Introduction

Dexus partners with suppliers to achieve operational efficiencies, customer amenity and positive environmental outcomes. Material issues that relate to Dexus's sustainable supply chain are:

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  • Human rights: Sourcing products and services from suppliers that uphold human rights and acceptable labour standards by rejecting child and forced labour and offering acceptable conditions and wages for workers. Dexus is committed to sustainable procurement, indigenous rights, equal opportunity and relevant legislation
  • Anti-competitive behaviour: Ensuring that business dealings promote a competitive marketplace and are free of activities such as collusion, bribery, corruption, price-fixing and standover tactics. An open and transparent tender process underpins Dexus’s procurement approach. Employees are trained in conflict of interest and anti-bribery to ensure a competitive process that selects suppliers based on merit rather than personal relationships
  • Local suppliers: Working with local suppliers to build local economies, reduce transport resource use and cost, and provide quality service delivery. Dexus chooses from a mix of local and nationwide suppliers using service delivery as the primary criteria. Dexus seeks to engage with local suppliers to reduce transportation costs, provide reliable solutions for critical services and to support the communities in which we operate
  • Supplier engagement and capacity building: Creating partnerships that go beyond simple client-supplier relationships to establish deep understanding of each other’s business drivers, and create further opportunities for value. Dexus develops long term partnerships that address sustainability impacts and create shared value. We recognise the key role that suppliers play in optimising asset performance, managing risk and delivering customer amenity

The boundary for these issues encompasses all direct suppliers to Dexus across all properties within the Dexus group portfolio, with social impacts felt across Dexus, our suppliers and their employees and upstream suppliers, as well as environment impacts.

Dexus's supply chain composition

Dexus’s supply chain encompasses a diverse range of products and services which are grouped into categories. All procurement categories are necessary however certain commodities are critical. Critical commodities present a risk to operational continuity, safety or have material environmental impacts.

Dexus defines a critical supplier as a one whose services are required daily for the normal operation of a building. Critical suppliers are retained on a Preferred Supplier List. Dexus applies a high level assessment of inherent supply chain sustainability risk for each spend category. The risk assessment is based on existing spend and supplier data and the British Standard 8903:2010 Principles and Framework for Procuring Sustainably – Guidance.

Dexus classifies our suppliers as follows:

  • Critical - representing areas with a high spend, as well as high potential supply chain sustainability impact
  • Secure - representing areas with a lower comparative spend, however still representing potential sustainability impacts and should also be prioritised
  • Cost driven - representing lower potential sustainability impacts, but still high spend
  • Acquisition - representing lower sustainability impact

The table below shows the main procurement categories, the areas of Dexus operations and whether they are critical suppliers.

Dexus's main procurement categories

Key procurement categories Classification Inherent sustainability risk
Environmental Social Economic
Building operations
Cleaning and waste management Critical
Facility managers Secure  
Energy and water Critical  
Security Critical  
Electrical, mechanical, hydraulic Secure  
Lifts Cost driven  
Capital works Critical
Fire protection Secure    
Statutory fees and non-controllable expenses Cost driven    
Developments
Developers and Builders Critical
Façade materials Critical
Building materials locally sourced Cost driven    
Building materials internationally sourced Critical  
Corporate
IT Critical  
Events and conferences Secure    
Merchandise and promotions Critical

 

Management objectives and goals

As a signatory to the United Nations Principles of Responsible Investment, we manage our supply chain to account for human rights, environmental, social and economic factors in our purchasing decisions.

Dexus rationalises suppliers where possible by identifying partners that can best meet our needs and optimise engagement across our portfolio. This leads to fewer suppliers and closer relationships with Dexus with a greater alignment of interest. It also facilitates efforts to embed Dexus Corporate Responsibility & Sustainability (CR&S) commitments with suppliers.

Dexus’s supply chain goals are to:

  • Maintain an efficient procurement process operating under sound governance that achieves the best value for money, meets business requirements and delivers financial and CR&S outcomes based on a whole of life costing
  • Mandate that suppliers abide by all minimum standards and laws in the countries in which they operate
  • Treat suppliers and contractors fairly, with respect and dignity demonstrating probity, equity and transparency
  • Continue to develop and manage relationships with suppliers and contractors to encourage them to promote a best practice approach to employment practices, social outcomes and the environment
  • Identify key risks and opportunities particularly in high value, high impact contracts and improve the overall impacts of the products and services Dexus procures
  • Challenge suppliers to deliver tangible, innovative and sustainable solutions that deliver mutually beneficial outcomes for Dexus and the supplier
  • Continue to assess each contract’s merits against a set of sustainability principles and ensure environmental and social impacts are assessed in line with Dexus policies and objectives, emerging best practice and industry standards
  • Ensure prospective and new suppliers understand contract sustainability criteria and requirements
  • Mandate that all suppliers acknowledge and abide by the Dexus Supplier Code of Conduct
  • Maintain sustainable procurement capability by engaging and upskilling employees and implementing sustainable procurement training for procurement and contract managers
  • Collaborate with suppliers and seek feedback as part of contract management
  • Where appropriate, increase the purchase of products that support community base charities, are carbon neutral or have a lower carbon footprint, are more efficient or meet internationally recognised sustainability performance standards
  • Where appropriate, partner or encourage supplier participation in community engagement and with Dexus philanthropic activities

