sustainable procurement

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 (4))
EDPR EU+BR (5)
Supplier breakdown by procurement structure (1)
Group (2)
Portugal (3)
Spain (3)
Suppliers 2018
Brazil (3)
EDPR NA (4))
EDPR EU+BR (5)
Supplier breakdown by procurement structure (1)
Suppliers
Group (2)
16 051
Portugal (3)
4 758
Spain (3)
2 029
Brazil (3)
4 851
EDPR NA (4))
529
EDPR EU+BR (5)
4 470
Supplier breakdown by procurement structure (1)
Suppliers > 150,000 EUR
Group (2)
1 487
Portugal (3)
455
Spain (3)
219
Brazil (3)
407
EDPR NA (4))
175
EDPR EU+BR (5)
271
Supplier breakdown by procurement structure (1)
Group (2)
Portugal (3)
Spain (3)
Turnover 2018
Brazil (3)
EDPR NA (4))
EDPR EU+BR (5)
Supplier breakdown by procurement structure (1)
Turnover
Group (2)
3 146 M€
Portugal (3)
766 M€
Spain (3)
240 M€
Brazil (3)
525 M€
EDPR NA (4))
785 M€
EDPR EU+BR (5)
829 M€
Supplier breakdown by procurement structure (1)
Local
Group (2)
97%
Portugal (3)
94%
Spain (3)
89%
Brazil (3)
99%
EDPR NA (4))
100%
EDPR EU+BR (5)
97%
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.
4) North America – included: the USA, Canada and Mexico
5) All operations of EDP Renewables (considered: Belgium, Brazil, Spain, France, Italy, Poland, Portugal, UK and Romania)

Fuel Purchases (1)
Unit
Group
Portugal (2)
Spain (2)
Brazil (2)
Fuel Purchases (1)
Unit
Group
Suppliers 2018
Portugal (2)
Spain (2)
Brazil (2)
Fuel Purchases (1)
Suppliers
Unit
#
Group
61
Portugal (2)
22
Spain (2)
32
Brazil (2)
7
Fuel Purchases (1)
Unit
Group
Turnover 2018
Portugal (2)
Spain (2)
Brazil (2)
Fuel Purchases (1)
Turnover
Unit
M€
Group
1 296
Portugal (2)
490
Spain (2)
641
Brazil (2)
165
Fuel Purchases (1)
Local
Unit
%
Group
52
Portugal (2)
40
Spain (2)
72
Brazil (2)
11
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.

Suppliers
Unit
Value
Suppliers
Unit
Certified Fuel Suppliers 2018
Value
Suppliers
ISO 9001
Unit
%
Value
82
Suppliers
ISO 14001
Unit
%
Value
82
Suppliers
OHSAS 18001
Unit
%
Value
81
Suppliers
Unit
Coal Origin 2018
Value
Suppliers
Colombia
Unit
%
Value
79
Suppliers
USA
Unit
%
Value
10
Suppliers
South Africa
Unit
%
Value
2
Suppliers
Russia
Unit
%
Value
9
Suppliers
Spain
Unit
%
Value
0,01

