Informe de actividad en Compras y Gestión de Proveedores y su

CONTENTS
6. Dialogue with suppliers
1. Presentation
Activity report for Procurement and
Supplier Management, and their
contribution to the Group´s Sustainability
2015-2016
a. Satisfaction survey
2. Purchases at IBERDROLA Group
a. Mission
b. Procurement organisation
b. Supplier traction
8. Commitment to continual improvement
c. Key figures: volumes, countries, supplies,
suppliers
d. Support for entrepreneurs or recently
created companies
3. Policies and procedures
a. Code of Ethics
a. Objectives for the year
b.
Main indicators
9. Supplier diversity programme
10. Supplier innovation programme
11. Supplier of the Year Award
12. Supplier communication plan
b. Procurement Policy
13. Main benefits
c. Supplier´s Code of Ethics
a. Social scope
d. Contractual clauses
e. Procurement procedure
4. Procurement process transparency
b. Economic scope
c. Environmental scope
5. Sustainability in procurement management and
supplier relations
a. Supplier registration and classification
b. Classification assessment factors
c. Human rights regarding suppliers
d. CSR Scoring
e. Emissions associated with the supplier chain
14. Medium-term priorities and objectives

2014-2015 challenges and their
status

Participation in other responsible
supplier management initiatives

Medium-term objectives
f. Credit risk
g. Supplier corruption risk
h. Global training for all procurement teams
in the Group
i. Procurement analysis in countries at risk of
corruption
j. Supplier audits
FINANCE & RESOURCES PURCHASE & INSURANCE Supplier Management
2. Purchases at IBERDROLA Group
IBERDROLA channels its procurement processes for
equipment, materials, construction work and services
through the Procurement and Insurance Division.
Mission
The Procurement Division takes a proactive stance to
respond to external requirements and adopt a firm
commitment at all levels, developing new capacities and
engaging the supplier/vendor from the outset of contact
with the Group.
Procurement's mission perfectly defines the centralisation
characteristic (permitting synergies and the application of
best practices for purchases throughout the entire Group)
and the 4 fundamental values that should be preserved:
Transparency: Guaranteeing equal opportunities by
applying criteria of objectiveness and impartiality.
Promoting publicity and competition in the selection
processes within the criteria for management efficiency.
To do so, IBERDROLA has its own Supplier’s Code of Ethics,
which sets out the Group's firm commitment not to accept
any corrupt, fraudulent or illegal practices or actions
contrary to the Company's policies and principles in the
area of corporate social responsibility.
Strategy: Purchases must always be aligned with Group
strategy and values: creating value, quality of life, safety
and security of persons and the supply, environmental
protection, social responsibility and customer orientation.
BUSINESS PARTNERS
Procurement Organisation
The IBERDROLA Group follows a common Corporate
procurement model. The Procurement organisation
comprises over 200 professionals strongly rooted in the
local community yet with centralised management. This
allows us to benefit from the talent and proximity to
operations of the business areas and the corporate fabric of
the countries in which we work, and with a Global-level
coordination enabling us to identify synergies and strategic
alignment.
Efficiency: Securing the best conditions by optimising the
available resources.
Suppliers are thus considered to be strategic players within
the Group, and the procurement function is equipped with
the necessary mechanisms to guarantee a fair &
transparent supply chain driven by ethical value.
SUPPLIERS
Service: It should be kept in mind that Procurement is an
internal client service unit and must thus satisfy client
needs in terms of cost, quality and timelines.
Compliance: purchases must be made in compliance with
the pertinent legislation in force in each country, approved
1
Liberalised Business handles the acquisition of fuels
LOCAL
In its day-to-day undertakings, the Procurement and
Insurance Division strives to create value for its various
stakeholders by assuming and promoting the values and
commitments acquired by the Group regarding ethics and
Corporate Social Responsibility (CSR) contained in the
Group's Code of Ethics and Social Responsibility Policies.
For this purpose, the procurement process has
implemented mechanisms to ensure transparent,
comprehensive and responsible management in the supply
chain. Doing so has enabled the company to take on
globalisation and internationalisation of its processes with
the confidence that the values and commitments to ethics
and responsibility are transmitted to their suppliers,
regardless of their global location or area of activity.
The Procurement and Insurance Division at IBERDROLA has a
single mission, namely: “To centrally and co-ordinately
manage the purchase of equipment and materials, and
the commissioning of construction work, services and
insurance policies1 for the entire Group, with the
objectives to minimize purchase costs, guarantee the
strategic alignment of the awarded contracts, compliance
with pertinent legislation in force in each country and the
Procurement Policy approved by Group Governance Bodies,
and compliance with the requirements defined by the
requesting internal client, who will subsequently execute
the provision. In addition, to define the insurance
contracting policies and execute all activities related to the
administration of contracted insurance policies.
Procurement Policy and the requirements defined by the
businesses.
GLOBAL
1. Presentation
A single organisation
Volume-based synergies
Supplier negotiating leverages
Attending to local needs
Using the Group´s best practices
Detecting global purchasing opportunities
Procurement Organisation Duality
There is an elevated level of coordination between
purchasers to secure contracting excellence.
Main figures:
volumes, countries, supplies, suppliers
The following table gives an overall breakdown of the total
volume managed by the Procurement Division in 2015,
which reached €7.300 million in awarded contracts, €5.093
million of which was received during the year:
General supply of
equipment, materials,
construction work and
services (millions of
euros)
2015
Spain
1.297
1.316
1.364
1.764
1.610
1.572
United Kingdom
2014
2013
United States
1.128
1.057
840
Mexico
479
332
217
Brazil
164
165
180
Other
261
119
186
