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Relations with suppliers

 

Standard and sustainability criteria used by us in ours relations with our suppliers

All information regarding tenders, online tenders and qualification processes for inclusion in the Supplier register are available on Terna’s Procurement Portal.

The Procurement Department has direct contact with suppliers to best manage contractual relations and specific problems, particularly for suppliers deemed most important to Terna business (critical suppliers) or those with high spending volume, those that cannot be replaced for strategic supplies or specific works to the electricity system for which Terna uses only qualified suppliers.

The Procurement Code regulates all procurement that regards the performance of activities linked to Terna’s core business (“instrumental contracts”), and which mainly comprise supplies of electrical materials and equipment, work contracts, and services in the sectors of electricity transmission, telecommunications and Information Technology.

In its relations with suppliers (1,978 contracted in 2017) Terna places primary importance on transparency and fairness, as indicated in its Code of Ethics and in compliance with Model 231 and the Integrity Pact (validated in 2014 by Transparency Italia), and asks its suppliers to adopt behaviour (summarised in the document “Principles of Supplier Conduct”) that is coherent with legal and ethical principles and respects human rights and environmental protection.

Although a prevalent proportion of suppliers are Italian (96% in 2017), in other cases, the supplier is always subject to screening relative to its country of origin. In cases of countries at risk as regards respect for human rights or corruption, further targeted investigations are carried out.

For those divisions subject to qualification, as well as strict requirements of a technical and legal nature, specific social and environmental requirements, such as certifications ISO 14001 and OHSAS 18001 have been introduced in certain cases. In 2017 such certifications became obligatory for the tree cutting and power line and HV glass insulator painting divisions.

With regard to the inclusion of qualitative elements to evaluate environmental and social topics in the contract awarding criteria, the new Procurement Code, which came into force in April 2016, provides an important stimulus. The Code - with limited exceptions - considers the criteria of the most economically advantageous offer in awarding contracts above a certain threshold. As such, the lowest price is not the only awarding criteria, as there is also a points system that considers both technical aspects (e.g. product quality, implementation times, etc.) and social and environmental aspects (e.g. certification, pollution and waste management, use of ecological products, etc.). Terna has already awarded several contracts using a points system based on environmental, social and governance criteria (ESG) and aims to place greater importance on these factors in the coming years.

KPI Supply Chain

Obligatory qualification requirements - certifications
Description:
The certification of environmental and occupational health and safety management systems has always been an important factor in the qualification procedure. Given the importance of quality management of both of these aspects for suppliers who carry out contracted works for Terna, between 2017 and 2020 these certifications will become obligatory prerequisites for qualification
Metrics
% of suppliers in the “works” sector in possession of the environmental and occupational health and safety certifications.
Trend
Suppliers certified according to ISO 14001 - 2015: 67%; 2016: 74%; 2017: 83%
Suppliers certified according to OHSAS 18001 - 2015: 63%; 2016: 71%; 2017: 81%
Target
100%
Year/reference period
2020
Progress
The programme was launched in 2017, along with the definition of the target for 2020. In 2017, certifications for both aspects were made obligatory for two of the seven sectors.
Use of ESG criteria in tenders - tree cutting
Description:
Use of ESG criteria in tenders in the “tree cutting” sector:
  • Possession of certifications ISO 14001 and OHSAS 18001
  • EMAS registration
  • Use of low-emission vehicles and machinery
  • Use of environmentally friendly oils and compounds
Metrics
% of tender value > € 1 million with the use of ESG criteria
Trend
2015: 0.0%; 2016: 0.0%; 2017: 100%
Target
100% of tenders
Year/reference period
2017-2019
Progress
The programme was launched in 2017 and achieved a result of 100%, in line with the target.
Use of ESG criteria in tenders - soil bioengineering
Description:
Use of ESG criteria in soil bioengineering tenders (mitigation of visual impact):
  • Possession of certifications ISO 14001 / EMAS
  • Use of low-emission vehicles and machinery
  • Use of environmentally friendly oils
Metrics
% of tenders with use of ESG criteria
Trend
2015: 0.0%; 2016: 0.0%; 2017: 100%
Target
50% of tenders
Year/reference period
2017-2019
Progress
The programme was launched in 2017 and achieved a result of 100%, in line with the target.
Use of ESG criteria in tenders - hardware equipment
Description:
Use of ESG criteria for tenders to purchase hardware equipment:
  • Low energy consumption
Metrics
% of tenders with use of ESG criteria
Trend
2015: 0.0%; 2016: 0.0%; 2017: 100%
Target
50% of tenders
Year/reference period
2017-2019
Progress
The programme was launched in 2017 and achieved a result of 100%, in line with the target.