Management approach

Dexus adopts a long term approach to managing and maintaining supplier relationships through a robust set of business procedures which guide supplier screening, selection and engagement. A suite of policies, principles and performance standards underpin the ethical and supply chain approach.

Dexus applies the following governance structure and approach to manage our supply chain:

1.     Sustainability approach

Dexus's sustainability approach incorporates the UNPRI ‘six principles’ relating to responsible investment and active property management, and is aligned with our corporate strategy through its overarching goal “to create Sustained Value by adopting an approach that embraces connectivity, liveability and resilience, and is integrated across our value chain.”

This framework incorporates five objectives which describe the stakeholders for whom we implement sustainability initiatives, while the three themes are a frame of reference for initiatives and programs.

CRS approach

Key themes:

  • Connectivity - using technology to enable connectivity between people and places and smart operations of Dexus's business and buildings
  • Liveability - creating vibrant, inspiring and flexible work places which enhance productivity and foster the well-being of employees and customers
  • Resilience - increasing resilience so that buildings and spaces are adaptive and customers and Dexus can prosper long term

 

 

Together, the three key themes and five key objectives, form the basis from which sustainability commitments and targets are formed, and how achievement is measured.

Dexus integrates supply chain sustainability throughout the group’s operations via the Strong Communities key objective, which recognises suppliers as an essential part of the Dexus ecosystem.

We believe that by partnering with like-minded suppliers to align sustainability goals, we can foster an open dialogue, most effectively manage supply chain risks and create opportunities for shared value.

Sustainable Procurement Framework

Dexus applies a Sustainable Procurement Framework to minimise any potential impacts from our upstream supply chain. Sustainable procurement is built into all supplier engagements through supplier adherence to the following Dexus Policies:

  • Supplier Code of Conduct
  • Sustainable Procurement Policy
  • Environment Statement
  • Human Rights Policy
  • Work Health, Safety & Liability Policy

All policies are available at www.dexus.com

2.     Managing supply chain across the lifecycle of a project

Our staged procurement and contract management process optimises performance and supplier service levels, manages risk, maintains healthy supplier relationships and realise shared value. The key aspects of this process include:

The lifecycle of a standard project 
Project stage Sustainability and risk management activities
1. Project is proposed
  • Project owners follow procurement procedures to develop and present a project business case to decision makers
2. Project is approved
  • Project owners: a) procure services directly within agreed limits and preferred panel, or b) work with Dexus procurement team to procure major services via formal tender
3. Quotes obtained or formal tender is issued
  • Business units work with the Dexus procurement team to issue project brief to service providers
  • Service providers may be pre-qualified and selected on Dexus's preferred supplier panel
4. Service provider is selected
  • Sustainability track record, as well as risks and opportunities are evaluated during a rigorous and structured screening and ranking of suppliers, using a balanced scorecard
  • Dexus conducts financial due diligence to establish that a company is viable and can perform the tasks required 
  • Assessing a company's capability to perform by reviewing its track record, and seeking feedback from references
5. Service provided is appointed
  • Dexus reviews proposed services to confirm fair value upfront and avoid later uplift
  • Service providers contractually agree to Dexus’s Sustainable Procurement Policy and Supplier Code of Conduct
6. Service is undertaken
  • SASSI is used to track on-site contractor activity and ensure contractors maintain licences and insurances
  • Project Control Groups (PCGs) hold regular meetings between Dexus and suppliers and receive progress reports
  • Dexus conducts site-level contractor spot checks to evaluate performance and develops corrective action plans where required
  • Evaluation against contract KPIs and SLAs
7. Service is monitored
  • Dexus procurement team monitors supplier performance through site feedback, regular performance meetings and tracking against project KPIs
8. Project completes
  • Dexus evaluates the effectiveness and value for money as part of retaining service providers 
  • Dexus conducts period spend analysis to maintain a current view of critical suppliers and commodities
  • Dexus surveys suppliers to gain insight into their business-related sustainability issues and gather feedback on our performance as a partner

 

All tender documentation and service agreements integrate CR&S policies and Key Performance Indicators (KPIs) and Dexus prioritises supplier engagements based on the commodity/service involved, the size of the contract, supplier values and its criticality to business continuity.

