Responsible sourcing and purchasing

Vattenfall is working to continuously improve our supply chain and the performance of our suppliers. Our ambition is to be a company with high sustainable performance throughout the value chain.

Vattenfall has approximately 33,000 suppliers. A small but growing share of these suppliers are based in high-risk countries1.

Through our suppliers and their subcontractors, we must manage risks and impacts that are outside of our direct control. This also entails that our responsibility goes beyond our own organisation.

1) High-risk countries: Country risk assessments are largely based on BSCI's (Business Social Compliance Initiative) list of risk countries. BSCI updated its methodology in 2014, and Vattenfall revised its methodology in 2015.

Our strategy

Status and activities 2015

KPI

Goods and services

Commodity fuels

Nuclear fuel

Heat fuels

Planned Activities

Our strategy

Vattenfall's Code of Conduct for Suppliers (CoCfS) defines the company's requirements and expectations within responsible sourcing and purchasing, namely, human rights, working conditions, the environment and anti-corruption. Vattenfall purchases a wide range of goods, services and fuels, with varying risk profiles and varying legal and sustainability requirements. As a consequence, implementation of Vattenfall's CoCfS varies. Essentially, purchasing and sourcing are conducted in four streams: goods and services, nuclear fuel, commodity fuels (coal, biomass, gas and oil) and directly sourced heat fuels.

With ambitions to manage supplier-related risks and impacts beyond first tier suppliers, Vattenfall is working to increase its knowledge of risks and impacts further along its supply chain.

Key challenges include a lack of traceability regarding origin with respect to screen trading of commodities (coal, gas, oil), limited insight into risks in the supply chain for goods and services due to the large number of suppliers, and the complexity of certain supply chains. Other areas for improvement include strengthening Vattenfall's engagement with suppliers, follow-up of corrective actions, and gaining a better understanding of sustainability issues, particularly human rights in high-risk countries.

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Status and activities 2015

Vattenfall uses different definitions of 'supplier' and 'new supplier' for the four purchasing streams reported below and is currently conducting a project to streamline the definitions of suppliers and new suppliers to improve consistency in its reporting and to increase transparency.

For 2015, a supplier of goods and services is defined as an entity providing goods and services to Vattenfall and whose invoices have been paid. A new supplier is an entity which has no agreements/contracts with Vattenfall yet but will be included in or is currently in Vattenfall's tender processes and/or pre-qualification processes. For commodity fuels, a coal supplier is an entity which delivered coal to Vattenfall's power plants for Vattenfall's own usage. A new coal supplier is an entity that Vattenfall did not previously have a contractual relationship with. A supplier of biomass, nuclear fuel or heat fuels is an entity Vattenfall has a contract with while a new supplier is an entity that does not have a contractual relationship with Vattenfall. In 2015, Vattenfall took several steps to improve and further develop its purchasing and sourcing processes. Below are some examples within the four purchasing and sourcing streams.

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KPI

New suppliers screened through desktop assessments or site audits.

Goods and services

  • Number of suppliers: ~32,500
  • Number of suppliers representing 80% of spend: ~1,200

 Status and activities 2015:

  • All three new suppliers from high-risk countries in 2015 screened through site audits.
  • Vattenfall's CoCfS, the supplier's code of conduct when equivalent to Vattenfall's CoCfS or a statement of compliance with the UN Global Compact included in new supplier contracts.
  • Project started to map high-risk product and service categories.
  • Process developed for sanction list screening of all suppliers.

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Commodity fuels

  • Number of suppliers: ~302
  • Number of suppliers representing 80% of spend: ~151

2) Pertains mainly to directly purchased coal and biomass

Status and activities 2015:

  • Vattenfall only screens hard coal suppliers with ownership or operational control over mines. In 2015, there were no such new suppliers. Screening mainly comprises desktop assessments.
  • Completed the first cycle of supplier screening for all new and potential hard coal suppliers.
  • CoCfS or UN Global Compact included in all contracts for directly purchased hard coal.
  • Dialogues held with NGOs and suppliers in relation to Vattenfall's hard coal sourcing activities in Colombia.
  • In 2015 no new biomass pellet suppliers from high risk countries.
  • All new and existing biomass suppliers screened. Screening mainly comprises desktop assessments.
  • CoCfS included in all biomass contracts.
  • Internal seminar held on sustainability aspects of coal, biomass and oil sourcing from Russia.

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Nuclear fuel

  • Number of suppliers: ~20
  • Number of suppliers representing 80% of spend: ~10

Status and activities 2015:

  • No new contracted suppliers from high risk countries in 2015. However, the first delivery was received from a supplier in Kazakhstan contracted several years ago and audited 2012.
  • All nuclear fuel suppliers delivering in 2015 screened and approved before delivery. Desktop assessments of potential and existing suppliers in the industry are conducted every year.
  • Environmental and UN Global Compact requirements included in all new supplier contracts.
  • Active member of the World Nuclear Association initiative
  • "Corporate Social Responsibility at Mining and Other Fuel Cycle Facilities."

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Heat fuels

  • Number of suppliers: ~100
  • Number of suppliers representing 80% of spend: ~40

Status and Activities 2015:

  • In 2015, no new suppliers from high-risk countries to Sweden or to Germany.
  • Existing suppliers in Sweden screened through desktop assessments and site visits. All new suppliers to Vattenfall's German heat plants screened during 2015. Screening mainly comprises desktop assessments.
  • Desktop assessments implemented for all sourcing of biomass, bio oil and imported waste in Sweden.
  • CoCfS included in all contracts in Sweden and in all new contracts in Germany as of 2014.

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Planned Activities

To ensure continuous improvement beyond first tier suppliers, Vattenfall will continue to apply its risk and impact-based approach when implementing its CoCfS. Focus will also be on strengthening follow-up of the implementation of corrective actions by suppliers and Vattenfall's engagement with suppliers. Vattenfall will start mapping potential and existing impacts on people within its supply chain as part of a human rights impact assessment. Development of internal competence within responsible sourcing and purchasing will continue to be secured through continued training within the Vattenfall Competence Centre for Sustainability Due Diligence.

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Last updated: 2016-04-15 08:31