Through our supplier engagement strategy and newly implemented sustainability assessments, we aim to deepen our influence in the supply chain and to strengthen relationships with our suppliers. Partnerships and cooperation with suppliers on sustainability-related challenges will enable significant risk mitigation, long-term cost reductions and increased profitability. Vattenfall purchases a wide range of goods, services and fuels, with varying risk profiles and legal and sustainability requirements. Purchasing and sourcing are conducted primarily in four streams: goods and services, commodity fuels (coal, biomass, gas and oil), directly sourced heat fuels and nuclear fuel.
Part of Vattenfall's procurement strategy going forward will be to seek and establish business relationships in new supplier markets. This represents an opportunity to significantly reduce costs and share knowledge, but requires greater attention to supplier sustainability performance.
Development in 2017
Particular focus was directed to improving Vattenfall's sourcing and purchasing methodologies, increasing internal awareness, and updating methods and documents. Due to the ongoing outsourcing of certain parts of procurement, we are mapping all processes to ensure that the relevant existing sustainability checks are integrated smoothly into future processes. Vattenfall is working continuously to increase its knowledge about risks and impacts further along the supply chain.
Internal sustainability specialists coach, train, and increase awareness and knowledge about sustainability in the sourcing and procurement organisations. This is essential as Vattenfall's risk exposure increases in pace with our efforts to establish business relationships in new supplier markets and high-risk countries. Focus areas for training included the new Code of Conduct for Suppliers, human rights (based on our 2016 impact screening), and knowledge about specific high-risk countries.
We are convinced that stakeholder dialogues need to be deepened, and towards this end we intensified our dialogue with NGOs, which continues to be a good way for identifying and mitigating social and environmental risks.
Developments within the four purchasing streams (PDF 524 kB)
Key achievements 2017
- Developed and implemented new types of reviews for different categories of suppliers in the supplier base, leading to a better understanding of our strategic and main suppliers.
- Strengthened our due diligence process, in particular for suppliers in high-risk countries.
- Moved beyond auditing to more direct engagement with our suppliers. In coal sourcing, for example, we developed engagement strategies on a supplier-by-supplier basis in which we engage directly with the companies in our due diligence process, inform them of the outcomes, and cooperate with them in our work on driving continuous improvement. For example: – In Colombia we performed a human rights risk assessment. Since this visit we have maintained regular contact with the companies and have discussed the findings of our report as well as further actions that can be taken for continuous improvements.
- Increased transparency of our sourcing and purchasing activities.
Activities planned for 2018
- Improve internal governance by clarifying roles and responsibilities in the sustainable procurement process. Focus on more accurate measurement of new and existing KPIs and better reporting through new IT tools
- Development of training material on sustainability and sustainable procurement.
- Switch to a new supplier database for goods and services in order to reduce and optimise our supplier base and improve supplier management
- Further increase the share of suppliers that have undergone sustainability assessments
- Increase audits and engagement around identified risk issues.
- Perform a human rights assessment in Russia covering primarily coal, nuclear power and biomass.
- Install a Responsible Procurement Board with focus on strategic issues.