Sustainable Procurement Policy



1. PURPOSE

 

This Sustainable Procurement Policy (“Policy”) is aimed at enhancing ZS’s overall sustainability performance and aligning its supply chain with ZS’s environmental, social and governance (“ESG”) goals.

 

ZS has received approval from the Science Based Targets Initiative (hereinafter, “SBTi”), on near-term targets to reduce absolute scope 1 and 2 GHG emissions 48.8% by 2030 from a 2019 base year, and to reduce scope 3 GHG emissions 55% per FTE within the same timeframe. Furthermore, ZS has committed to reach net-zero GHG emissions across our value chain by 2045. This requires strict controls in ZS’s procurement practices, especially for Scope 3 emissions, which are a major part of ZS’s carbon footprint.

 

This Policy also reenforces ZS’s commitment to creating an inclusive supply chain and fostering broader social impacts. Ethical sourcing is enforced through ZS’s Supplier Code of Conduct and rigorous supplier engagement, mitigating risks related to labor and environmental standards. Ultimately, ZS’s sustainable procurement policy is designed to build long-term value, protect the company from sustainability-related risks, and bolster ZS’s reputation as a responsible business, ensuring that its supply chain activities robustly support its broad ESG objectives.

 

This Policy is not intended to override or supersede other ZS policies that may apply to Suppliers; rather, this Policy is limited to defining ZS’s ESG requirements for its Suppliers.

 

2. WHO IS COVERED BY THE POLICY?

 

This Policy covers all the establishments and operations of ZS.

 

3. ZS SUPPLIER EXPECTATIONS

 

3.1. ZS has the following expectations for all its Suppliers:

 

3.1.1. Acknowledge and comply with the Supplier Code of Conduct or an equivalent alternative standard that the Supplier maintains, and third-party governance framework.

 

3.2. ZS has the following expectations for its “Key Suppliers”:

 

3.2.1. All Key Suppliers are required to agree in writing, preferably in the applicable agreement with ZS, to comply with the ZS Supplier Code of Conduct, or a ZS-approved alternative standard that the Key Supplier maintains.

 

3.2.2. ZS expects its Key Suppliers to have the following ESG management practices in place, or a reasonable plan to implement such practices, as agreed to in the written agreement with ZS:

 

3.2.2.1. Annual Assessment: Key Suppliers must undergo an annual assessment of their corporate social responsibility (CSR) practices concerning environmental, labor and human rights issues, and sustainable procurement. This assessment is to be conducted by EcoVadis, CDP or another ZS-approved, globally recognized external organization.

 

3.2.2.2. Minimum ESG Rating: Key Suppliers must maintain a minimum score of 45/100 per theme according to the EcoVadis scoring system, or an equivalent score on a ZS-approved comparable scale. The results of these assessments must be made available to ZS upon request.

 

3.2.3. ZS expects its Key Suppliers to have the following environmental performance practices in place, or a reasonable plan to implement such practices, as agreed to in the written agreement:

 

3.2.3.1. GHG Emissions Reporting: Key Suppliers are required to measure and report their GHG emissions across scopes 1, 2 and 3, using methods and details specified by ZS. Annual reports on these emissions must be provided to ZS, and ZS retains the right to audit these reports. Key Suppliers may need to provide third-party assurance for the reported data.

 

3.2.3.2. Science Based Targets: Within the timeline set forth in the written agreement with ZS (preferably 6 months), Key Suppliers must declare their intent to set science-based targets through the Science Based Target Initiative (“SBTi”) or an equivalent approved by ZS. Within 24 months of this declaration, Key Suppliers must develop and submit their emissions reduction targets for official validation by the SBTi or a ZS-approved equivalent.

 

3.2.3.3. Renewable Energy Requirement: For services rendered to ZS, and within the timeline set forth in the applicable agreement between ZS and the Key Supplier, Key Suppliers are expected to source renewable electricity from on-site generation or by purchasing Renewable Energy Attribute Certificates. ZS expects its Key Suppliers to use reasonable efforts to purchase all their electricity from fully renewable electricity sources by 2030.

