"Third parties assessment", or "ethical due diligence" refers to all the checks that ENGIE carries out before entering into a contractual or commercial relationship with a third party (partner, subcontractor, supplier, prime contractor, customer, partner, buyer, seller, etc.) in order to identify the risks related to human rights, fundamental freedoms, health and safety of people and the environment, as well as the ethical risks of a company (also called "red flags"), its management, its shareholding, its media and legal background, suspicions of fraud, money laundering, corruption, sanctions, etc.
A first level of due diligence is carried out internally, using public databases or specialized tools. In the event that this analysis reveals red flags, ENGIE carries out a so-called level 2 due diligence, either by the ENGIE analysis and support unit (C2A) or via external service providers.
The due diligence is then recorded in a catalogue held by the same unit.
Indeed, it is important to note that ENGIE has chosen to be part of an innovative trend by creating its own "team" of investigators (the C2A). It is made up of ENGIE employees who are specialised in economic intelligence and carry out due diligence using the same tools as specialised external service providers.
This due diligence is implemented within the framework of several policies:
Focus on two policies: those relating to partners in the context of investment projects & those relating to our suppliers and subcontractors.
All investment projects, whether for sale, acquisition, partnership or other investment, are subject to systematic due diligence.
Each entity or BU must, prior to any investment project, make a list of its co-contractors (whether the customer, the supplier or direct subcontractor, the joint venture partner or the project company, etc.) and carry out due diligence.
This due diligence must draw up an exhaustive table of all the risks presented by the company (country risk, human rights risk, environmental risk, health and safety risk, corruption risk, money laundering risk, etc.), existence of an ethical process, etc.
For more information, see the policies mentioned above.
For all the entities of the ENGIE Group, due diligence must be carried out in accordance with the mapping of the risks as well as the scope of use of the suppliers in the consolidated entities of the group.
The term "supplier" refers to external companies with which the Group and its entities have a direct contractual relationship, which includes: on the one hand, companies that supply a good or a service; and on the other hand, those that provide a service, whether or not in addition to a supply, and which are called "direct subcontractors or subcontractors of rank 1".
Due diligence must be carried out at least on all the Group's preferred and strategic suppliers, as well as on the Business Unit/entity suppliers at risk, either because they are identified by the latter as being critical, or based on their importance (Top 50 suppliers of the entity or BU, or those representing 80% of expenditure).
In parallel, each BU/entity carries out the same exercise on the suppliers it has identified as being at risk.
If necessary, ENGIE also carries out due diligence on the entire supply chain to ensure compliance with our ethical rules and our vigilance plan.
In addition, the identification of one or more risks systematically leads to the implementation of preventive or remediation mechanisms or procedures (in particular via ethical clauses with the possibility of terminating the contract, monitoring of the company, etc.).
Once a risk has been identified, ENGIE evaluates and builds the best solution and proposes appropriate remediation measures.
The evaluation of the severity of the identified risk determines whether or not to consider a contractual outcome with the third party. Only if the risk is assessed as too important or uncontrollable should the project be stopped for ethical reasons. However, as soon as the risk is considered to be under control, even though it exists, a contractual outcome can be envisaged.
In 2020, 100% of the partners in the Group’s investment projects were subject to due diligence, including a systematic study of “vigilance” issues.
Likewise, 180 major suppliers were subject to due diligence. Some assessments are supplemented by on-site audits. For example, the MESCAT BU carried out 48 audits of the site facilities for foreign workers (United Arab Emirates and Bahrain).
Indeed, as part of the supplier’s pre-qualification in categories in which manpower is required, the MESCAT BU implemented in 2019 a standard audit in situ (we visit the supplier), Procurement & Health & Safety, on 4 axes: work planning, H&S and work environment, CSR and Quality Management. Each supplier is evaluated, and improvement actions defined with them. The total scoring is shared with all the entities in the region. In particular related to Human Rights and as part of the CSR audit we look into: salaries payment process and accommodation conditions of the workforce.
Lastly, the Group’s new preferred and major suppliers were automatically assessed via due diligence before contracting took place. This rule applies to a panel of 1,600 suppliers representing about 20% of total expenditure.
Directly or indirectly, 100% of the Ethics Officers and purchasers have access to a specialist due diligence tool. See the procurement approach for more information.