The mission of Procurement is to contribute to ENGIE’s ambition to be the world leader in the transition to “Zero Carbon” as a service. Procurement, sustainable by design !
Understanding and quantifying what really matters in the value chain is a key component of the Group’s strategy With an addressable spend of 20,3 billion euros in 2018*, of which 80% in Europe. ENGIE Develop and maintain sustainable performance with ~110 000 active suppliers 90% being European.
(* except energy)
1 - Purchasing at ENGIE – Key Figures (2018)
2 – Our ambition: Engaging with suppliers for a sustainable Business
The mission of Procurement is to obtain the optimal contribution of suppliers to the ENGIE Strategy to lead the zero-carbon transition as a service by:
- negotiating the best economic and operational conditions with suppliers,
- mastering (mitigating?) risks, including those related to health, safety, ethics and the environment
- capturing opportunities for value creation through innovations in supplier markets.
Intrinsically procurement function, suppliers and subcontractors are essential stakeholders in the Group value chain.
The ENGIE Group Procurement Department has set the goal of implementing by 2020 CSR initiative covering procurement chain management in all entities controlled by the Group. This initiative is broken down into three key commitments:
- paying on-time our suppliers and subcontractors
- supporting the subcontractor Health & Safety policy
- integrating a continuous improvement process for CSR into operational processes, and providing the corresponding training to key contributors
This ambition launched in 2016 is annually monitored through combined KPIs. In 2018, we performed 84 % of 2020 target.
3 - An ambition driven by a management system
To achieve its ambitions, the procurement function is based upon a strong management system compliant with legal requirements and including two governing documents:
1. A procurement policy an external document for suppliers, sustainable by design as it sets out ENGIE’s commitments and requirements in the following areas:
- Compliance with health and safety: Suppliers shall demonstrate their compliance with these requirements
- Social responsibility, business ethics, embargoes and anticorruption: Suppliers’ commitment to ethical business conduct Policy
- Sustainable Development: to ensure competitive bids and sustainable, innovative solutions
2. A procurement Governance: an internal document, it defines the Group-wide principles governing external expenditure, and sets out practical operating rules for the procurement function. Its purpose is also to guaranty the segregation of duty and the cooperation between buyers and specifiers to get the best offer combining price, quality, innovation and sustainability.
The principles set out in these two reference documents are translated into 3 operational processes:
- Manage Supplier Panel
- Manage Purchase Category
- Buy & Supply
The procurement referential is compliant with other ENGIE Group requirements laid down in:
- The Ethics & Compliance Charter
- The Corporate Social Responsibility Policy
- The Health & Safety Policy
- The Code of Conduct in the Supplier Relationship
- The Due Diligence Policy Direct Suppliers and Subcontractors
4 – A procurement organisation dedicated to CSR objectives
The CSR approach is fully implemented by Procurement through its matrix organisation.
A Category Management organization focusing on a limited portfolio of categories:
- those considered strategic across the Group and for which a global management system is set up by the Group Procurement Department (Group managed categories),
- those for which the Business Unit / entities are best positioned by their activity and their proximity to the supplier market, and ensure local control while developing between them the appropriate modes of collaboration (Business Unit managed categories).
A procurement organisation in each BU reporting to the Group Procurement Department:
- BU Chief Procurement Officers (CPO) report functionally to the Group Procurement Director,
- BU CPOs are empowered within their BU to contract all external commitments with suppliers, and to take all decisions regarding resources and the purchase budget in accordance with delegations of authority.
5 – Implementation of Duty of Vigilance Plan
As part of the implementation of its Duty of Vigilance Plan, ENGIE is committed to assess its preferred suppliers first (under the Category Managers responsibility) and then, in each of the 25 Business Units’ major suppliers (under CPO responsibility) from a CSR perspective.
Therefore, at the beginning of 2018, each purchasing category was evaluated (low, medium or high risk) by the category managers of the Group Strategic Sourcing and Purchasing department compared to the intrinsic risks related to all CSR dimensions (Environment, Labor & Human Rights, Ethics and Sustainable Procurement ). This exercise facilitated the definition of selection criteria for new preferred suppliers and the assessment of existing suppliers.
Through the implementation of three operational processes, “Manage Purchasing categories”, “Buy & Supply” and “Manage the supplier panel”, the management system of the non-energy purchases incorporates the requirements related to human rights, health and safety at work, ethics and the environment. The prevention plan under the duty of vigilance is implemented through the Purchasing Process by following the following key steps:
- analysis of risks and opportunities by Purchasing category and by country (prioritization);related mitigation plan (qualification and selection criteria for preferred suppliers, need for an audit, due diligence, supplier data accessible via the Procurement Information Center, etc.);
- inclusion of contract clauses on ethics, GDPR, etc.;
- measurement of the performance delivered by the suppliers and related improvement plans (Business Review);
- All previous steps are integrated into our internal compliance and audit processes.
6 – Training: the basis for deployment
A continuous and progressive training program for all procurement function is a key success factor for an efficient implementation.
- 2013 - 2014 Procurement Passport – Management category training
- 2016 - 2017 Ethics training
- 2018 - 2019 Passport V2 – Training on the advanced purchasing levers that incorporate CSR
- 2018 – 2019 Early warning signs
Moreover all procurement management meetings include sessions designed to raise awareness of CSR issues, and meetings are also organized with those specifiers and operations staff involved in the procurement process.
This training scheme provides a powerful lever to upskilling and facilitating transformational change in job functions.
7 – Going forward: a new partnership with a CSR specialist to monitor ENGIE’s suppliers panel
Following an assessment campaign started at the end of 2018, ENGIE signed a long term services contract with EcoVadis. This new partnership will help the Group to monitor its main suppliers panel in a CSR perspective.
7.1 EcoVadis methodology
EcoVadis has developed a methodology for assessing company CSR engagement against 21 CSR criteria and analyses multiple data sources by CSR experts.
Suppliers are assessed on a scale numerically represented as scales from 0-100 (0-24=Insufficient, 25-44=Partial, 45-64=Moderate, 65-84=Advanced, 85-100=Outstanding)
7.2 ENGIE Preferred Supplier Panel
To date, the overall score of assessed suppliers is 57,4/100 that is good according EcoVadis’ referential. Over 45/100, EcoVadis considers that the supplier is engaged in major CSR topics, therefore risks are limited. The Supplier embraces continuous performance improvements on CSR and should be considered for a long-term business relationship.
ENGIE’s suppliers scorecards are well above the average scorecard of companies assessed by EcoVadis.
ENGIE aims at either having suppliers with a minimum score of 45/100 or managing the risk through mitigation plans. EcoVadis plate-form will allow Procurement to set up and monitor specific correction plans for suppliers with poor CSR assessment.
7.3 Risk mapping and Country risk assessment
In addition to a continuous assessment of the Preferred and Major Suppliers, ENGIE manages (with the support of EcoVadis) both a risk mapping per purchasing categories and a country risk assessment to optimize supplier relationship management.
ENGIE’s Preferred Supplier Panel against risk country
ENGIE’s Preferred Supplier Panel against risk country
Preferred Suppliers are distributed across 27 purchasing categories.