As a service company, Air France-KLM’s business activity heavily depends on procurement that represented €13.3 billion in 2019. Fuel purchasing amounts to about 38% of this expenditure, followed by aircraft maintenance and components, airport and navigation fees and airport handling.
We make significant contributions to regional and national economies, both through our purchases and the trickle-down impact on other sectors.
- Air France purchases in France: €2.6 billion, of which more than 710 million euros in French regions
- KLM purchases in the Netherlands : €1.1 billion
- More than 5,600 suppliers worldwide
PURSUING A RESPONSIBLE PROCUREMENT PROCESS
Optimizing, innovating and making the supply chain more sustainable are Air France-KLM priorities which also contribute to improving profitability. For a number of years, our procurement policy has aimed to incorporate Corporate Social Responsibility principles into relations with suppliers by reinforcing control over ethical, social, environmental and supply chain risks.
The procurement process takes place in the following manner:
- Questionnaires are sent to suppliers, addressing a number of themes such as safety, environmental management and HR policy.
- The suppliers are invited to sign the Sustainable Development Charter for suppliers which is based on the principles of the UN Global Compact, or provide their own equivalent document that may be approved upon analysis. Since 2015, this Charter has been supplemented by a Supplier Code of Conduct. Every year, the Group measures the percentage of suppliers who have signed the Sustainable Development Charter. In 2019, this figure reached 67%. The Group has set a target of 75% for 2020.
- Tender documentation, in many cases, list the criteria enabling the evaluation of the environmental impact of the product or service, which are then taken into account during the evaluation of the different supplier proposals. This is an integral part of the assessment of the total cost of ownership and the life cycle analysis.
- The supplier contract includes an ethical and environmental clause based on the relevant products and services.
To supplement the existing process, Procurement works with EcoVadis, a company specialized in the evaluation of suppliers based on Corporate Social Responsibility criteria.
The risk mapping process takes into account the different sectors of procurement and the countries in which the suppliers are based. It takes place at the beginning of the procurement process:
- Buyers must systematically verify the positioning of each supplier in the risk map.
- In the event of a “high” or “severe level” of risk, suppliers are contacted by EcoVadis or an equivalent organization to address the following four themes: environment, social, ethics and sustainable procurement (as defined in the EcoVadis system).
- There are six levels of risk. If the risk category of the supplier is lower than “high risk”, suppliers are encouraged to have themselves evaluated. They can then share their scores with other companies, which may prove to be a competitive advantage in terms of winning bids and contracts.
- Following the evaluation, suppliers having failed to reach an acceptable level will need to put in place corrective measures to meet the Procurement requirements. At Air France, these cases are discussed during the quarterly Steering Committee meetings, overseen by the Procurement and CSR departments.
The number of companies whose CSR performance was evaluated by EcoVadis increased by 17% in 2019, from 355 to 414. Furthermore, as part of a continuous improvement process, in 2020, the company’s goal is to evaluate 100 additional suppliers.
EMPOWERING THE BUYERS
Air France-KLM buyers are largely committed to respecting the Group’s social responsibility. On their first day in office, they sign a Code of Ethics outlining the ethical rules to be followed when dealing with suppliers. In light of the Anti-Bribery legislation, a Code of Ethics reminder has been sent around to the parties involved. These documents, the Procurement Sustainable Development Charter and the Code of Ethics are available on the Procurement website, which initiates an ongoing dialogue with our suppliers.
An internal process has been established to develop the buyer’s skills through training, seminars, web information on best environmental practices. All Procurement staff have completed an anti-corruption e-learning module. All new procurement staff receive training on the department’s sustainability commitments, the duty of vigilance and the anti-bribery processes, and on how to use a sustainability scoring tool (EcoVadis).
The Procurement function encourages the maintenance of knowledge on sustainability (news, legislation, events, conferences, webinars, etc.) and the sharing of experience.
The Procurement Action Plan sets out the sustainability undertakings as a strategic lever; this Plan has been distributed to the team and forms part of the induction documentation for new recruits. More than ever, sustainability is a challenge for Air France-KLM, which places sustainable development at the heart of its priorities and projects: the buyers seek suppliers who can help the Group make progress on this issue and contribute suggestions and innovative ideas.