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
ECONOMIC IMPACTS
Unit
GVA
Value
ECONOMIC IMPACTS
Gross value added related to purchases
Unit
000.000 EUR
Value
4588
ECONOMIC IMPACTS
Gross value added related to purchases in countries of operation
Unit
%
Value
70.0
ECONOMIC IMPACTS
Gross value added - Capital intensive purchases
Unit
%
Value
55.5
ECONOMIC IMPACTS
Unit
EMPLOYMENT
Value
ECONOMIC IMPACTS
Employment related to purchases
Unit
#
Value
177323
ECONOMIC IMPACTS
Employment related to direct purchases
Unit
%
Value
44.0
ECONOMIC IMPACTS
Skilled Employment related to purchases
Unit
%
Value
29.0
ECONOMIC IMPACTS
Employment related to purchases in countries of operation
Unit
%
Value
59.0
ECONOMIC IMPACTS
Employment related to raw materials purchases
Unit
%
Value
31.0
ECONOMIC IMPACTS
Employment resulting from raw materials direct purchases
Unit
%
Value
11.0
ECONOMIC IMPACTS
Working hours related to purchases
Unit
000.000 hours
Value
326
ECONOMIC IMPACTS
Working hours related to direct purchases
Unit
%
Value
44.0
ECONOMIC IMPACTS
Unit
SALARIES
Value
ECONOMIC IMPACTS
Salaries related to purchases
Unit
000.000 EUR
Value
1965
ECONOMIC IMPACTS
Salaries related to purchases in countries of operation
Unit
%
Value
79.0
ECONOMIC IMPACTS
Salaries resulting from raw materials
Unit
000.000 EUR
Value
482
ECONOMIC IMPACTS
Salaries resulting from raw materials direct purchases
Unit
%
Value
24.0
ECONOMIC IMPACTS
Unit
TAXES
Value
ECONOMIC IMPACTS
Taxes related to purchases
Unit
000.000 EUR
Value
90
ECONOMIC IMPACTS
Taxes related to purchases in countries of operation
Unit
%
Value
31.0
ECONOMIC IMPACTS
Taxes resulting from raw materials purchases
Unit
000.000 EUR
Value
55
ECONOMIC IMPACTS
Taxes resulting from raw materials direct purchases
Unit
%
Value
30.0
ECONOMIC IMPACTS
Unit
PROFITS
Value
ECONOMIC IMPACTS
Profits related to purchases
Unit
000.000 EUR
Value
1894
ECONOMIC IMPACTS
Profits related to purchases in countries of operation
Unit
%
Value
62.0
ECONOMIC IMPACTS
Profits resulting from raw materials purchases
Unit
000.000 EUR
Value
920
ECONOMIC IMPACTS
Profits resulting from raw materials direct purchases
Unit
%
Value
40.7
RELATED TO DIRECT AND INDIRECT PURCHASES
unit
Tier 1
RELATED TO DIRECT AND INDIRECT PURCHASES
Voice and Accountability
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
Political Stability and Absence of Violence/Terrorism
unit
%
Tier 1
7.1
RELATED TO DIRECT AND INDIRECT PURCHASES
Regulatory Quality
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
Government Effectiveness
unit
%
Tier 1
7.3
RELATED TO DIRECT AND INDIRECT PURCHASES
Rule of Law
unit
%
Tier 1
7.1
RELATED TO DIRECT AND INDIRECT PURCHASES
Control of Corruption
unit
%
Tier 1
10.3
RELATED TO DIRECT AND INDIRECT PURCHASES
Child Labor
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
Forced Labor
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
Occupational Health & Safety Risk
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
High Working Hours
unit
%
Tier 1
0.0
RELATED TO DIRECT AND INDIRECT PURCHASES
Low Wages
unit
%
Tier 1
0.3
RELATED TO DIRECT AND INDIRECT PURCHASES
Gender equity
unit
%
Tier 1
18.3
Environmental Impacts
Unit
Value
Environmental Impacts
Unit
LAND USE RELATED TO PURCHASES
Value
Environmental Impacts
Land Use related to total purchases
Unit
ha
Value
199193
Environmental Impacts
Land Use related to direct purchases
Unit
%
Value
0.8
Environmental Impacts
Land Use related to raw materials
Unit
%
Value
20.0
Environmental Impacts
Land Use related to purchases in countries of operation
Unit
%
Value
62.0
Environmental Impacts
Unit
GHG EMISSIONS RELATED TO PURCHASES (1)
Value
Environmental Impacts
GHG emissions related to total purchases
Unit
000 t CO2eq
Value
3931
Environmental Impacts
GHG emissions related to direct purchases
Unit
%
Value
23
Environmental Impacts
GHG emissions related to raw materials
Unit
%
Value
56
Environmental Impacts
GHG emissions related to purchases in countries of operation
Unit
%
Value
78
Environmental Impacts
Unit
WATER CONSUMPTION RELATED TO PURCHASES
Value
Environmental Impacts
Water consumption related to total purchases
Unit
000.000 m3
Value
41825
Environmental Impacts
Water consumption related to direct purchases
Unit
%
Value
13
Environmental Impacts
Water consumption related to raw materials
Unit
%
Value
29
Environmental Impacts
Water consumption related to purchases in countries of operation
Unit
%
Value
51
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.