IBERDROLA Group
5.093
4.599
4.359
+17.000
The elevated volumes of purchases made during the year
drives growth in the countries in which the Company
undertakes contracting, favouring business, industrial and
social development in these regions by creating jobs along
the entire supply chain.
The main suppliers of the Group in 2015 were:
ABB
General Electric
Alstom
IBM
Bladt Industries
Prysmian
Elecnor
Siemens
Gamesa
ZIV
None of the main suppliers represents over 10% of the total
volume invoiced in the year.
Distribution of purchases by supply type during 2015:
Works &
Services
61,4 %
Equipment
& Materials
38,6 %
Suppliers with at least one order in the year
+7.300
Tenders managed during the year
Purchase Segmentation in 2015
The main categories of goods and services contracted
during 2015 were: underwriting of service contracts for the
construction and maintenance of power distribution
facilities, purchasing of equipment and spare parts for
renewable energies, generation plant equipment and spare
parts, other IT support services and engineering work.
Purchases made from local suppliers at the close of 2015
rose to 85%, itemised as follows:
% General supply purchases from
local suppliers
2015
2014
2013
Spain
United Kingdom
United States
Mexico
Brazil
Other
93
80
98
61
100
41
84
91
99
60
100
40
87
83
99
64
100
67
IBERDROLA Group
85
87
86
Note: a local company has its tax identification/registration
(NIF/CIF/VAT) registered in the same country as the Purchase
In addition to purely economic wealth, the actions of
IBERDROLA from a responsible and sustainable point of view
constitute a powerful motor for the market, motivating our
suppliers to enhance their environmental, ethical and social
profile through actions that foster excellence within their
management, to go beyond technical quality and,
therefore, contribute to making our suppliers even more
competitive.
Support for entrepreneurs or recently created
companies
IBERDROLA'S purchasing volume with companies younger
than 5 years in Spain during 2015 totalled €36 million,
which clearly shows our support to entrepreneurship, given
the commonly accepted belief that the most effective way
of supporting new business ideas is by acquiring the
products/services during the initial years of a business to
help them enter the market.
Moreover, the Supplier of the Year Award incorporated
another category, namely for “Best Startup”.
3. Policies and procedures
Code of Ethics
A key element in the integrity of IBERDROLA businesses.
The vision and values incorporated in the Code of Ethics are
embodied by some principles of conduct linked to the
Group by the manner to conduct relationships with third
parties and represents the commitment with the highest
standards of company ethics and transparency.
Procurement Policy
The Procurement Policy, approved by the Board of
Directors, establishes the global framework for monitoring
and managing risks (market, credit, business, regulatory,
operational and reputational) resulting from activities
undertaken for the procurement or contracting of materials
and equipment, and commissioning works and services at
IBERDROLA Group, particularly stressing compliance with
the commitment to ethics by professionals from the Group
and its suppliers.
The Procurement Policy is based on the following basic
principles:
• Promoting a strong risk culture and the development of a
corporate culture based on ethics and honesty across the
entire organisation, capable of supporting the professional
and ethically responsible behaviour of all of the employees,
through strict application of the Code of Ethics.
• Establishing in a coordinated fashion, the standards and
controls associated with the activities of purchasing and
contracting for equipment, materials, works, and services
for the benefit of the companies making up the Group,
ensuring full adherence to the corporate organisation
deriving from the Group’s governance model.
• Implementing the mechanisms required for purchasing
decisions to in any event ensure the achievement of
balance between technical competence, quality, price, and
supplier qualifications as a key condition for the
contribution of value.
• Establishing supplier selection procedures that conform to
standards of objectiveness, impartiality, and equal
opportunity, ensuring at all times the professionalism of
employees as well as their loyalty to the Group and its
shareholders regardless of their own or third-party
interests.
• Promoting strict compliance by suppliers with contractual
terms and conditions and with applicable law, as well as
with the guidelines for action set forth in the Suppliers’
Code of Ethics.
• Furthering a supplier relationship policy based on the
principles of corporate ethics and transparency, striving for
continuous improvement and mutual benefit and promoting
innovation and development activities.
• Fostering the motivation and active participation of
employees, the training required for the performance of
their tasks, and the continuous education thereof.
Supplier Code of Ethics
Attached as an annexe to The Procurement Policy of the
Group is the Supplier’s Code of Ethics, which stipulates the
guiding principles for suppliers’ activities, in line with
Group principles and values. The full text can be viewed at
the following link:
http://www.IBERDROLA.es/webibd/gc/prod/es/doc/prove
edores_codigo_etico.pdf
During the tender stage, all suppliers and service providers
are informed of the Supplier Code of Ethics, which is part
of the documentation in both the request for proposals as
well as the final contract documentation entered into with
the awarded provider.
Contractual clauses
The purchasing conditions of IBERDROLA are the general
documents that govern the relationships between the
enterprises constituting IBERDROLA Group and their
suppliers, and are normally included as an essential part of
the contractual documentation.
These conditions contain binding contractual clauses for
performance by the parties within the most stringent levels
of health and safety, occupational risk prevention and
environmental respect. Moreover, the Group's General
Contracting Conditions incorporates specific clauses
regarding supplier corporate social responsibility based on
the UN Universal Declaration of Human Rights, the
Agreements of the International Labour Organisation and
the principles of the Global Compact (respect and
protection of human rights, eliminating all forms of forced
and mandatory labour, preventing all forms of child labour,