MOBILIZING AND INNOVATING WITH SUPPLIERS
The Supplier Relations Management Program (SRM) is aimed at building long-term relationships between Air France-KLM and its strategic suppliers. The program puts issues like Corporate Social Responsibility central to discussions, and seeks to move forward together on these issues.
Our suppliers are bona fide partners in mutually-beneficial growth. We support their quest for innovative solutions and analysis of the environmental impact of products. During the drafting of a product specification, the prescriber and buyer work together to identify the environmental and social characteristics, thereby encouraging the supplier not only to develop the environmental performance of its products but also to engage in a wider commitment to sustainability.
Air France is pursuing its ambitious Purchase Plan launched in 2018, aimed at capturing more innovation with its suppliers and, in particular, with small and medium-sized companies and start-ups. Purchasing from the sheltered and adapted sector reaffirms Air France’s values and thus underscores its commitment to Social and Environmental Responsibility. In 2019, Air France organized four Purchasing meetings aimed at increasing procurement with SMEs, the sheltered sector and innovative companies.
The obligations of suppliers in terms of the environment and vocational health and safety are stipulated in the product or service specifications. To prevent the risks linked to joint-activity during interventions, the establishment of prevention plans is systematic. This approach is the subject of a General Occupational Health and Safety Procedure. For Air France, the accident record for sub-contractors is tracked in the Company’s annual social reporting.
Furthermore, an environmental clause figures in Air France’s catering contracts which includes measures to reduce the environmental footprint, such as the sorting and recycling of waste and the use of seasonal products.
Air France entrusts a significant part of its purchases to SMEs.
To promote and protect this ecosystem, Air France participates in initiatives such as the creation of an innovation counter and participation in incubators on specific themes, and is a member of the SME Pact. Every year, an action plan is developed within the context of its relations with SMEs (Mid-caps, startups and VSBs). These actions included a reduction of the settlement period, but also the advancement and introduction of innovations, such as the “start-up kit” which enables them to work in a more agile way with startups, and the realization of PoCs (“Proof of Concept” trials).
MEASURES IN FAVOR OF RESPONSIBLE CATERING
Serving close to 85 million meals and snacks every year, Air France-KLM implements measures to promote responsible catering.
For catering procurement, in partnership with its different catering suppliers, Air France prioritizes local products which are responsible and, whenever possible, seasonal. Certified protected origin products (produits d’appellation d’origine contrôlée et protégée – AOC/AOP), particularly cheese, form part of a broad range of products. Organic food products are also offered, particularly in the meal trays intended for children.
As of the design of on-board equipment, multiple criteria are taken into consideration: weight of the articles, materials used, place of manufacturing, mode of transportation, management of the material’s end of life. Particular attention is paid to reducing the amount of packaging and the use of single-use plastics. At the end of 2019, on board Air France’s aircraft, plastic cups, covers and stirrers, i.e. the equivalent of 1,300 tons of plastic, were progressively replaced by cardboard cups while cutlery and stirrers were designed in wood sourced from FSC label forests and covered in paper wrappers.
Rethinking some food services also contributes to this goal of reducing single-use plastics. For example, the development of the Bon Appetit bag distributed on Medium and Long-haul flights avoids the use of around 200 tons of cutlery and other plastic items.
Whenever feasible, KLM chooses products and partners that share the sustainable mission, in order to contribute to the overall objective of attaining the Sustainable Development Goals. The catering policy focuses on environmental preservation in production areas and takes human rights, working conditions and animal welfare into account. It is applied to all flights departing from Amsterdam Schiphol Airport and elsewhere in Europe and, where possible, includes responsible products in catering from destinations.
For KLM, it is important that the ingredients in meals, such as fish, chocolate, palm oil and soy, are sourced responsibly. To this end, KLM is a member of the Responsible Soy (RTRS) and Sustainable Palm Oil (RSPO) Round Tables and offers certified products on board its aircraft such as MSC-certified fish, “better life” egg and chicken, and UTZ certified coffee and tea.
One of the additions of last year was a new, more sustainable version of the famous chocolate houses in the World Business Class. The cocoa used for creating the bars comes from fincas (farms) in Panama that participate in the CO2OL Tropical Mix project in which KLM invests for CO2 compensation via its CO2ZERO service.
We donate a number of products from in-flight catering not distributed to passengers to charitable associations (see Waste and Circular Economy).