EDP's Impact in the Supply Chain

sustainable procurement

EDP's Impact in the Supply Chain

During 2015 it was developed an extensive characterization study of EDP’s purchases, aiming a deeper knowledge about the economic, social and environmental impacts of EDP’s supply chain. EDP expects from now on to use these results for better definition of the priorities concerning sustainability management.

The purchase of fuel, the construction of energy facilities, the purchase and maintenance of equipment and service contracting related to distributional and commercial activities of energy are groups of supply categories that define the fundamental profile of the Group’s supply chain. On the map there is illustrated the origin of EDP suppliers by country and in the immediate tables the origin of purchases by EDP structure.

  • Supplier breakdown by procurement structure (1)
    Group (2)
    Portugal (3)
    Spain (3)
    Brazil (3)
    EDPR NA
    EDPR EU+BR
  • Suppliers
  • Supplier breakdown by procurement structure (1)
    Group (2)
    Portugal (3)
    Spain (3)
    Brazil (3)
    EDPR NA
    EDPR EU+BR
    Suppliers
    18 647
    5 275
    2 641
    4 263
    3 456
    3 545
  • Supplier breakdown by procurement structure (1)
    Group (2)
    Portugal (3)
    Spain (3)
    Brazil (3)
    EDPR NA
    EDPR EU+BR
    Suppliers > 75,000 EUR
    2 010
    687
    368
    497
    193
    304
  • Turnover
  • Supplier breakdown by procurement structure (1)
    Group (2)
    Portugal (3)
    Spain (3)
    Brazil (3)
    EDPR NA
    EDPR EU+BR
    Turnover
    2 832 M€
    989 M€
    243 M€
    683 M€
    637 M€
    280 M€
  • Supplier breakdown by procurement structure (1)
    Group (2)
    Portugal (3)
    Spain (3)
    Brazil (3)
    EDPR NA
    EDPR EU+BR
    Local
    92%
    90%
    86%
    88%
    100%
    99%

Notes:

1) Fuel purchases not included.
2) In the total number of EDP Group suppliers, business partners supplying in more than one geography are accounted only one time.
3) EDPR not included.

  • Fuel Purchases (1)
    Unit
    Group
    Portugal (2)
    Spain (2)
    Brazil (2)
  • Suppliers
  • Fuel Purchases (1)
    Unit
    Group
    Portugal (2)
    Spain (2)
    Brazil (2)
    Suppliers
    #
    63
    29
    37
    5
  • Fuel Purchases (1)
    Unit
    Group
    Portugal (2)
    Spain (2)
    Brazil (2)
    Suppliers > 75,000 EUR
    #
    42
    14
    36
    1
  • Turnover
  • Fuel Purchases (1)
    Unit
    Group
    Portugal (2)
    Spain (2)
    Brazil (2)
    Turnover
    M€
    1 365
    427
    808
    129
  • Fuel Purchases (1)
    Unit
    Group
    Portugal (2)
    Spain (2)
    Brazil (2)
    Local
    %
    40
    55
    36

Notes:

1) Includes fuel purchases and services associated.
2) In the total number of EDP Group suppliers, business partners supplying in more than one geography are accounted only one time.

The tables below show the impact of EDP purchases under some dimensions. It is, however, a synthetic information that does not show the depth of the information available. The study, developed by PWC and based on ESCHER methodology, details data by: country (not only where EDP operates), relevant purchases categories and suppliers.

It can be highlighted the most relevant economic impacts:

  • the employment volume induced by EDP in its supply chain which reached 177 thousand jobs and 326 million hours worked with direct suppliers representing 44% of the total workforce;
  • the importance of the capital intensive purchasing represents 55% (raw materials, equipments), compared with 45% related to labour-intensive (provision of services);
  • the value created by EDP purchases is mostly retained in the countries where EDP operates: retention of 70% of value of purchases, 59% of jobs and 79% of wages.

EDP, through its direct suppliers, is exposed to a relatively low social risk. Risks such as child labour, forced labour or occupational health & safety came out as very low risk control priorities should be given to low wages (0,27% of direct purchasing). The main risk from the social perspective came out as being the gender equity, representing 18,34% of direct purchasing.

Under the category “Country”, 7% of direct purchasing is exposed to political instability, rule of law ineffectiveness and government effectiveness fragility, but the most relevant risk is corruption, covering around 10,3% of direct purchasing.

However, when the scope is indirect purchasing, results are significantly different.

