Sustainable procurement

"ERG considers its suppliers a primary source of competitive success; thus it strives to base its relations with suppliers on the same principles of sustainability, integrity and confidentiality and manage these relations with both current and potential suppliers in accordance with principles of legality, transparency, correctness and loyalty."
(from ERG Code of Ethics)


We create value thanks to the responsible management of relations with our suppliers, who are fundamental players in the ethical and sustainable management process. The values that guide our relations with our suppliers are integrity, ethics and transparency, as indicated in our Code of Ethics and the other governance documents such as the 231 Model, the Anti-corruption Policy, the Sustainability Policy and the Human Rights Policy.

To establish robust and sustainable relationships, we ask all of our suppliers, including contractors, subcontractors and partners, to adopt the principles of conduct indicated in our Supplier Code of Conduct. The code indicates all of the standards to be upheld and applied throughout the supplier chain, covering topics such as lawfulness, ethics, human rights and the environment. Sustainability is therefore a fundamental aspect in our relations with suppliers and has been further promoted in 2019 thanks to the use of a new on-line registration portal, enabling a more efficient and detailed supplier certification and selection process, including the selection of specific issues relating to sustainability.


Sustainable procurement

In 2019 we launched the "Sustainable Procurement" project aimed at pursuing sustainability in the supply chain, in line with our sustainability strategy. The project aims to efficiently manage the environmental, social and economic impacts while promoting good business practices throughout the life cycle of products and services.


Read more in Suppliers area

"Sustainable Procurement Project: new Supplier Sustainability Assessment Process" - read the news (18 June 2020)
ERG Group - Supplier Code of Conduct
approved by the Board of Directors of ERG S.p.A. on 31 October 2019

Suppliers - Data and indicators

    2019 2018 2017
Active suppliers (transactions with at least one order) no. 1,736 1,772 1,564
with registered offices or a billing address in Italy no. 63% 65% 71%
with registered offices or a billing address in the regions where our
plants are located
no. 35% 34% 35%
% expenditure local suppliers (Italy/total)   61% 77% 74%
Qualified suppliers on Vendor List no. 997 990 920
of which: qualified based on HSE parameters no. 231 223 226
Newly qualified suppliers in the year no. 67 67 61
of which: newly qualified based on HSE parameters no. 31 36 31
Average qualification time days 41 59 103
% of tenders (of total value of purchases)   54% 53% 41%
% of tenders (of total number of purchases) 25% 29   25% 29% 31%

 

  • The Group Supply Chain
    Responsible supply chain management and value creation for our business partners are important values for us. The Group's supplies are mainly of a technical nature and are linked to the development (new construction), improvement and efficiency or maintenance of our plants. Primary international companies satisfy a significant part of the procurements, such as suppliers of turbines in the construction of new wind farms, or leading industrial groups with regard to maintenance activities. However, our main goal is to limit the condition of "single supplier" or exclusive supplier to the specific cases justified by technical reasons or constraints that can be objectively identified.

    We also seek to maximise the use of competitive processes to ensure equal treatment of suppliers. Moreover, we pay attention to local suppliers who, with the same technical and quality requirements, once selected, can give further impetus to the economy within their areas. For the activities of efficiency and maintenance of our plants in all technologies (wind, hydroelectric, solar and thermoelectric), we deal with both national and international suppliers, depending on the technical and technological requirements.

    In general, we do not purchase raw materials for production, with the exception of the methane gas used to supply the Priolo CCGT power station, which, together with electricity, is the only energy source supplied to the Group. To reduce the environmental impact of our activities, we buy certified electricity from renewable sources where possible, thereby significantly reducing SCOPE 2 emissions.

     
  • Supplier Management
    We seek commitment from suppliers and external collaborators in sharing our corporate values, informing partners of our rules of conduct and asking them to sign the ERG Group's Code of Ethics, the Organisational and Management Model pursuant to Italian Legislative Decree no. 231/01 and the Anti-corruption Policy.

    In 2018, we began to evaluate all suppliers, in Italy and abroad, at an ethical and reputation level as well. In this way, we ensure that both companies and their executives maintain, in their dealings with us and within their management, behaviour in line with generally recognised ethical and social principles.

    In accordance with the provisions of the "Key Third-Party Due Diligence" procedure, we verify the presence of any investigations launched, sentences or orders issued against the supplier or its administrators. The selection of suppliers is based on an accurate assessment, classification and monitoring process, according to objective criteria with regard to their technical capacity and reliability.

    This activity is regulated by a procedure that uses on-line supplier management portals, allowing a complete analysis of the technical, economicfinancial, legal and qualitative profile of the potential partner. In addition to specific requirements relating to the environmental, health and safety aspects indicated in the HSE Group specifications, we request information on the protection of human rights, compliance with the ban on child labour, the obligation of equal treatment and the prohibition of discrimination.

    This allows us to value companies with specific certifications and recognition, extending the principles of sustainability in which we believe to the supply chain as a whole. It is also important for us to avoid any situations of dependence of the supplier on our Group: consequently, we monitor to ensure that each supplier does not generate more than 30% of its turnover with ERG. If this threshold is exceeded, we begin an analysis and evaluation process in order to define the appropriate corrective actions. This also ensures an economic/financial equilibrium for the supplier, avoiding a significant tie to our Group.

    We also constantly monitor field activities, through the assessment of objective indicators in the area of environment and safety, ensuring compliance with the rules and procedures. This further element contributes to a more precise evaluation of the partner, not only to identify and correct any critical issues, but also to reward their level of excellence, both in terms of service and, for example, financial solidity.

    In the event of findings during the audits, we promptly set up "repair" activities, subsequently proposing, where appropriate, training courses in favour of suppliers and third party workers. The repeated performance of activities outside of the established parameters may lead to penalties for the supplier, termination of the contract and, in more serious cases, removal from the Vendor List.

     
  • The Procurement Process: transparency and equal opportunities for suppliers
    In compliance with the rules of fairness and transparency, we aim to encourage competition between suppliers, maximising the use of tenders in assigning contracts, also through the use of an online portal that tracks all stages of the awarding process. The process is based on the rules of: 
    - transparency of procedures and behaviours;
    - separation of roles in contractual relations and in negotiations in particular; 
    - consistency among ethical principles and organisation, through verification of employed personnel;
    - equilibrium in relationships, intended as the definition of limits in the orders assigned to each supplier with regard to their overall turnover;
    - respect of the agreements signed with suppliers, also in terms of contractual conditions and payment terms.

    Awarding is based on the most advantageous offer, taking into account all of the related variables (especially the technical ones) and not only based on the lowest price.

     
  • Management of subcontracting
    Each supplier is also liable for any authorised subcontractors and undertakes to comply with social and environmental regulations, such as those regarding the protection of health and safety in the workplace or the disposal of waste.

    Procurement also supervises the subcontracting process, through the acquisition of information and document control, including regular payment of contributions, respect of the workplace safety regulations, the extent in percentage terms with respect to all works and a guarantee of the maximum discount applied with respect to contract prices.