This metric is based on the Global Reporting Initiative (GRI) G4 Guidelines. It covers one of the requirements of Indicator G4-EC9 - 'Proportion of spending on local suppliers at significant locations of operation'. While this metric looks for the proportion of the company's spending that goes to local suppliers, this indicator asks for additional information:
G4-EC9-a: Report the percentage of the procurement budget used for significant locations of operation spent on suppliers local to that operation (such as percentage of products and services purchased locally).
G4-EC9-b: Report the organization’s geographical definition of ‘local’.
G4-EC9-c: Report the definition used for ‘significant locations of operation’.
The influence an organization can have on a local economy goes beyond direct jobs and payment of wages and taxes. By supporting local organizations in the supply chain, an organization can indirectly attract additional investment to the local economy.
Organizations can gain or retain their social license to operate in part by demonstrating positive local economic impacts. Local sourcing can be a strategy to help ensure supply, support a stable local economy, and can prove to be more efficient for remote settings.
The proportion of local spending can also be an important factor in contributing to the local economy and maintaining community relations. However, the overall impact of local sourcing will also depend on the sustainability of the supplier over the long term.
To calculate the proportion of the company's spending that goes to local suppliers - G4-EC9-a:
- Calculate the percentages based on invoices or commitments made during the reporting period (that is, using accruals accounting).
- Local purchases may be made either from a budget managed at the location of operation or at the organization’s headquarters.
- If more than one location is reported, the metric value should relate to the location where the company is headquartered.
Reporting on this Indicator should include the following contextual information as a comment to the metric value:
- If the company provides details of how they calculated this proportion please add this information as a comment on your metric value.
For WikiRate Researchers:
- Please see this page for guidelines on how to research values for GRI-based metrics.