Sustainability in the selection and assessment of suppliers: from qualification to ongoing contracts

Various systems for qualifying suppliers of works, goods and services are active in Acea in observance of principles of competition and equal treatment.
The Supplier Qualification Unit:

• coordinates working groups to identify the qualification requirements;
• draws up the Qualification Regulations;
• establishes Qualification systems of European significance¹²⁸ and Supplier Lists for so - called “below threshold” or private contracts.

During 2023, the product tree shared between the Group companies whose procurement is managed centrally included 573 product groups and the Unit in charge managed, as of 31.12.2023, 165 Supplier lists.

To register with the Lists/qualification systems, companies must visit the Acea institutional website (www.gruppo.acea.it Suppliers section) which is a dedicated portal, which works with the suppliers database; the requests are processed, including verification that the requirements are actually met with the relative communications to the supplier. During 2023, a total of 2,390 registration applications for the Qualification Systems/Lists were processed (+54% compared to the 1,554 applications in 2022), amounting to 741 successful applications in total. Specifically:

• 212 qualification applications processed for “works” Qualification systems”;
• 529 qualification applications processed for Qualification Systems/Suppliers’ Lists for “goods and services”.

The requirements suppliers must meet to enrol in the qualification systems are “general” – including ethical requirements established in sector regulations, including acceptance of the Acea Group's Code of Ethics and Organisation, Management and Control Model (pursuant to Italian Legislative Decree 231/2001, as amended. – and “specific”, relative to the group or group of goods/services associated with individual Supplier Lists.

Among the specific requirements, in some cases Acea requires its potential suppliers to have certain Authorisations and/or certifications:

• UNI EN ISO 9001 certification (binding requirement for all the “works” product groups and for almost all the “goods and services” suppliers);
• UNI EN ISO 14001 certification (for inclusion in the lists of suppliers for special non-hazardous waste, cleaning services, armed surveillance service and concierge/reception);
• Registration with the National Environmental Operators’ Register or authorisation to manage a plant for the recovery/disposal of waste (for inclusion in suppliers’ lists for Waste Management Systems);
• UNI EN ISO 45001 certification (for inclusion in the suppliers’ list for the electro-mechanical maintenance of industrial plants and cleaning services);
• UNI EN 15838:2010 certification (for inclusion in the suppliers’ list for “Call Centre and Back Oce”);
• SA 8000 certification (for inclusion in the suppliers’ list for “Cleaning services”);
• UNI 10891 certification (for inclusion in the suppliers’ list in the “Armed surveillance service and concierge/reception”).

For admission to the Qualification Systems of Community-wide significance, companies wishing to qualify must declare their availability to undergo an audit at the administrative head office, aimed at assessing the truthfulness and adequacy of the documentation provided, and at the operating plants or product warehouses, in order to assess the implementation and application of the active management systems.

The supplier portal is constantly updated, indicating any changes which have occurred; in particular, in December 2023 the European Single Regulations for Qualification Systems were updated for both works, goods and services, with the relative Annexes, with the introduction, among specific requirements that suppliers wishing to qualify must supply (for the Lists expressly indicated, in Annex A to the Regulations), of a cyber risk self-assessment questionnaire. This is a cyber-risk self-assessment questionnaire developed by Acea, known as the “ACEA - Third Party Cyber Security Assessment Tool”, which makes it possible to assess the supplier with reference to the requirements of fungibility, diversification and evaluation of technical reliability with the aim of identifying cyber risks linked to the supply chain. Suppliers must also comply with anti-trust principles adopted by the Acea Group in the context of its anti-trust compliance programme.

The assessment of suppliers involves dierent types of controls that are implemented depending on the List/qualification system and the dierent statuses that the supplier acquires with respect to Acea:

• during the qualification phase;
• qualified;
• qualified with contract in progress.

In order to be able to register on the suppliers’ listrelating to the Single Regulations for Goods and Services and Works which, for 2023, concerned 116 out of 165 total Suppliers’ Lists (“qualification phase”), suppliers must complete a self-assessment questionnaire on the Quality, Environment, Safety, Energy and Social Responsibility management systems (QASER), found on the Vendor Management platform. In 2023, this questionnaire on QASER systems was completed by 315 suppliers (233 for goods and services and 82 for works), representing 100% of the qualified suppliers on the supplier lists for the aforementioned Single Regulations and 85% of total suppliers qualified during the year (equal to 371)¹²⁹.

Furthermore, in continuity with a practice that has been consolidated for several years, the Procurement & Material Management Function, in synergy with the Sustainability Planning & Reporting Unit, sent a panel of 100 Group suppliers an in-depth questionnaire to assess their commitment on environmental issues, with a particular focus on energy consumption. 51 companies responded to the questionnaire in full and the results of the survey are shown in the Relations with the environment section, in the chapter on The Use of Materials, Energy and Water (Energy Consumption paragraph), to which reference is made.

