Purchases and tenders for goods and services

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Enel entrusts tender contracts for works, services and supplies in compliance with the legislation in force and the principles of cost-effectiveness, correctness, competition, and advertising, using procurement procedures which guarantee participating companies the utmost transparency, objectivity and equality of treatment. In addition, specific sustainability criteria are envisaged in terms of the approval procedures, procurement choices, contractual clauses and means of checking the work of suppliers.

Purchases of materials and services 2015: around 10 billion euro

Purchases of materials and services 2015:_1

Purchases of materials and services 2015:_2

SUPPLIERS WITH WHICH ENEL HAS SIGNED A NEW CONTRACT IN THE YEAR

INCREASE IN APPROVED SUPPLIERS COMPARED TO 2014

WORKFORCE OF CONTRACTORS

 

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During 2015 the Sustainable Supply Chain Project was launched which, through close collaboration between the Global Procurement and Sustainability Functions at both global and local level, aims to increasingly integrate environmental, social and governance issues into the strategy, by creating shared values with suppliers in the spirit of the circular economy. A key element is represented by the standardization throughout the Group of the criteria for selecting, assessing and monitoring suppliers from the ethical viewpoint, but, above all, in relation to the impact on the Company. In particular, during the year a questionnaire was developed to assess, during the qualification stage, the level of maturity of suppliers in regard to the issues linked to ethics, human rights and work practices, to environmental sustainability and fighting corruption, as well as to safety in the workplace.

Doing innovation together with suppliers in order to be safe and competitive

Finding innovative and concrete solutions to precise technical issues with the collaboration of suppliers and potential future partners, this was the objective of the workshop “Innovation by Vendors”, promoted by the Global Procurement unit, which saw the participation of around 25 companies operating in the various industrial sectors. An approach which has never been tried before in Enel both from the viewpoint of the methodology of addressing the issues and for the way the event was organized, based on collaboration between the Company, external suppliers and other businesses. The companies first took part in a morning briefing session on three key technical challenges for the Torrevaldaliga Nord power plant, followed by a visit to the plant, and subsequently they were asked to draw up individual technical and economic proposals and to take active and open part in brainstorming sessions. An internal Enel commission will assess the individual proposals received and the ideas that emerged, in order to verify their subsequent realization.

(October 8, Torrevaldaliga Nord power plant, Italy)

Enel has always put protecting the health and safety and mental and physical wellbeing of people, whether its own employees or contractors, at the center of its corporate culture and production processes: for this reason Enel is committed throughout its whole scope to disseminate and consolidate the culture of health and safety, encouraging people to act responsibly, promoting greater focus on and awareness of risks and working for the continuous improvement of health and safety standards and including specific clauses in contracts. Therefore, suppliers in the areas that are considered at risk (site works, maintenance, supply and laying of materials) are assessed on specific accident indices, on policies linked to occupational safety, compliance with hygiene regulations, turnover, training programs, degree of obsolesce of plant and machinery and so on (see the chapter “Occupational Health and Safety”).

The processes underpinning Enel’s procurement system

Enel’s global system of qualifying suppliers enables an accurate assessment of the companies which intend to take part in the procurement procedures and represents:

  • a guarantee for Enel, since it is an updated list of subjects of certified reliability on which to draw;
  • the possibility, in compliance with the laws in force, for suppliers, to be called on for procurement tenders organized by Group companies.

The qualifying process requires, also in compliance to the law in force, the presentation of a series of documents (selfcertification regarding the possession of the general prerequisites, financial statements, certification, etc.) and, among other things, the adhesion to the principles expressed by the Code of Ethics, by the Zero Tolerance of Corruption Plan and by the 231 Compliance Program, the Policy on Human Rights, the ten principles of the Global Compact with specific reference to the absence of any conflict of interests (including any potential conflict). All qualified suppliers have been requested, during the formalization of the contract, to provide specific documentation certifying they are up to date with the payment of social security contributions (impact on the company). 49% of the new suppliers approved in 2015, which operate in sectors considered at risk, were assessed taking into consideration also criteria linked to work practices, safety performances (including accident indices), policies linked to workplace safety, OHSAS or equivalent certification, etc. In addition, for sectors with a high environmental impact (15% of the new suppliers approved in 2015), in the approval requirements the supplier’s environmental performance was assessed and, where necessary, they were asked to implement an environmental management system that conforms to ISO 14001. For some categories relating to the Market Division specific requirements are envisaged in relation to the assessment aspects linked to staff turnover and training. The companies included in the Enel Register of qualified Companies are also constantly monitored, including through the use of external databases, in relation to events for which the company and its main exponents are responsible (economic-financial reliability, administrative procedure taken against the company or its exponents), social security contributions, criminal procedures.