A supplier assessment process takes into account labour practices, social, environmental and human rights impacts. Suppliers are encouraged to work with Dexus to reduce carbon emissions, adopt sound environmental principles, manage their people ethically, drive positive supplier relationships and consider the impacts of their activities on the communities in which they operate.

Ongoing data collection and analysis provides a benchmark for site teams that oversee supplier services. This is valuable data on how performance trends vary over time and across sites. This data is used as input into initial reviews of supplier contracts and periodic reviews of Dexus’s panel of preferred suppliers.

Supply chain governance

3.     Procurement procedures

Our Procurement Procedures outline the buying process for personnel in the Dexus Office & Industrial, Retail and Corporate sectors, and by authorised third party property managers. The procedures accompany the Dexus Operating Limits, Conflicts of Interest and Tendering policies.

The procedures ensure that: 

  • Service providers are engaged based on merit 
  • Conflicts of interests are appropriately identified and managed 
  • Dexus interests are legally protected (including the avoidance of fraudulent transactions) and 
  • Dexus insurances are not compromised

A key step in this process is engaging with suppliers to evaluate the effectiveness of Dexus’s sustainable procurement policies and supplier relationship management practices.

4.     Tender process

The tender process ensures that service providers are chosen based on merit and capacity to deliver works and services, rather than relationships with Dexus personnel. The number of organisations invited to tender varies due to a project’s size, complexity and procurement guidelines. Dexus is committed to a transparent and competitive tendering process. The process is subject to detailed monitoring and oversight.

A Project Control Group (PCG) is established for high value projects. The PCG includes appropriately qualified representatives from Dexus, co-owners and senior representatives of the core service providers and contractors or consultants, for example builders, architect, project manager or leasing agents.

5.     Employee responsibilities and training

Dexus employees receive periodic training on procurement best practices as well as building-related products, services and requirements. This provides them with the required skills and industry knowledge to appropriately select and appoint service providers.

All employees with responsibility for selecting, appointing and monitoring service providers must ensure performance and compliance with contractual agreements via standard contract templates.

5.     Employee responsibilities and training

Dexus employees receive periodic training on procurement best practices as well as building-related products, services and requirements. This provides them with the required skills and industry knowledge to appropriately select and appoint service providers.

All employees with responsibility for selecting, appointing and monitoring service providers must ensure performance and compliance with contractual agreements via standard contract templates.

6.     Contractor health and safety

Dexus recognises our duty of care to manage any work health and safety risks across our managed property portfolio. Dexus’s Work Health, Safety and Liability (WHS&L) statement outlines how Dexus manages property risks. It states the group’s commitment to maintaining safe properties, working with stakeholders to manage hazards, risks and continuous monitoring.

Dexus implements a safety management system that is certified against OHSAS 18001 to address WHS&L risks across the portfolio.

Dexus uses a third party tool across all Dexus managed properties to monitor contractor WH&S management systems and manage compliance of contractors regarding insurance, WH&S and inductions.

7.     Supplier monitoring and relationship management

Dexus monitors the performance of major contracts through:

  • Regular performance review meetings with site teams that assess performance against KPIs
  • High level performance reviews that occur at least half yearly and incorporate formal feedback from internal stakeholders
  • Site and corporate team feedback, which is discussed with suppliers to directly manage exceptions against performance expectations

Service agreements set out the level and frequency of monitoring. Suppliers must perform an appropriate level of monitoring, which may include a combination of physical monitoring of activities and performance reports.

Evaluation and process improvement

Dexus’s procurement process is subject to ongoing, targeted auditing and monitoring via the Risk and Compliance team. Potential breaches of procedures are investigated and result in disciplinary action if substantiated.

Dexus operations teams monitor procurement activity to evaluate the value that is being delivered to Dexus, as well as identify and address environmental, social and governance risks within tier 1 suppliers (i.e. Dexus’s direct suppliers).

Dexus measures its success in effective supply chain management in the following ways:

  • Effective delivery of services to Dexus and customers and achievement of contract KPIs and SLAs
  • Compliance with legal obligations and avoidance of fines, penalties associated with negative environmental, social or governance practices
  • Strong relationships with engaged suppliers, with a culture of service excellence, innovation, and value for money