, we completed two audits of our cleaning and security suppliers. The audit findings were minimal with no major issues identified. However, some minor administration process improvements were recommended that will help our suppliers ensure best practice. 

Addressing Modern Slavery and broader sustainability risks in our supply chain

Since the Modern Slavery Act 2018 (the Act) came into effect, Vicinity has welcomed the interest from our investors, retailers and other stakeholders on how we are responding to modern slavery risks in our own business and our supply chain. As a reporting entity under the Act, Vicinity’s first modern slavery statement outlines the actions undertaken by Vicinity Centres during FY20 to assess and address modern slavery risks in our operations and supply chain. Given this is Vicinity’s first modern slavery statement, we have also included actions undertaken in previous financial years to provide historical context for our position today.

Vicinity was a founding member of a cohort of 15 Property Council of Australia members who banded together to create an industry-first online platform that supports a proactive approach to collecting, comparing and sharing data on our collective supply chains.  The modern slavery supplier platform was launched in October 2019, and throughout FY20 Vicinity remained an active partner.  Vicinity is additionally an active member of the Property Council’s Modern Slavery Working Group, collaborating with our industry peers to continuously improve our approach and increase transparency relating to modern slavery risks in our supply chain.

As part of the modern slavery supplier platform launch, Vicinity invited 20 suppliers across our highest risk categories  to complete the modern slavery questionnaire via the platform, providing us with a view of where the current level of understanding, risk and actions lie with regards to modern slavery amongst these suppliers and identifying areas for further engagement. Over the next year, we intend to onboard additional suppliers to the platform, and also use the information provided by suppliers in our procurement and contract management processes.

During FY20, we continued to implement our Responsible Procurement Action Plan and our supply chain due diligence activities, with a focus on modern slavery. We strengthened our risk assessment process by updating our Supplier Sustainability Questionnaire to further understand how suppliers assess and address ESG risks, where responses are additionally used to help us continue to identify suppliers for onboarding to the Property Council’s modern slavery supplier platform. Our standard supplier contract documentation was updated with requirements to comply with the Modern Slavery Act, including supporting Vicinity in our own reporting obligations. We also increased visibility of our whistleblower policy amongst our supplier employees by displaying signage in back-of-house areas at all our shopping centres. Furthermore, we continued to roll out annual supplier audits of our cleaning and security providers, and established a formal supplier review procedure outlining a common process for engaging suppliers in regular compliance reviews against contractual arrangements with Vicinity.

 

 

Case study: Addressing modern slavery in the context of COVID-19

We recognise that COVID-19 may have altered our initial modern slavery risk assessments across some areas of our supply chain and were mindful of this in our business and operational response to the pandemic, including as we reviewed our existing service agreements to meet the government’s related guidelines and emerging customer expectations. 

During our pandemic response, we have focused on ensuring our suppliers, particularly cleaning and security providers, are managing their workforces appropriately. This has included reaffirming suppliers’ commitments to uphold the highest standards of occupational health and safety for their workforce, including through the provision of appropriate personal protective equipment (PPE) and requesting additional details on availability and management of staffing, subcontracting arrangements and award details. We have also worked with our suppliers to minimise staff working across multiple sites to reduce risk of COVID-19 transmission.  

Our shopping centre portfolio has remained operational to provide essential services to communities during the pandemic, which has also meant ongoing employment for our cleaning and security contractor workforces. Furthermore, we have extended contracts with some of our strategic operational suppliers with the aim of providing greater stability for both Vicinity and suppliers, as we navigate through the pandemic.  

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As the COVID-19 crisis continues to unfold, we remain vigilant of the ongoing and evolving modern slavery related risks for our supply chain workforce. We will proactively monitor and continue to engage with our contractors on the possibility of job losses resulting from widescale economic shutdown, particularly in Victoria, and as economic activity picks up post-COVID-19, when the vulnerability of low skilled workforces are likely to increase as people seek work, irrespective of conditions.