Requirements of good standing

In 2015, new operating practices were identified and are currently being implemented regarding the checks on the “Requirements of good standing” of suppliers, aimed at consolidating the existing control system through more incisive action to contrast corruption and in particular through:

  • the determination of specific documentary criteria to certify the legal requirements and good standing, which are standard and applicable to the procurement process (from the approval stage to the assignment of the individual contract);
  • the identification of operational verification methods aimed at enhancing the prevention instruments available and aimed at impacting in a rational, complete and decisive way on cases of corruption and on the factors which favor its dissemination;
  • the promotion of a widespread culture of respecting the rules and ethics.

The strengthening of the checks on the possession of the aforementioned requirements, both in the stage of admission to the Approval System and maintaining the approval and in the stage of assigning a contract, is focused in particular on specific goods/contracts which are considered more sensitive.

In addition, Enel has established specific contractual clauses, which are periodically updated to take into consideration the various regulatory updates and to align to best practice, and which are included in all the tender contracts for works, services and supplies. In particular, the General Contract Conditions consists of a General Part which contains the clauses that are applicable in all the countries, to which are added country-specific annexes containing specific clauses applicable in each individual country. Currently there are 15 annexes in use (Italy, Spain, Portugal, Chile, Peru, Colombia, Brazil, Romania, Slovakia, Russia, Argentina, Guatemala, Panama, Mexico, Costa Rica). With these contractual clauses, Enel requires, among other things, its contractors and subcontractors to adhere to the ten principles of the UN Global Compact, the respect and protection of internationally recognized human rights, as well as respect of the ethical and social obligations on combating child labor and protecting women, equality of treatment, a ban on discrimination, freedom of union membership, association and representation, forced labor, environmental safety and protection, hygiene and sanitary conditions and other regulatory, pay, social security, insurance and tax conditions. Contractual commitments are then envisaged for Enel’s contractors and subcontractors aimed at adopting conduct that is opposed to any form of corruption and extortion and to lead to conduct that does not harm the environment, favoring initiatives to promote greater environmental responsibility and the development and dissemination of technologies which respect the environment.

In order to guarantee respect of the aforementioned obligations and constantly check their fulfillment, Enel reserves the right to monitor and control its contractors and to terminate the contract in the case of violation.

 

The qualifying procedure is complemented by the Vendor Rating system, aimed at monitoring the performance of suppliers in terms of their correct conduct during the tender, and the quality, timeliness and sustainability in performing the contract. The Vendor Rating index can be used as an element to assess tender invitations and to continue contractual relationships in compliance with the law in force.

Through these monitoring and assessment procedures, Enel establishes a continuous dialogue with suppliers, with the purpose to collaborate with and not to sanction them, which leads to the highlighting of weaknesses and problems found and the sharing of corrective actions. In almost all cases the company’s performance improves and the working relationship with Enel continues to mutual satisfaction.

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NUMBER OF SUPPLIERS ASSESSED UNDER VENDOR RATING WITH AN ONGOING CONTRACT IN 2015

NOTIFICATIONS OF CRITICAL SITUATIONS

PERCENTAGE OF SUPPLIERS ASSESSED WITH A CORRECTIVE ACTION PLAN WHOSE ESG PERFORMANCE IMPROVED FOLLOWING THE ACTION PLAN

Global PortalOne

In January 2015 a single global registration point was launched for suppliers and for all the companies in the Enel Group, a sole interface for the whole global procurement world.

This new function immediately allows the supplier, using their unique username and password, to interact with all the companies in the Enel Group through the global dashboard (called “myHome”) and to use all the services available: responding to tender invitations, managing their own qualifying process, viewing their own Vendor Rating results, and so on.