eliminating all discrimination practices, working against
corruption, etc.).
When undertaking and/or executing the supply, suppliers
must adopt the necessary measures in their organisation
for:
(i) Promoting good practices for the support and respect in
safeguarding human rights.
(ii) Precluding the incurrence of complicity -of any sortfacing the abuse of these rights.
(iii) Respecting the freedom of trade unions and the right
to collective bargaining for workers as contemplated in the
pertinent local legislation to which the supplier is subject.
(iv) Eliminating all forms or modes of forced and
compulsory labour, i.e., all work or service demanded of an
individual under the threat of any penalty whatsoever and
not given freely and voluntarily by the individual.
(v) Precluding all forms of child labour in the organisation,
adhering to the minimum age limits for contracting as
stipulated by the pertinent legislation currently in force
and having appropriate and reliable mechanisms for
verifying the age of employees.
Suppliers shall inform IBERDROLA of any situation in which
a breach of the aforementioned principles has been verified
in addition to the plan to remedy the presented situation.
On failure to adapt such corrective plans, IBERDROLA
reserves the right to cancel the contract.
Additionally, when the supplier subcontracts to undertake
and/or execute the supply commissioned by IBERDROLA,
the indicated principles must be established among the
contractual conditions applicable to the subcontractor or
reseller.
The full text can be viewed at:
http://www.iberdrola.es/suppliers/purchasingportal/contracting-conditions/terms-purchase/
Procurement Procedure
The Procurement procedure develops the Procurement
Policy.
The management for procurement equipment, materials,
construction work and/or services includes the part of the
entire supply chain, from scheduling the purchase until the
contractual relationship with the supplier has been
formalised.
(vii) Having a preventive approach regarding environmental
issues to attain sustainable development while limiting
activities whose environmental impact raises concern.
The Procurement Organisation at IBERDROLA is responsible
for developing this management task on behalf of the units
or business parent companies and subsidiaries thereof, via
the following stages:
Rejecting all fraudulent practices or corruption situations,
developing a culture of integrity in the businesses and
establishing preventive mechanisms for fighting against
corruption in any shape or form.
Tender
Assessment of
Offers and
Proposals
Award
Formalisation
of the
Framework
Agreement/
Closed Order
At all times during the effectiveness of the contract, the
supplier will let IBERDROLA review the degree of
compliance with the principles established in these clauses.
(vi) Eliminating all discriminatory practices in the area of
employment and labour. To this end, discrimination is
construed as any differentiation, exclusion or preference by
reason of race, colour, sex, religion, political opinion,
nationality or social condition that leads to the annulment
or alteration of equal opportunities in employment.
Regarding the fight against corruption:
Purchasing
Plan
Purchase management stages
During 2015, the Procurement Division has renovated its ISO
certification of the quality management system for the
companies pertaining to IBERDROLA Group based in Spain
and the United Kingdom. The certification includes the
management of the procurement process and supplier
classification.
It is an important achievement that rewards the efforts
made for integrating processes and corresponding quality
standards while confirming the consolidation of the
corporate procurement model.
Certification was granted by AENOR and IQNET, and implies
that the procurement process and classification of suppliers
have a quality management system in accordance with
standard UNE - EN ISO 9001:2008.
Procurement process management encompasses activities
corresponding to the acquisition of equipment, materials,
construction work and services, and supplier classification
encompasses activities necessary for registering suppliers
and their analysis according to stipulated requirements.
4. Procurement process transparency
IBERDROLA is committed to the best corporate governance
practices, with ethical business principles and transparency
in all areas of the Company.
The equality of opportunities is guaranteed at the
Procurement Division by applying objective and impartial
criteria for relationships with suppliers, and promoting
publicity and competitiveness for selection processes under
the criteria for management efficiency.
With a view to attaining greater transparency in the
process, the request/reception of offers and economic
negotiation with suppliers is exclusively handled by the
Procurement organisation, or the Business Manager for
Procurement.
The yearly targets for the procurement team include
finalising the rounds of negotiations in tendering processes
with a transparent closure through closed envelopes and/or
electronic auction.
The procurement process is audited regularly, both
internally by the competent unit as well as by external
entities, with no non conformities during the year.
Nonetheless, recommendations and opportunities for
improvement arising during such reviews are analysed and
implemented with a view to maintaining constant
improvement in the related procedures.
5. Sustainability in procurement management and
supplier relations
Supplier registration and classification
Supplier management effectiveness has become an element
of vital importance enabling constant improvement in the
value chain while generating the necessary decision-making
information in the Procurement area.
The rapid and profound transformation that IBERDROLA has
undergone in recent years has also multiplied our
responsibility as a global enterprise with thousands of
suppliers with orders throughout the year from all corners
of the world.
The global supplier management model is the foundation on
which to build comprehensive and uniform corporate
processing for responsible supplier management regardless
of the suppliers' global location, economic activity and
territorial scope from which purchases are made,
nevertheless attending to local requirements that may exist
in the supplier's country of origin.
One of the essential factors behind the creation of this
management model is the importance given to facilitate
the registration and classification process for suppliers
who:




strive to work with IBERDROLA
are participating in tender/procurement
proceedings
have been awarded some contract or framework
agreement for supplying equipment and materials,
or furnishing construction work and services
have an effective contract open for delivering
services inside and/or outside IBERDROLA work
centres
The model lets us standardise and streamline the
relationship with suppliers, registering and classifying
them, and sharing key and updated information with the
personnel involved in the procurement process. The
foregoing clearly results in savings in terms of time, costs
and efforts invested in business activities for suppliers and
IBERDROLA.

Basic registration: new potential suppliers,
suppliers with a low order amount, non-critical
equipment or services supplies. Depending on the
information provided and internal classification
criteria, a supplier can remain at this level ("low
risk") or be required to complete a higher level
(Global Registration)

Global Registration: suppliers with a relevant
yearly order amount, critical supplies, country risk.
This requires the presentation of detailed
information and relevant documentation, which we
use to manage suppliers internally
Supplier classification assessment factors
The minimum requirements to be classified as an
IBERDROLA supplier include:




Acceptance of the Supplier´s Code of Ethics
Compliance with applicable legislation in each of
the countries in which IBERDROLA Group conducts
its business
Proof of a stable financial situation
For certain contracts, an appropriate needs-based
third-party liability policy
Once registered, the factors assessed for classifying the
supplier will depend on the supplier's situation in the
following areas:

Corporate social responsibility, labour practices and
respect for human rights

Environmental respect

Safety and occupational risk prevention
Access to the supplier record is open to any interested
company through the corporate website.

Assessment of credit risk, financial health

Quality
There are currently two supplier registration levels:

Risk of corruption and bribery

References and history of previous work
The supplier's situation in the area of sustainability
(quality, environment, occupational risk prevention, social
responsibility and human rights) has a weight of 40% on the
total score, and the other 60% corresponds to the
assessment of credit risk, financial health and prior
references.
Seeking to improve the situation for suppliers with minor
performance in these matters, year-long actions are carried
out for traction, awareness-raising and motivation with a
view to having these suppliers become certified in these
areas (further information in the section on Dialogue with
suppliers-Traction).
Human rights regarding suppliers
In supplier management and during the procurement
process, the measures adopted by the Company to protect
these rights are founded on the Procurement Policy,
Supplier Code of Ethics and the specific clauses regarding
social responsibility in the contractual conditions
accompanying the issued orders.
Countries considered to be at risk,
where purchases have been made
2
5,77
3,24
Mexico
Brazil
Canada
% of purchase
over total
(*)
0,96
Greece
0,15
(*)
0,10
India
(*) Primarily projects and supplies of Iberdrola Ingeniería y Construcción
for third parties
During 2015, no human rights issues were detected for
suppliers, nor were there any practices that could
undermine the respect for human rights in the Procurement
area at Grupo IBERDROLA, and thus no contract was
cancelled for this reason.
Supplier CSR Scoring
Since 2011, the Procurement Division is participating in the
development of a sustainable assessment model for
suppliers.
The purpose of CSR Scoring is to ascertain the relative
position based on the management that suppliers carry out
in terms of social responsibility so as to create a
distinguishing criterion when requesting for proposals or
entering into contracts with them.
To do so, the supplier must submit its situation in the 4 CSR
dimensions:
•
Leadership
•
Dialogue
•
Management
•
Communication
Depending on the results, suppliers are classified as: “A+”
or above-average suppliers, “A” or suppliers whose scoring
falls within the average, and “B” or below-average
suppliers.
A regular analysis is conducted on purchases made in
countries considered to be at risk for not having ratified ILO
conventions regarding forced labour, freedom of trade
unions and collective bargaining, and child labour; in
addition to countries that, while having ratified these
conventions, have nevertheless had observations made
raising weak points in the application thereof.
The assessment gives added value to a supplier, revealing
areas for improvement to focus its efforts in terms of social
responsibility.
In 2015, the Procurement Division consolidated CSR Scoring
in all global areas, resulting in the following:
The most recent analysis at the close of 2015 revealed the
following percentages for purchases from suppliers
operating in risk countries:
Classification
2015
%
2014
%
2013
%
A+
552
36
360
27
324
27
A
813
53
757
57
710
59
B
171
11
209
16
168
14
Totals:
1.536
2
Countries at risk were identified based on the International Labour
Organisation's 2015 report entitled Report of the Committee of Experts on the
Application of Conventions and Recommendations.
Countries were considered to be at risk for not having ratified ILO conventions
regarding forced labour (C029, C105), freedom of trade unions and collective
bargaining (C087, C098), and child labour (C138, C182); in addition to countries
that, while having ratified these conventions, have nevertheless had observations
made raising weak points in the application thereof.
1.326
1.202
In this analysed group, there are 343 suppliers adhered to
diverse international corporate social responsibility
initiatives (compared with 323 in the previous year). These
Emissions associated with the supplier chain
In IBERDROLA's firm commitment to the fight against
climate change, we seek to extend our efforts to meet
emissions reduction targets among our suppliers. The
emissions from suppliers are obtained through a yearly
environmental awareness campaign with a view to fostering
the reduction of CO2 emissions in the supply chain.
In 2012, the resulting footprint was included for the first
time in scope 3 of the IBERDROLA emissions inventory and
verified as per standard ISO 14064.
During 2015, we ran the Sixth Supplier Greenhouse Gas
Awareness and Measurement Campaign by sending
specific questionnaires to over 1,100 Group suppliers
(materials, equipment, construction work or services) in
Spain, Mexico, the United Kingdom, Brazil and the United
States of America.
With this initiative, we seek to have suppliers demonstrate
their effectiveness in the management, control and
reduction of greenhouse gas (GHG) emissions, while
understanding the impact of climate change on their
businesses, managing the associated risks appropriately.
Of the replies obtained from the questionnaires, emissions
proportional to the supplier invoicing volume to the
Company with regard to the total were taken as
corresponding to IBERDROLA.
With these campaigns, suppliers are also given the
opportunity to let us know the environmental projects that
they are developing or whether they have some
environmental project that they would like to undertake in
partnership with IBERDROLA.
Questionnaires sent
Mexico
Brazil
United
Kingdom
United
States
Sixth Supplier
Greenhouse Gas
Measurement Campaign
Spain
initiatives include: Global Compact, Code of good practices
in the corresponding sector, WBCSD or national
representative delegations.
Total
No.
589
250
133
120
78
1.170
No.
318
94
70
32
19
533
%
54
38
53
27
24
46
No.
127
51
19
9
7
213
%
40
54
27
28
37
40
No.
103
44
13
6
6
172
%
32
47
19
19
32
32
No.
116
47
19
8
7
197
%
37
50
27
25
37
37
No.
44
34
7
4
4
93
%
38
72
37
50
57
47
the basis of financial solvency, capacity and IBERDROLA's
exposure to the risk of breach of contract. This
qualification is considered when selecting the awardee
suppliers for contracts, and when scoring the various
options to safeguard the Group's position.
Over 87% of the total amount of purchases made were
analysed during 2015.
Questionnaires received
Provided emissions
calculations
Established some target
for reducing emissions
Made an emissions
inventory
Emissions inventory
verified by third parties
Supplier corruption risk
Forty per cent (40%) of the questionnaires received (46% of
total) provided emissions calculations, of which nearly 47%
had their inventory verified by a third party.
These figures reveal both an increase from previous years
and the campaign's effectiveness in raising supplier
awareness.
Analysed supplier credit risk
With a view to preventing the potential negative
consequences for IBERDROLA of the failure of the suppliers
to honour their acquired commitments, the Procurement
System has a credit risk management system for the main
suppliers of the Group.
In application of this system, the main potential and
current suppliers of the Group are assessed and qualified on
At IBERDROLA, there is a commitment to the highest
standards of corporate ethics, transparency and integrity in
business.
One instance of this commitment came in 2012, when the
Board of Directors set up the Compliance Unit, whose
duties include the diffusion of the Code of Ethics and the
development of a preventive culture based on the principle
of “zero tolerance” with regard to crime and fraud.
Establishing programmes and mechanisms to fight against
corruption and forestall them no matter their embodiment
is of vital importance to the Group; fostering a culture of
integrity among Group professionals and related third
parties.
IBERDROLA requires that both in-house professionals as well
as any third party working on the behalf thereof, or with
whom we have an established relationship during activities,
must observe the most stringent standards of integrity
when undertaking their business activities and not involve
themselves in situations involving corruption or bribery, nor
participate in any type of fraudulent conduct or actions.
The following measures are implemented in IBERDROLA
procurement procedures and processes as mechanisms to
prevent bribery and corruption:









IBERDROLA Group Code of Ethics
The Supplier´s Code of Ethics
Crime Prevention and Anti-fraud Policy, through which
a preventive culture is established based on the
principle of "zero tolerance" towards crime and fraud
In general and depending on the number of existing
suppliers and nature of the acquisition, the tendering
process will ensure that a minimum of three valid bids
are obtained for each acquisition
Bids for orders are released jointly, and approved by
two duly empowered officers
There is a separation of procurement activities
(Procurement Division) from the activities of the
subsequent procurement (Business Units) and invoice
payment to suppliers (Administration and Control
Division)
Fully supported traceability (payment-invoice-ordertender) in corporate systems with the necessary
substantiating documentation
The process is audited regularly, though no non
conformity has arisen so far
Specific section prompting the supplier to reply during
the classification process:
o Can the company demonstrate that its labour
practices consider the following internationally
recognised conditions? Anti-bribery and anticorruption measures
o Does the company require its suppliers and
contractors to apply labour practices in the
area of Corporate Social Responsibility (CSR)
according to international standards?
Additionally, the most recent addition of the contractual
clauses includes specific sections in this regard.
After the “Anti Bribery Act” came into force in the United
Kingdom, a series of measures were established in the
tendering process so that an associated corruption risk
assessment will be conducted on the contract when
opening a new relationship or renovating an alreadyexisting contract with a supplier.
Reflection of IBERDROLA's pledge to integrity and adopting
best practices for fighting against corruption by extending
measures of this sort across the full procurement gambit of
the Group, and suppliers participating in tenders entailing
approximately 90% of the total tendered amount during the
year have been analysed in the area of corruption.
Over 90% of the total amount of purchases made were
analysed during 2015.
No incidents were reported through the established
channels during the year that would have given reason to
cancel orders or contracts with suppliers, and no court
decisions were handed down in this regard.
Any suspicion concerning an employee or third party
regarding a potential case of bribery or corruption must be
reported immediately to the immediate supervisor, brought
to the attention of the Group's Compliance Unit or
communication through the ethics mailboxes enabled for
this purpose.
Suppliers are analysed in each of the following six sections:
Factor 1 – Level of contact that the service
provider/supplier has with public authorities
Factor 2 – Type of service furnished
Factor 3 – Contracting volume
Factor 4 – Corruption index of the supplier's country as
per Transparency International (CPI)
Factor 5 – Payment method
Factor 6 – Other factors: “red flags”: high dependency of
the providers/suppliers on the Iberdrola Group, high
financial risk, requests from providers/suppliers to
receive payments in countries considered to be tax
havens, failure to observe IBERDROLA Policies, or refusal
to accept an anti-bribery and corruption clause in the
corresponding contract, etc.
the scores for each section are added together to
determine the supplier's total risk qualification, and the
analysis could be derived in a process of “Due diligence” in
case of a high risk of corruption.
Global training for all procurement teams in the
Group
The Procurement team tallied over 1,600 classroom
training hours during 15 sessions held throughout 2015 in
Spain, the United Kingdom, the United States of America,
Mexico and Brazil. The content of this training focused on
the knowledge of the main principles established in the
Procurement Policy, Corporate Social Responsibility
measures in the supply chain, internal and external risks,
area objectives and cybersecurity.
Procurement analysis in countries at risk of corruption
Transparency International publishes its Corruption
Perceptions Index on a yearly basis. The 2015 Corruption
Perceptions Index (TI CPI 2015) was published on 27
January 2016. This edition reported that two-thirds of the
168 countries studied obtained scores under 50 with an
overall average of 43 on a scale from 0 (perception of high
corruption levels) to 100 (perception of low corruption
levels).
After publication of the Transparency International 2015
Corruption Perceptions Index, Company purchases were
examined:
6. Dialogue with suppliers
The model that IBERDROLA has been developing and
improving to manage the rapport with suppliers as well as
the broad catalogue of dialogue and communications
channels made available to these groups are summarised in
the table:
Stakeholder
group
Relevant
dialogue and
communicatio
n channels
Supplier service
centre
The percentages in 2015 and 2013 were very similar, since
the index worsened again for Spain, whose score dropped
to medium risk (currently at 58 points compared with the
60 points in 2014). Countries with a high risk of corruption
in which purchases were made with local suppliers are
primarily: Mexico and Brazil.
Moreover, IBERDROLA has made no general supply purchase
in tax havens.
Suppliers
Supplier portal
on the
corporate
website
Satisfaction
survey
(*) The percentage of purchases made refers to the accumulated awarded
contract volumes to suppliers in these countries at fiscal year end
Other dialogue channels
Supplier registration and
classification process
Workshops with business
organisations
Meetings with suppliers
E-mail
[email protected]
Supplier traction campaigns
Global coordination meetings with
Spain, UK, USA and Brazil
Supplier audits
By year's end, a total of 48 social audits were conducted on
suppliers with orders during the year. Suppliers with non
conformities have been given a deadline to rectify detected
deficiencies. The purpose of the audits conducted in situ is
to be assured that the supplier has fulfilled all the
requirements to be able to minimise the risk in the areas of
human resources, environment, quality, labour risks and
corporate social responsibility.
the expectations and perceptions of suppliers regarding the
procurement process and Company.
Significant progress has taken place in key elements
regarding relations with this group with a view to
consolidate the model applied within the parameters of
Standard AA 1000 (Assurance Standard).
Supplier Survey
As a further instance of the efforts that IBERDROLA has
made to ascertain the satisfaction and expectations of its
stakeholders, among which supply companies hold a
prominent position, there is a regular Supplier Satisfaction
Survey conducted to provide the Procurement Division with
Knowledge of our suppliers' opinions is an essential piece to
include new continual improvement actions in the
Corporate Social Responsibility and Reputation Plan (with
the active participation of the upper echelon of the
Procurement and Insurance Division at IBERDROLA Group).
The most recent edition of the survey was sent to a
representative number of Group suppliers/providers: 2,516
suppliers/providers, with a participation of 49.6 %; hence
greater interest and collaboration than normal for these
cases.
Supplier
Satisfaction
Scoring
4th
Edition
3rd
Edition
2nd
Edition
1st
Edition
8,00
7,74
7,57
7,56
Results from supplier satisfaction surveys
Regarding the perception on procurement processes,
systems and supplier relations, high marks were attained
for professional respect, agility in contracting and
transparency when establishing conditions.
Computer software used during tendering provided
transparency in the process while saving time.
The aspects of possible improvement (while still receiving
noteworthy scores) concern the financial conditions.
Regarding the overall perception of the Iberdrola,
appreciation rests primarily in the Company's reputation
and the trust that it inspires (with a score of 8.5 out of 10
possible points).
Supplier traction
7. Commitment to continual improvement
The diversity of our group of current and potential suppliers
in terms of size, sector, geographic distribution, etc., has
given rise to the need to define flexible actions that adapt
to the local or global market at all times.
Objectives for the year
One consolidated practice in Spain concerns the traction
activities for quality, environment and occupational risk
prevention among relevant suppliers that had no thirdparty certified management system. Each one was
contacted and informed that their certification in these
areas would be valued positively, since IBERDROLA’s
objectives include having key suppliers with certified
management systems, as the Company’s corporate units and
business areas have already done as a vehicle to ensure
reliable and responsible conduct throughout the supply
chain.
In recent years, this practice has extended to all global
areas.
During 2015, over 550 letters were sent to suppliers to
encourage them to become certified in the mentioned
areas.
During 2015, the small suppliers development programme
was carried out in partnership with SEBRAE (Brazilian Micro
and Small Business Support Service), with a view to
increase competitiveness and improve small enterprise
management. At the end of this stage, participating
suppliers received a report with their individual situation in
the areas of: clients, competitors, suppliers, financial
situation and performance together with an action
guideline useful for improving their business.
The establishment of objectives is essential for improving
processes and seeking excellence in management.
Evaluating results against objectives becomes fundamental
on the path to excellence.
The Management by Objectives System at IBERDROLA has
been designed to reinforce the attainment of objectives
derived from strategic lines, contributing to the creation of
value.
An innovative aspect of IBERDROLA's Procurement Division
entails having established annual objectives of continual
internal improvement for the Purchases team associated
with variable compensation directly related to quality
improvement and supplier performance in areas of the
environment, occupational risk prevention, quality and
corporate social responsibility.
OBJECTIVE
2015
2014
2013
% increase in the awarded amount to
classified suppliers
93,5
92,3
86,8
84,5
83,7
84,4
75,2
76,9
75
69,2
71,5
69,1
% increase of the amount contracted
to quality certified suppliers
(ISO 9001 or equivalent)
% increase of the amount contracted
to environment certified suppliers
(ISO 14001 or equivalent)
% increase of the amount contracted
to occupational risk prevention
certified suppliers
(OHSAS 18001 or equivalent)
The chart below shows the progress made over recent
years:
This therefore motivates not only suppliers to improve their
profile by actions that encourage excellence in business
management (as mentioned in the section on Dialogue with
suppliers), but also the Procurement Organisation through
quantifiable objectives affording an incentive to select
companies with good performance in the areas to be
developed throughout the process.
Main indicators
The tracking indicators defined for improving supplier
sustainability are:
Scope: Suppliers with orders in the year with an amount greater or equal
to €400,000 Global scope: Spain, the United Kingdom and the United
States of America. Brazil and Mexico.
While historically measured in Spain and characterised as
trending upward, these indicators have nevertheless slowed
down their growth primarily due to the “USA effect”: in
light of the current global scope and when including US
suppliers, this trend tends to flatten out, since, countries
like the USA and Mexico comparatively tend not to value
management system certification as much, though growing
ratios measured in these countries have in any case
progressed positively in the year, though not yet at the
levels measured in Europe.
8. Supplier diversity programme
The IBERDROLA Procurement Division has been working
during recent years to incorporate employment centres into
the network of regular suppliers. The volume under
contract with them in 2015 (with the aim of helping and
collaborating with the disabled) reached €2.7 million.
In the United States, IBERDROLA USA runs a “Supplier
Diversity Program”, a programme gauging supplier
diversity, through which we commit to broaden our supplier
chain network and increase purchases from:







Minority owned Business Enterprise (MBE)
Woman owned Business Enterprise (WBE)
Lesbian, Gay, Bisexual, and/or Transgender owned
Business Enterprises (LGBTBE)
Veteran owned business enterprises (VET)
Service Disabled Veteran owned business enterprise
(SDVET)
Small Disadvantaged Business (SDB)
Historically Underutilized Business Zone (HUBZone)
enterprises and minority owned companies to grow and
prosper.
Our goal is to extend this type of measures that were
implemented in Spain and the USA across all the companies
constituting the Group at an international level so they
apply these initiatives in their countries of origin.
9. Supplier innovation programme
IBERDROLA invested €200 million in R&D+i in 2015, thus
doubling the resources allocated to this area in seven
years.
IBERDROLA has launched a Supplier Innovation Programme
for promoting and accelerating the development of new
products and services that provide solutions to the future
needs of the Company while responding to the challenges
facing the sector.
The programme revolves around three central axes:
 simplifying access to financing mechanisms for
suppliers
 encouraging the joint creation of companies
(supplier spinoffs) through the Perseo fund
 innovating purchasing of developed products and
services
This additional business development programme was
created to help disadvantaged small enterprises (referred
to as SBs or SBEs “small businesses” or “small business
enterprises”) be competitive and have access to the federal
procurement market.
The innovative strategy for management and technology
deployed over the last decade has made IBERDROLA a
global leader and benchmark in the area of Research,
Development and Innovation (R&D+i) on the merits of:
The contract volume to these groups during 2015 was
approximately $50 million.