The table reveals a dramatic high increase of risk exposure, namely child labour (0,54%), forced or compulsory labour (0,39%), occupational health and safety (7,9%), excessive working hours (1,4%) and low wage (13,4%). Gender equity is still the most relevant risk, increasing to 25,7%. The increase of risks is also expressively present in the dimensions related to rule of law, government effectiveness and corruption.

Following this study, managing sustainability in EDP’s supply chain will need new processes in place to give EDP guaranties that direct suppliers endorses commitments in the improvement of labour and social conditions of its own supply chain.

EDP impacts on environment are also relevant. These are clearly linked to the environmental costs from extraction and transport of raw material, where gas and coal are dominant. EDP will continue this work, promoting energy efficiency initiatives on its suppliers, as well as the reduction of waste towards an improvement of the circular economy.

  • ECONOMIC IMPACTS
    Unit
    Value
  • GVA
  • ECONOMIC IMPACTS
    Unit
    Value
    Gross value added related to purchases
    000.000 EUR
    4588
  • ECONOMIC IMPACTS
    Unit
    Value
    Gross value added related to purchases in countries of operation
    %
    70.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Gross value added - Capital intensive purchases
    %
    55.5
  • EMPLOYMENT
  • ECONOMIC IMPACTS
    Unit
    Value
    Employment related to purchases
    #
    177323
  • ECONOMIC IMPACTS
    Unit
    Value
    Employment related to direct purchases
    %
    44.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Skilled Employment related to purchases
    %
    29.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Employment related to purchases in countries of operation
    %
    59.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Employment related to raw materials purchases
    %
    31.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Employment resulting from raw materials direct purchases
    %
    11.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Working hours related to purchases
    000.000 hours
    326
  • ECONOMIC IMPACTS
    Unit
    Value
    Working hours related to direct purchases
    %
    44.0
  • SALARIES
  • ECONOMIC IMPACTS
    Unit
    Value
    Salaries related to purchases
    000.000 EUR
    1965
  • ECONOMIC IMPACTS
    Unit
    Value
    Salaries related to purchases in countries of operation
    %
    79.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Salaries resulting from raw materials
    000.000 EUR
    482
  • ECONOMIC IMPACTS
    Unit
    Value
    Salaries resulting from raw materials direct purchases
    %
    24.0
  • TAXES
  • ECONOMIC IMPACTS
    Unit
    Value
    Taxes related to purchases
    000.000 EUR
    90
  • ECONOMIC IMPACTS
    Unit
    Value
    Taxes related to purchases in countries of operation
    %
    31.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Taxes resulting from raw materials purchases
    000.000 EUR
    55
  • ECONOMIC IMPACTS
    Unit
    Value
    Taxes resulting from raw materials direct purchases
    %
    30.0
  • PROFITS
  • ECONOMIC IMPACTS
    Unit
    Value
    Profits related to purchases
    000.000 EUR
    1894
  • ECONOMIC IMPACTS
    Unit
    Value
    Profits related to purchases in countries of operation
    %
    62.0
  • ECONOMIC IMPACTS
    Unit
    Value
    Profits resulting from raw materials purchases
    000.000 EUR
    920
  • ECONOMIC IMPACTS
    Unit
    Value
    Profits resulting from raw materials direct purchases
    %
    40.7
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Voice and Accountability
    %
    0.0
    12.5
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Political Stability and Absence of Violence/Terrorism
    %
    7.1
    17.9
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Regulatory Quality
    %
    0.0
    11.0
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Government Effectiveness
    %
    7.3
    15.7
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Rule of Law
    %
    7.1
    16.3
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Control of Corruption
    %
    10.3
    19.8
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Child Labor
    %
    0.0
    0.5
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Forced Labor
    %
    0.0
    0.4
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Occupational Health & Safety Risk
    %
    0.0
    7.9
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    High Working Hours
    %
    0.0
    1.4
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Low Wages
    %
    0.3
    13.4
  • RELATED TO DIRECT AND INDIRECT PURCHASES
    unit
    Tier 1
    Tier 2n
    Gender equity
    %
    18.3
    25.7
  • LAND USE RELATED TO PURCHASES
  • GHG EMISSIONS RELATED TO PURCHASES (1)
  • WATER CONSUMPTION RELATED TO PURCHASES

Notes:

1) There is a difference between the values of these emissions and Scope 3 calculation. This is due to the exclusion of end-use consumption and net electricity purchases.