Online deals in 2015 in Italy numbered 1,640 and allowed around 430 thousand pages not to be printed, thus reducing the environmental impact of this work.

The contractors are also involved in numerous informationgiving and training activities, such as the “Annual Suppliers’ Days” which are organized in various countries; for example, in that organized in June 2015 by Enel Russia the prerequisites in terms of health and safety for contractors were presented, as well as anti-corruption policies, the Code of Ethics and conformity to international corporate standards for current and potential suppliers (see also the chapter “Occupational Health and Safety”).

Development and use of local companies in the Istmo region (Mexico)

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Since 2012, the year when the two power plants of Stipa Nayaa and Zopiloapan in the State of Oaxaca, in Mexico, came into operation, Enel Green Power has provided work opportunities in O&M activities to around 10 local companies, favoring their development and so contributing to the economic and social participation of around 50 families from the State of Oaxaca. Local companies were involved in the routine maintenance work on the plants and in general services (for example, security guarding, drinking water services, road maintenance and onsite civil engineering works).

Green Procurement

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The Environmental Management System of Enel Italia includes, in Italy, the green procurement business, in other words the procurement of products and services which are more environment-friendly than others which may be used for the same end. In particular ad hoc requirements have been introduced (relating to energy consumption, use of water, consumption of raw materials and dangerous substances, use and recovery of packaging, polluting emissions and noise, recycling/reuse of the waste produced) in the technical specifications to call new green tenders. Green procurement contributes also to increasing the purchase of recycled materials.

Enel has set the goal of increasing the types of green goods and services, both by applying new ecological criteria to other geographic areas, and by adopting international ecological brands which are continually updated (Ecolabel, Nordic Swan, Blue Angel, etc.).

 

In 2015 total green purchases in Italy stood at 807.5 million euro (663 million euro in 2014). In particular, this includes purchases relating to 24 product groups identified as green (around 244 million euro) and the tenders awarded to suppliers holding for the product or environmental management system certifications or who have ongoing certification (around 564 million euro). The increase compared to the value in 2014 was largely due to the inclusion of 3 new product groups: demolition works on large scale plant, works on low- and medium-voltage plant and complete primary cabins.

Group product codeGreen product groupsContractual value (m. euro)% of total
FEAP01 Lead and hermetic accumulators 3.0 1.2%
FETR15 Oil immersed MV/LV transformers and self-transformers 0.4 0.2%
FETR16 Resin MV/LV transformers and self-transformers 0.4 0.1%
FHPC02 Ammonia 4.2 1.7%
FIHC01 Storage devices (magnetic disks and backups) 3.0 1.2%
FIHD04 Personal computers (Desktop, Notebook and Palmtop) 10.1 4.1%
FOCA02 Stationery, printers, cardboard, toner, IT materials and accessories 0.4 0.1%
FOMO05 Furniture and fittings for offices 2.0 0.8%
FOPA03 Supply of promotional items 0.1 0.1%
LCCC04 Demolition of buildings 4.4 1.8%
LCCC20 Demolition works on large scale plant 1.1 0.4%
LELE05 Works on low- and medium-voltage plant 114.2 46.7%
LESC01 Complete primary cabins (civil and electric works) 19.3 7.9%
LIOP02 Tunnels, canals, and hydraulic works – construction and maintenance 10.5 4.3%
LMIS01 Insulation installation and removal and hire of scaffolding 1.5 0.6%
LMTS04 Industrial paints 1.3 0.5%
MCMO08 Routine maintenance services for buildings 0.7 0.3%
MMIM18 Operation and maintenance of wind farms, specialist interventions on wind turbines 5.6 2.3%
MMPI02 Industrial cleaning and washing 5.7 2.3%
SLPI04 Cleaning – transport, goods/material movement and porterage 1.0 0.4%
SLRA51 Management of canteens, company bars and supply of restaurant vouchers 14.6 6.0%
SLTR28 Transport and movement of goods/materials and porterage 21.8 8.9%
SRTS21 Transport and disposal of non-hazardous special waste 12.6 5.2%
SRTS22 Transport and disposal of hazardous special waste 6.6 2.7%
Total 244,4 100.0%