Responsible supply chain

We ensure the Group's sustainability principles of action in the purchasing and contracting processe

We promote responsible supply chain management, especially in environmental, social and good governance matters, guaranteeing, among others, ethical behavior and human and labor rights, transparency, full and fair opportunity, respect by the interests of the interested parties, respect for the principle of legality and international standards of behavior, focus on needs, integration and continuous improvement.

We establish objective and impartial mechanisms for the evaluation and selection of suppliers, ensuring that the supply chain complies with the principles established by the Supplier Code of Ethics, to which all suppliers must adhere and whose content emanates from the Naturgy Code of Ethics, from the Policy Human Rights, Health and Safety Policy, Anticorruption Policy, as well as internationally recognized principles of good governance.

Naturgy’s ESG programme for suppliers classifies them according to the ESG risk level of the service/material they supply, taking into account the ESG risk matrix (country risk and commodity risk) and establishing different measures according to this risk level. The annual supplier assessment process excludes the tendering process and the receipt of orders in the event of an unsatisfactory response. ESG audits of suppliers with a high ESG risk level and high purchasing volume and the establishment of corrective actions in case of non-conformities.

The “Measuring carbon footprint in the supply chain” project implemented in 2022, which establishes the obligation to have a carbon footprint certificate in tenders for services or products with a high climate change risk or with a large volume of purchases. Documented safety inspections, on-site audits carried out on suppliers with health and safety risks. Online reputational risk monitoring of the supplier portfolio and compliance processes that can disqualify suppliers for fraud or unethical practices. Performance assessment with metrics and implementation of corrective actions or discarding suppliers whose rating does not reach the standard set by the company. Collaboration with the Spanish Network of the United Nations Global Compact in the “Training programme: sustainable suppliers”.

Values we convey to our suppliers

Transparency

We guarantee equality, independence and free competition.

Integrity

We are committed to acting in an honest, upstanding, dignified and ethical manner.

Sustainability

We develop our business with a strategic time horizon that transcends immediate economic interests, thereby contributing to economic, environmental and social development.

Results

We draw up plans, set objectives and take decisions based on the objectives sought by our vision, ensuring those targets are met.

Responsible action principles

To extend the company’s culture to the supply chain, share the goal of service excellence and the responsible action principles upheld by the company, and encourage the incorporation of sustainability criteria into their day-to-day management, mainly by conducting environmental, social and governance audits.

To promote compliance with the company’s codes and policies in the supply chain, especially in terms of human rights, ethics and health and safety.

To encourage the signing of contracts with domestic or regional suppliers in the countries where the company operates, thereby helping to create a positive social impact and foster practices that favour traceability and fair trade in raw materials from source.

Strengthen the commitment and increase the demand by incorporating sustainability criteria in the bidding processes.

Supply chain indicators

The supplier assessment process consists of two components: business classification and activity certification.

The supplier business classification model establishes:

For suppliers with low or intermediate risk, there is a basic level of assessment that ensures their compliance with Naturgy’s Code of Ethics for Suppliers and declaration of adherence to key legal, fiscal, organisational, environmental, social, health and safety, cybersecurity, compliance , quality and personal data handling criteria required by Naturgy.
For high-risk suppliers, an extended level of assessment is applied, which additionally requires a comprehensive questionnaire and evidence of financial information, sustainability practices, health and safety measures and compliance adherence.

	Indicator	2023	2022	2021
Supplier evaluation	Suppliers assessed via desk assessments/on-site assessments (nº)	1464	1290	1302
	Significant suppliers assessed (%)	100	100	100
	Suppliers assessed with substantial actual/potential negative impacts (nº)	96	39	31
	Suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plan (%)	100	100	100
	Suppliers with substantial actual/potential negative impacts that were terminated (nº)	0	2	0
Corrective action plan support	Suppliers supported in corrective action plan implementation (nº)	96	39	31
Corrective action plan support	Suppliers assessed with substantial actual/potential negative impacts supported in corrective action plan implementation (%)	100	100	100
Capacity Building programs	Suppliers in capacity building programs (nº)	343	348	221
Capacity Building programs	Significant suppliers in capacity building programs (%)	100	100	100