The virtuous supply chain: sustainability from procurement to human rights

Published on Tuesday, 23 August 2016

Having a sustainable Supply Chain and Procurement, based on the assessment of environmental, social, governance and supplier performance, has become a key factor for successful businesses and long-term growth.

When the Supply Chain and Procurement system is not working properly, or does not comply with ESG (environmental, social and governance performance) standards, companies are exposed to huge operational and reputational risks. 

A value creating process that directly involves the supply chain in all its aspects should be developed in order to avoid such risks and guarantee balanced growth in all contexts in which a business operates (both emerging and more advanced countries). 

Over the course of 2015, Enel launched its Sustainable Supply Chain Project through close collaboration between two of its functions, Global Procurement on the one hand and Innovation and Sustainability on the other, at both global and local levels. Thus a single selection process was created by standardising in all the countries in which we operate the criteria for assessing and monitoring suppliers from an ethical standpoint and, above all, in relation to the impact on the Company. In this way we integrate environmental, social and governance issues into our strategy, creating shared value with the local businesses working with us, in the spirit of the circular economy.

In order to achieve this result, the Global Procurement Division has set three main phases to integrate ESG standards into the supply chain process: Qualification System, General Terms and Conditions, Vendor Rating Process.

According to the UN Global Compact  (the network of companies, associations and organisations set up in 1999 by then United Nations Secretary-General Kofi Annan to promote sustainable development across the world) , this model has become a benchmark for companies aiming to promote long-term sustainable growth while respecting the environment, communities and people. During the presentation of the 2016 report The State of Sustainable Supply Chains: Building Responsible and Resilient Supply Chains, the organization cited Enel’s project as an example of what companies can do in order to render more sustainable this important part of their business.

The supply and procurement process allows us to accurately assess whether those who work with us are aligned with the Group’s targets and sustainable growth strategy. To this end, starting from the tender qualification stage, a questionnaire is submitted to suppliers to assess their level of preparedness in regard to ethics, human rights, work practices, environmental sustainability and fighting corruption, as well as to safety in the workplace.

In compliance with governing laws, the qualifying process requires the presentation of a number of documents and adherence to the principles expressed by the Code of Ethics, by the Zero Tolerance of Corruption Plan and by the 231 Compliance Programme. Other requirements include observance of the ten principles of the Global Compact, with specific reference to the absence of any conflict of interest (including any potential conflict). An equally strong focus is on safety at work: accident indicators and OHSAS or similar certifications are assessed. In addition, for sectors with a high environmental impact, the supplier’s environmental performance is assessed and, where necessary, an environmental management system in accordance with the ISO 14001 standard is required.

Finally, the qualifying procedure is complemented by the Vendor Rating system, aimed at monitoring the performance of suppliers in terms of their proper conduct during the tender and quality, timeliness, and sustainability in performing the duties stipulated by the contract.

In order to make the whole process more sustainable and effective, Global Procurement applies cutting-edge technologies that make it possible to standardize the various systems and enhance best practices. Through the dedicated website, all Enel Group companies and suppliers can interact and share information and data, establishing a constant and positive dialogue with the businesses that work with us.

This open system makes it possible to grow together and create sustainable development for the environment and the communities involved.