Sustainable supply chain

The transformation of the energy system, alongside the digital revolution, entails changing and evolving the way works are performed and how goods and services are supplied. It also means suppliers are essential partners to achieve sustainable progress across the entire context in which the Company operates.
Enel requires that suppliers not only operate in compliance with applicable laws and authorizations, but that they also commit to adopting best practices in terms of governance, ethics, human rights, health, safety and the environment, in line with the Group’s strategy, some of its codes of conduct (the Human Rights Policy, the Code of Ethics, the Zero Tolerance of Corruption Plan approved by the Enel SpA Board of Directors) and its global compliance programs. Enel works with suppliers to maximize the economic, productive, social and environmental benefits of the transition and strives to create sustainable, innovative and circular processes to mitigate the impact generated by its activities through efficient use of resources, technological innovation and proper waste management, mindful of the need to prevent pollution and reduce energy consumption and emissions, including gas emissions.

In 2023, the total for works, services and supply contracts amounted to over 18 billion euros, of which about one half in Italy, followed by Spain, Chile and Brazil.

Together with suppliers, Enel works to define new metrics and to promote co-innovation projects in the perspective of a decarbonization and circular economy pathway, which should have positive impacts on both power generation processes and purchasing methods. Specifically:

• Product Carbon Footprint (PCF) certifications, including the Environmental Product Declaration (EPD) and the ISO PCF, are sought from suppliers in the core categories⁽¹⁾, with the aim of objectively quantifying, certifying and communicating the environmental impacts generated throughout the life cycle of supplies. Certified data enables Enel to measure emissions along the entire supply chain, supporting the Group’s decarbonization pathway;
• as part of its tendering process, Enel sets increasingly challenging reduction targets on core supply categories, which also take into account the contributions of innovation. These targets are shared with suppliers and are in line with the Paris Agreement, which calls for a less than 1.5 °C temperature increase containment path. In line with the digitalization process, a tool has also been developed to calculate, both on a daily basis and automatically, supply chain emissions (Scope 3 upstream) and projected reduction curves to 2030 and 2040 (see also the box dedicated to the “GoZero Dashboard”);
• a responsible supply approach to energy commodities is encouraged, with suppliers asked to adhere to the principles to which Enel is committed (the Human Rights Policy, the Code of Ethics and the Zero Tolerance of Corruption Plan).

In the bidding processes for core commodity categories Enel requires suppliers to declare the quantities of each component material in the product, including recycled and recyclable materials. The acquisition of this information allows suppliers to be rewarded based on their recycling capacity, thereby stimulating a circular culture and reducing potential ESG impacts associated with pressure on materials and technologies critical to the transition, environmental degradation associated with their extraction and processing, and carbon emissions arising therefrom.

Also with regard to the core categories, in the tender phase suppliers must fill out a form through which they map the geographical areas of extraction and production of raw materials involved in the supply of the product being tendered, all backed up by relevant documentation.
A tool has also been developed which, on the basis of data from the literature and information also acquired through interviews with suppliers, arrives at an initial identification of potential human rights issues, so as to better guide strategic sourcing choices (see also the dedicated box entitled “Assessment of potential human rights issues in the supply chain”).

⁽¹⁾ Core categories are those that are strategic for the business including wind turbines, inverters, smart meters, photovoltaics, switches, panels, cables, transformers, electric car charging points, street lighting, smart home solutions and storage systems.