Creating sustainable supply chains

We are committed to tackling social and environmental issues not only in our business, but throughout our supply chain too. From helping our customers with new boiler parts to securing energy with equipment for drilling oil and gas offshore, we spent £24.5bn across our supply chain during 2014. We are using our purchasing power to embed sustainability through the products and services we buy, which also helps secure reliable supplies and protects our reputation.We have responsible business clauses in supplier contracts and work with independent supply chain sustainability experts EcoVadis, to run an online supplier assessment programme which helps identify and manage risks in our supply chain such as environmental malpractice, bribery and corruption as well as human rights abuses.

In 2014, 57 of our potentially higher risk, strategic suppliers completed the risk assessment. Following an analysis by EcoVadis, we received an average supplier risk score of 51 (low risk) which reflects that the majority of our suppliers are based in lower risk countries such as the UK, Europe and North America. This score is better than the multi-industry average of 41 (medium risk) and marks an improvement on our 2013 performance of 49 (low risk).

Of those who undertook an assessment in 2014, none of our suppliers were classified as high risk. 25% were medium risk, 65% were low risk while top performers amounted to 10%. Where suppliers receive a medium or high risk rating, we work with them to create corrective action plans.

It’s important that we work collaboratively with suppliers and have relationships founded on mutual benefit. To reduce the burden on suppliers and avoid duplication of effort, suppliers have the option to share their EcoVadis findings with other clients. We additionally seek feedback on how we can improve and following conversations with suppliers in 2014, we have worked to make ourselves more contactable and flexible to deal with. We will also host a Supplier Forum in 2015 to share best practices across our supply chain.

In 2015, our focus will be on extending the EcoVadis assessment further into Direct Energy and Centrica Energy. We will also conduct a strategic review of our supply chain risk programme to strengthen our approach and gain greater insight into the supply chains of our immediate suppliers.

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