In short, having a diverse supplier base is a benefit both for
the businesses as well as our Company. It lets us obtain the
goods and services that we need while enabling small
implementation of a common model for all areas
partnerships with technology suppliers
impulse towards a culture of innovation
In 2015, the company continued driving the development of
initiatives concerning smart grids, clean generation,
offshore wind power and new business technologies and
models. The company's world leadership in renewable
energies was recognised through the 2015 National
Innovation and Design Award in the category of
internationalisation.
As a result of a unwavering commitment to innovation, the
company was recognised as the most innovative utility in
Spain and fifth in Europe according to the European
Commission's ranking.
Our Company's resolute commitment to R&D+i is embodied
in our support to technology-based entrepreneurs and
enterprises through the capital risk programme known as
Perseo.
The main objectives of this initiative comprise:
a. Securing IBERDROLA's access to future energy
technologies
b. Encouraging the creation of new business
opportunities for IBERDROLA
c. Fostering initiative and development of an
innovative corporate fabric in the energy sector
Through PERSEO, IBERDROLA is currently seeking innovative
projects in the energy field, which can be sent by e-mail to
[email protected]
10.
Supplier of the Year Award
Iberdrola's Supplier of the Year Award for Spain is a tool to
share recognition and appreciation with suppliers who have
contributed to the achievement of Group objectives.
The 2015 Award comprised eight categories:




Quality and response in service
Internationalisation
Health and safety
Ethics and corporate social responsibility




Competitiveness and innovation
Best startup
Job creation
Special award
become a tradition and reference in the Brazilian
electricity sector.
11.
Supplier communication plan
The slogan of “Moving forward together” shimmered
throughout 2015 for the 8 workshops held in different
regions in Spain that were attended by over 700 suppliers.
These workshops sought to reinforce IBERDROLA's
commitment to local suppliers and share the values and
foundations on which the relationship between the
Company and its suppliers is based, namely objectivity,
transparency, impartiality, equality of opportunities, value
creation and the management of risks and opportunities.
With these awards, the Company reiterates its commitment
to incentivise, in the corporate management of its
suppliers, sustainable development, quality,
internationalisation, innovation, corporate social
responsibility, job creation and occupational risk
prevention.
Iberdrola works and shall continue working with excellent
and sustainable suppliers, and thus establishes clear
traction and measurement mechanisms to do so, with
resources in the Procurement Division dedicated for such
tasks. The Company likewise establishes personal
objectives with its management team that are linked to
continuously improving the sustainability ratios of its
suppliers.
Moreover, in May 2015, Elektro held its Eleventh Supplier
Awards ceremony, an event that seeks to improve
collaboration among partners, dissemination of best
practices and increased competition. This event has now
This initiative was also fertile ground for presenting the
pioneering Supplier Innovation Programme for promoting
and accelerating the development of new products and
services that provide solutions to the future needs of the
Company while responding to the challenges facing the
sector.
These meetings also had the active
participation of local suppliers. This year
in particular, over 30 suppliers shared
their experience working with
IBERDROLA, explaining to the other
suppliers in attendance what it means to
be a Company supplier, the challenges
and opportunities in their path to
becoming suppliers and the ones they
face currently.
12.
Main benefits for suppliers
Actions of this sort being developed by
the Procurement Division as a social,
economic and environmental impulse for
suppliers have generated a progressive
convergence of suppliers and supplies toward the
sustainable parameters required by the company, resulting
in a multiplying effect throughout the supply chain, since
what is currently being requested from first-level suppliers
will gradually be assumed by the entire supply chain.
By acting as a driving company and being an economic
engine, because of the high potential for yearly purchases
and:

Creating a comprehensive, ethical and transparent
business model that favours the development of
these values and commitments in the market of
activity

Favouring internationalisation

Injecting liquidity to suppliers

Contributing highly qualified employment

Boosting R&D investment

Rewarding supplier contribution to achieving the
strategic goals of the Company
IBERDROLA has contributed, among other results, so that
supplier companies that were not initially local, had no
management system, or were focused on a single activity,
etc., could gain access to new markets and clients, become
involved in R&D projects, grow more competitive by
developing an international presence that would allow
them to become leading entities on their own in sectors
such as renewable energies, industrial facility
maintenance, power facility construction, global services,
etc.
But in addition to purely economic wealth, our actions from
a responsible and sustainable point of view constitute a
powerful motor for the market, motivating our suppliers to
enhance their environmental, ethical and social profile
through actions that foster excellence within their
management.
13.
Short- and medium-term priorities and
objectives
2014-2015 CHALLENGES AND THEIR STATUS:

Prepare the plan for suppliers in the Group's new
2015-2017 CSR Plan
 Supplier Communication Plan
Medium-term objectives
In addition to continuously maintaining the actions
presented throughout this report for supplier management
and procurement activity, the prominent objectives for the
short and medium terms are:


 Consolidate supplier CSR Scoring at a global level
 Increasing sustainability and compliance assessment
for Group suppliers
 Conduct the sixth supplier greenhouse gas emissions
measurement campaign
Participation in other responsible supplier
management initiatives
In 2015, Iberdrola participated in different meetings of the
Responsible Procurement and Consumption Committee of
the Spanish Excellence in Sustainability Club (Club de
Excelencia en Sostenibilidad), resulting in the publication of
the guide entitled “Creating value through responsible
procurement” (Creación de valor a través de la compra
responsable).
Iberdrola also joined the First Responsible Supply Chain
Management Conference organised by Unesa, where the
Company explained and shared its responsible supplier
management model with the attendees.


Create the fifth edition of the Supplier Satisfaction
Survey
Further the target lines of action and activities
based on the Procurement function and supplier
management in the 2015-2017 SCR Plan
Improve the level of communications and
information channels with our suppliers
Conduct the seventh supplier greenhouse gas
emissions measurement campaign
Over the coming years, IBERDROLA will continue to develop
a sustainable, long-term business model.