Of the companies that manage their own procurement, it should be noted that Deco, which requires suppliers that intend to register in the company’s vendor list to complete a questionnaire, signed by their legal representative, centred around topics of socio-environmental importance, such as the adoption of a 231 Organisational Model, any presence of current legal proceedings for the oences envisaged by Italian Legislative Decree no. 231/01 or by environmental or occupational safety regulations, as well as any posses- sion of certifications on QASER management systems or EMAS registrations. Furthermore, Deco requires suppliers during registration to sign a commitment to corporate social responsibility on the aspects envisaged by international standard SA 8000, which allows for a higher score to be achieved during qualification. As at 31 December 2023, Deco had 566 letters of commitment signed by the legal representatives of the suppliers on the vendor list, 25 of which received during the year in question. The company carries out analysis to identify its “key” suppliers, namely those that, while performing their activities, could have a greater influence on the corporate activities and which could have eects on the quality of the service, the environment and certain aspects of health and safety at work. All key suppliers are periodically evaluated to confirm qualification and must, before a contract is signed, fill out the aforementioned questionnaire and undergo a second-audit.

AdF also applies, where relevant, preferential sustainability criteria during registration on the Suppliers’ List, and for qualification in the product categories, for example by requiring operators who intend to qualify in the product category “hazardous and non-hazardous special waste disposal services” to certify that they have ISO 14001:2015 certification.

Additionally, since 2020 AdF has applied the Circular Economy Protocol, prepared with the direct involvement of interested parties (institutions, sector authorities, credit institutions, universities, trade unions, etc.) to protect local suppliers and ensure quality and social/environmental sustainability in the supply chain are valued. The Protocol makes it possible to reserve a portion of the goods, services and works procedure for local economic operators, in cases not subject to the Public Contracts Code, which apply to a dedicated register to qualify for categories linked to the circular economy. The initiative is able to create shared advantages: local suppliers benefit from contracts, sometimes long-term, while also undertaking, so as to remain on the Register, to fully comply with the established sustainability criteria. Social and environmental responsibility is also taken into account when assessing qualification requests, and incentive criteria that are linked to further commitments are envisaged, such as, for example, hiring sta belonging to protected categories, good practices in terms of health and safety in the workplace, use of vehicles with low environmental impact, etc. (see the Circular Economy Regulation available in the "Suppliers Area"

of the institutional website www.fiora.it). As at 31 December 2023, qualified suppliers in the area governed by the Protocol numbered around 130; AdF monitors qualifications in the categories falling under the Register, periodically verifying the results achieved and the quality of the actions taking also sharing the information with local stakeholders.

Once qualified, the supplier may be subjected to a second-party Audit on Quality, Environment, Safety, Energy and Social Responsibility (QASER) Management Systems to verify the the application of active and certified Management Systems and the management methods used for other areas linked to sustainability. In 2023 12 of the main suppliers were selected and subjected to verifications, operating in the most critical areas with respect to “environment” and “safety” (waste management and works); the audits were carried out with the Teams platform, with documentary evidence shared remotely. Each supplier was sent feedback indicating the degree of compliance per scheme and overall, as well as a report with recommendations for improvement. Overall, it was found that 100% of the audited suppliers are certified for Quality (ISO 9001), 97% for Environment (ISO 14001), 83% for Safety (ISO 45001), 50% for Social Responsibility (SA 8000), and 25% for Energy (ISO 50001). An overall average overall average compliance, compared to the requirements of the audited schemes (QASER), of about 74% (77% for Quality, 73% for Environment, 78% for Safety, 55% for Energy and 75% for Social Responsibility).

During the year, Deco also prepared its annual audit plan for its “key suppliers” and investigated 2 companies on aspects envisaged by the standard SA 8000 such as the use of child labour or forced or compulsory labour, discrimination, worker safety, compliance with national collective bargaining agreements and labour law, and freedom of association, which found no non-conformities. Should non-conformities be detected, based on their severity, Deco also calls for the establishment of a recovery plan which allows the supplier to raise awareness and improve its performance, with the exception of particularly serious findings that could lead to the interruption of the contractual relationship.

The Group’s Vendor Rating system is in place on the single purchasing portal, utilised to monitor certain supplier performance indicators (punctuality, quality, safety) and generate a “vendor rating index”, which was calculated for 900 suppliers in 2023; this works with a sustainability rating, based on the Ecovadis model, calculated during the year for 640 suppliers, a figure which increased by around 89% with respect to the previous year (sustainability rating calculated for 339 suppliers in 2022); also see the box on the subject and chart no. 37.

Chart no. 37 – Presence of certified management systems and policies with suppliers evaluated by Ecovadis (2023

Note: suppliers may have several management systems/policies; percentages are rounded.

128 Pursuant to Article 134 of Legislative Decree no. 50/2016 as amended.
129 The number of qualified suppliers does not coincide with the 741 successfully processed applications for registration in qualification systems, as suppliers can register in more than one qualification system.