 

3.2.4. ZS expects its Key Suppliers to participate in the following initiatives, or a reasonable plan to implement such practices, as agreed to in the written agreement:

 

3.2.4.1. Tier 2 Supplier Inclusion Information: On a quarterly basis or as otherwise agreed to with ZS, Key Suppliers must report the percentage of their diverse suppliers and contractors directly supporting ZS services, along with the methodology used for this calculation. If a Key Supplier qualifies as a small or Diverse Supplier, it must provide certification of this status upon request.

 

3.3. Prospective Suppliers

 

3.3.1. All RFx Processes will include an ESG assessment questionnaire to assess the prospective Supplier’s alignment with ZS’s ESG values before engagement.

 

3.3.1.1 Suppliers will be assessed against applicable criteria, which will include, but not be limited to:

  • Whether the Supplier has completed, or plans to complete, an annual third-party assessment of its corporate social responsibility practices with respect to the environment, labor and human rights, and sustainable procurement by EcoVadis or another globally recognized external organization approved by ZS.
  • Whether the Supplier has received a valid score of at least 45/100 per theme on the EcoVadis scoring scale, or an equivalent score on an equivalent scale approved by ZS.
  • Whether the Supplier measures and reports its GHG carbon accounting emissions for scope 1, 2 and 3.
  • Whether the Supplier has science-based commitments and or targets approved by SBTi.
  • Whether the Supplier encourages inclusion their supply chain.

3.3.2. All potential Key Suppliers will undergo a pre-signature risk audit consistent with ZS policies and procedures.

 

4. NON-COMPLIANCE AND CORRECTIVE MEASURES

 

4.1. Action Plan Requirement: If a Supplier fails to meet any of the requirements to which it has agreed, the Supplier must submit an action plan to ZS within an agreed timeframe detailing how it intends to remedy the situation.

 

4.2. Termination: If a Supplier fails to submit an action plan or to comply with the original requirements within the stipulated timeframe, ZS may terminate the agreement at its discretion.

 

5. GOVERNANCE

 

This Policy shall be assessed as appropriate by the ZS procurement team, which will evaluate continued relevance, monitor compliance and drive continual improvement.

 

6. DEFINITIONS

 

6.1. References in this Policy to "ZS," "we," "us," and "our" are references to ZS Associates, Inc. and its direct or indirect affiliates.

 

6.2. Suppliers: Any business, company or individual that provides goods or services to ZS, as part of a contract. This may include manufacturers, distributors, contractors, consultants and service providers.

 

6.3. Key Suppliers: A Key Supplier is a Supplier identified by ZS as integral to ZS operations, which may be characterized by such factors as: significant financial transactions, strategic importance to our internal stakeholders, involvement in handling client data and direct participation in client projects, established strategic partnerships and other associated risks.

 

6.4. RFx Process: The RFx Process refers to formal solicitation methods ZS uses to gather offers from potential Suppliers. ZS’s RFx Process includes:

  • RFI (Request for Information): Collects general information about products or suppliers to inform future decisions.
  • RFP (Request for Proposal): Invites detailed solutions for specific needs, with comprehensive criteria for evaluation.
  • RFQ (Request for Quotation): Requests pricing for well-defined goods or services.

The RFx Process is essential for promoting transparency and competition in procurement, helping ZS secure the best value by comparing potential vendors effectively. Additionally, the RFx Process plays a crucial role in assessing and mitigating ESG risks associated with Suppliers, ensuring alignment with corporate sustainability goals.

 

6.5. Energy Attribute Certificate: Any type of auditable contractual instrument that conveys rights to attributes from electrical energy.

 

6.6. Diverse Suppliers are defined as Suppliers certified as:

  • Minority-owned business enterprises (MBEs)
  • Women-owned business enterprises (WBEs) 
  • Disability-owned business enterprises (DOBEs)
  • U.S. Veteran-owned business enterprises (VBEs)
  • LGBTQ+ owned business enterprises (LGBTBEs)
  • Businesses included in the Historically Underutilized Business Zone (HUB Zone) as certified by the U.S. Small Business Administration
  • Businesses categorized as small based on revenue and/or employees as determined by the Small Business Administration’s classification standards
  • Businesses holding equivalent certifications issued by officially recognized institutions in other countries or regions

Because ZS operates globally, our employees are subject to the laws and regulations of different countries. Your local laws and regulations will control in the case of a conflict with the policy set forth above. ZS reserves the right to change or delete any policy at any time without notice.