EVN’s demands on its suppliers

Aspects: Evaluation of suppliers, complaint procedures

The step-by-step implementation of sustainability criteria in the selection of suppliers and their products is a priority for EVN’s CSR agenda in order to align procurement practices with sustainability goals. A continuous dialogue with suppliers plays an important role in this process.

Integrity clause and guidelines for contract partners

An integrity clause for suppliers defines the guidelines for sustainable procurement and the duties and responsibilities of suppliers in eleven points which include, among others, human rights, labour practices, protection of the environment, resource conservation and business ethics. It is binding for all suppliers (100%) of products and services ordered by the procurement department for the locations in Austria, Bulgaria and Macedonia and is available for review by all investors, investment and joint venture partners, subcontractors and stakeholders on the EVN website (www.evn.at/integrity-clause). The integrity clause is included with each order and tender and represents an integral part of the contract. EVN reviews compliance with the integrity clause on a regular basis and has developed a special questionnaire for this purpose. On-site evaluations were performed at the locations of major suppliers in 2012/13 and 2013/14. Additional controls are carried out via checklists as required and in connection with appointments at major suppliers’ locations. The audits carried out during the reporting year did not lead to any objections. EVN, as an international company, also operates in countries with a less developed understanding for human rights or may purchase services, materials or products from such countries through central procurement. In connection with the sensitive area of textile procurement (work clothes), risk countries have already been excluded through an internal guideline. Other product groups are also being included in this type of exclusion practice, or specific criteria and measures are introduced to implement the EVN integrity clause and can even exceed this. One example involves coal procurement in Poland and Russia, where purchases are only made after EVN has conducted its own research and verified compliance with human and labour rights and examined the working and living conditions.

All EVN’s tenders have included an additional checklist since 2011/12, above all when risk products are involved. This checklist asks for additional information on environmental compatibility, product recycling and packaging as well as the manufacturer’s certification. It supports the uniform evaluation of suppliers’ compliance with the integrity clause. EVN’s most important suppliers are now covered by this type of control.

WTE, an EVN subsidiary, has fully integrated the “partners and suppliers“ and “integrity and prevention of corruption“ sections of the EVN Code of Conduct in its procurement procedures. Special attention is paid to compliance with human rights as defined in the relevant section of the Code of Conduct. The EVN integrity clause has been a part of all suppliers‘ contracts concluded by WTE’s German branch since 2011/12. It is included when offers are requested, and reference is made to the required compliance. The integrity clause is explicitly discussed during contract negotiations and included as an attachment to all suppliers‘ contracts. The procurement department in Poland has not included the integrity clause in its suppliers‘ contracts to date, but all such contracts contain an attachment on “employer’s requirements“. This attachment covers suppliers’ requirements for projects subsidised by the EU and requires the tendering companies to provide proof of quality assurance and, for safety and health protection, certificates of origin for all individual components. These certificates are normally issued by the suppliers and confirm the origin of the materials used. Therefore, components and materials from countries outside the EU are generally excluded. Since 2007, WTE has followed a goal to avoid the purchase of products from high-risk countries, e.g. India and China.

Certifications and on-site inspections

EVN’s procurement department evaluates the major suppliers and subcontractors for selected product groups, especially those from non-EU countries, in accordance with human rights and sustainability principles. This evaluation takes place on both a sampling and a regular basis when major orders are placed with new suppliers. The majority of all deliveries to EVN originate in the EU. Suppliers that are not based in the EU are inspected on-site by EVN. Contractors, especially construction companies, are audited with regard to their payment of social insurance contributions for their employees. This review covers all Austrian contractors performing construction services with a volume above EUR 10,000. To date, EVN has not identified a single contractor that has failed to meet the obligations to make social insurance contributions.

Audits are also carried out in the area of primary energy procurement, above all as regards the coal supply chain. All coal mines that supplied coal for EVN’s energy generation in 2013/14 meet wide-ranging international standards and are certified under ISO 14001 (environmental management). The US mine that supplies EVN with coal is also certified under OAHSAS 18001 (Occupational Health and Safety). Regular on-site inspections not only take place at the intermediate tiers of the supply chain – for example, in coal processing companies – but also at tier 3, i.e. directly in the mines. EVN conducted on-site inspections at one mine and one processing company during the reporting year. Any objections are immediately reported to the respective operators and improvements are requested. In the event that a satisfactory solution cannot be found, the related contracts are terminated.

• GRI indicators: Percentage of new suppliers that were screened using ecological criteria (EN32), using human rights criteria (HR10), using labour practices (LA14) and the related impacts on society (SO9)

Mandatory labelling of electricity

In accordance with legal regulations, EVN’s customer invoices in Austria include information on the origin of the electricity. This proof of origin shows the percentage of the electricity in the supply mix of EVN Energievertrieb GmbH & Co KG that comes from the respective primary energy carriers. The customer invoices also include information on the environmental impact (CO₂ emissions and radioactive waste). This data is reviewed by an independent auditor after the end of each financial year and reported to the regulatory authority. In 2012/13, proof of Austrian origin was provided for all electricity volumes. The comparative data for 2013/14 will only be available after editorial deadline of this report.

• GRI indicators: Labelling of products and services (PR4); Product information (PR3); Percentage of new suppliers that were screened using ecological criteria (EN32)

• For details on the composition of electricity from primary energy sources, see Customer Advisory Board

Complaint procedures

A complaint office was established in Lower Austria for bidders in tender processes. It can be used to file complaints and obtain explanations, free of charge and without mandatory legal counsel. This independent office reflects legal requirements and, based on EVN’s activities as a sector contractor, is mentioned in the prequalification/ tender phase of every tender project. There were no justified objections in recent years.

Labour practices and humane employment

In order to minimise the risks associated with workplace safety, EVN only works with selected partners who are contractually required to employ trained personnel. Compliance with the directives for partner companies is reviewed by experienced, well-trained EVN employees who serve, for example, as construction coordinators or supervisors. Subcontractors and suppliers are used for tasks with a limited period of time, especially for maintenance and repairs and for the construction of new power plants and transmission networks. More than 5,000 subcontractors and suppliers worked for EVN in Austria and other countries during the reporting year. EVN does not maintain central records on the number of workdays attributable to subcontractors and suppliers because this would not have any significance for their labour practices.

External services relevant for safety and/or health (e.g. in civil engineering and building construction) are performed by roughly 300 prequalified companies under general contracts. Point 4 of EVN‘s integrity clause, “Health & Safety at the Workplace“, requires compliance with legal regulations for occupational health and safety protection at the workplace, free access to drinking water and sanitary facilities, appropriate fire protection, lighting, ventilation, suitable personal protective gear and training for its proper use. The companies are also required to instruct their employees in accordance with § 14 of the Occupational Health and Safety Act (“Arbeitsschutzgesetz”, ASchG) and § 154 of the Construction Worker Safety Regulation (“Bauverordnung”, BauV). The same rules apply to their subcontractors. Training certificates must be provided automatically. Subcontractors must also confirm that they have the required certifications and qualifications to undertake the contracted work. Comparable regulations are in force at EVN‘s international subsidiaries.

• GRI indicators: Workdays of subcontractors and suppliers for construction, servicing and maintenance (EU17); Percentage of subcontractors and suppliers who have participated in health and safety training programmes (EU18)