Case study: Cleaning Accountability Framework Pilot

The Cleaning Accountability Framework (CAF) is an initiative seeking to improve labour standards in the cleaning industry in Australia. With high numbers of vulnerable employees who may not be able to advocate for their rights, cleaning can be an area of risk for illegal and unethical labour practices.

CAF sets standards for wages and labour conditions, tax and super, and responsible contracting which are independently audited to verify these criteria are being met for cleaning services at a specific location. CAF audits compliance within both the contracting company and the cleaning services provider, ensuring both entities are accountable for the standards being met. 

Vicinity was one of the first retail property companies to participate in CAF’s pilot program. We are proud that in March 2019 Northland Shopping Centre (Vic), in collaboration with our incumbent cleaning services provider, achieved the 3 Star

Standard certification across six areas of compliance: Labour; Responsible Contracting; Workplace Health and Safety; Financial Viability; Worker Engagement and Remediation.

In order to maintain our 3 Star Standard certification over the next three years, both Vicinity and our cleaning services provider must meet six monthly compliance checks and annual audits including: fair work conditions; payslip and timesheet checks; worker health and safety; induction and training and employee checks.

We continue to evaluate the CAF framework and remain an active member of the CAF Advisory group providing expertise on application in the retail sector.

 

Procurement through social and Indigenous enterprises

With a portfolio of Vicinity’s scale and reach, we acknowledge our role as a large employer of service providers across Australia, generating significant economic activity through the operation of our centres.

Partnering with social enterprises gives us the opportunity to make a positive impact in local communities through our day to day operations.  Where possible, we partner with social enterprises working to alleviate social issues that are aligned with our own community investment or diversity and inclusion focus areas. 

During FY20, we continued to support social enterprises to meet our procurement needs, bringing our cumulative total to approximately $4.0 million spent since 2018..

We currently work with:

  • YMCA Rebuild in Victoria, who employ youth out of custody and support their integration back into the community and workforce; and
  • Activ Foundation in Western Australia, Aruma (formerly House With No Steps) in New South Wales, and Orana Incorporated in South Australia who employ individuals with disabilities.

We also encourage our suppliers to engage social enterprises, disadvantaged youth and Indigenous businesses in their operations and supply chains.

To support our Reconciliation efforts and Reconciliation Action Plan (RAP) commitments we’ve expanded our Indigenous procurement program. In FY20 we spent $334,123 with indigenous procurement, bringing our cumulative spend to approximately $1.0 million since FY18.

We believe this inclusive approach strengthens our communities and increases the local community’s connection with our centres, further driving the success of our business.

Case study: Supporting Indigenous employment with Wilco Electrical

We are proud of our growing relationship with Wilco Electrical, a Supply Nation certified Indigenous-owned business.

Approximately three years ago, Vicinity started working with Wilco Electrical who now provide electrical maintenance for all our centres in Western Australia, as well as completing project work such as energy efficiency upgrades and ongoing repairs and maintenance. Not only are Wilco proudly Indigenous owned, but they provide training and apprenticeships to young Aboriginals in Western Australia with three 4-year in-house electrical apprenticeships as a direct result of working with Vicinity.

The expansion of Ellenbrook Central in FY20 saw more than 500 new solar generating car park shades installed and new complimentary electric vehicle charging stations connected to the centre’s expansive rooftop solar system. Wilco Electrical was engaged to undertake electrical work for the solar car park shades.

Frank Mitchell, Director of Wilco Electrical said,

“A big thank you to Vicinity, your support has been a major contributor to our success and our ability to provide training, skills and work experience to local Aboriginals in WA. Together with Vicinity, we’re looking forward to developing even more pathways for Aboriginal people. We encourage other businesses to follow Vicinity’s lead and try Supply Nation suppliers like Wilco to help create more employment opportunities for Indigenous Australians”.