Implementation of supply chain responsibility
Our social performance depends to a significant extent on our collaboration with partners in the supply chain. We aim to make a net positive contribution to SDG 12 (Responsible Production and Consumption) so that we can contribute to social and environmental effects in our supply chains. Our procurement policy contributes directly to Alliander’s sustainability pillars: access to clean and affordable energy, climate, raw materials, and being an inclusive employer.
A sustainable relationship with our suppliers
Alliander’s annual procurement volume is approximately €1.5 billion for products and services. Contractors, energy purchases, components and IT are the main areas of expenditure in our procurement profile. Together with our suppliers, we can make a major contribution to sustainability. Sustainable procurement is an integral part of our tender invitation/evaluation criteria. Our outsourcing policy incorporates provisions relating to human rights, working conditions, use of raw materials, recycling, and carbon emissions. Alliander requires work to be performed in line with safety protocols and standards for working with the gas and electricity infrastructure, such as VIAG and BEI. Suppliers’ staff must comply with these protocols and standards as well.
All contracted suppliers of Alliander have committed to the ‘Alliander Supplier Code of Conduct’. This code is based on OECD guidelines and requires suppliers as well as their suppliers and manufacturers to adhere to ethical and fair business practices. Infringements of the code can lead to the imposition on our part of sanctions such as termination of the contract or temporary suspension of work with or without notice of default.
Compliance with agreements made with suppliers
Each year, we carry out multiple supply chain audits. Due to the COVID-19 crisis, we were only able to conduct two audits in 2020 to assess the quality of the products and services delivered to us (2019: 11). No critical deficiencies in these aspects have been reported. During the audits, compliance with the Code of Conduct and with the supply chain responsibility aspects are discussed, as well as the actions taken or to be taken in relation to any issues discussed. On top of the customary quality and product checks, we look at elements of CSR such as compliance with universal human rights, working conditions, health and safety, and their environment management system. Outsourcing, investments and production in other countries sometimes lead to an increased risk regarding these aspects and for the recognition and observance of fundamental human rights. An organisation can involuntarily become involved in dubious practices such as child labour. Findings are shared with the supplier. We did not take any measures with regard to suppliers in 2020.
In the event of proven negligence or violation of the agreements, we terminate the relationship or impose other sanctions in accordance with the contract and Alliander’s Supplier Code of Conduct. In the event of damage or risks, we communicate with our stakeholders, carry out investigations and implement temporary or structural measures. We keep in touch with and inform the parties concerned about the progress we make.
CO2 score in tenders
When assessing our tenders, we include the energy consumption of components during their service life as far as possible. Given the volumes we purchase, we are always looking for improvements in this area. Alliander is the initiator of a sector-wide internal CO2 pricing scheme (see also the Sustainable organisation chapter). Working with an internal CO2 price ensures stronger prioritisation of a higher CO2 reduction in respect of our own investments and the components we purchase from others. In 2020, we collaborated with the other network operators to develop an instrument that objectively applies this CO2 price and that can be used in tenders to favour circularity. We will start using this method in practice in 2021 and expect to adopt it across the board in 2022.
Circular operations
As a network operator, we use large quantities of materials and, indirectly, of raw materials. We have a responsibility to do the best we can when it comes to the sourcing and use of our materials. For a few years now we have been integrating circular procurement into our purchasing processes. We report a ‘circular procurement’ percentage every quarter. We use this term to refer to the purchase of materials made largely from recycled constituents and/or materials that are recyclable after use. This applies to our primary assets: low-voltage and medium-voltage cables, gas pipes, distribution and power transformers and (smart) electricity and gas meters. The percentage of recycled or recyclable is determined based on raw materials passports provided by our suppliers, which state these percentages. So we rely on the support and expertise of our suppliers to identify these percentages.
In 2020, the ‘circular procurement’ percentage was 44% (2019: 30%). We calculate the ‘circular procurement’ percentage as the average of ‘recycled constituents’ and ‘recyclable at end of life’. From the end of 2020, we will also use relevant data from research carried out by CE Delft to produce our own analysis of the percentages quoted by suppliers and adjust them where necessary. Based on a recalculation performed as part of CE Delft’s research, the most likely percentage for ‘circular’ is roughly 35%. However, this method also indicates a wide variance band for certain materials, from 10% to 80% recyclable. Our aim is to source 60% of our primary assets via circular procurement in 2025. We also manage based on the following flows and principles to implement circular operations even more concretely:
We make the best possible use of the materials we have.
We avoid wasting raw materials in our organisation.
We recycle 90% of the remaining waste using high-grade recycling methods.
Within the Green Networks coalition, the coalition members (regional network operators, TenneT, GTS, ProRail, Rijkswaterstaat, and KPN) share their experiences with raw materials passports. In 2020, the coalition members agreed to adopt requesting the relevant raw materials passports for the most important components as standard practice. A consistent format is used to simplify the procedure for suppliers.
Circular Procurement Green Deal
Circular procurement demands intensive co-operation with our suppliers. To achieve this, we have worked for several years in accordance with the Circular Procurement Green Deal. The aim is to learn from each other’s experiences with starting up circular procurement processes and accelerate the widespread adoption of circular procurement. The more than sixty participants have a great deal of knowledge and experience. Alliander makes a major contribution to the Green Deal, involving such things as protective clothing, transformers, redeveloping office space, coffee cups, furniture and fair meters.
Publicly available raw materials data
The circular economy benefits from high transparency in relation to the level of demand for and the availability of materials and raw materials. As a result, suppliers can better assess which raw materials will become available where and which can be reused. Transparency also facilitates the growing number of ‘raw materials brokers’, who specialise in matching supply and demand. Together with the other network operators, we have invested in a public database that aims to professionalise our raw materials data and the raw materials passports. We have included this functionality in the KSANDR platform, which network operators already used to record all the outage data relating to our main components. KSANDR is a not-for-profit organisation that aims to record, share and develop knowledge about the behaviour of the current electricity grids in the Netherlands.
Making the best use of what already exists: reuse
The efficient use of material is in keeping with a circular economy approach and supports the principles of excellent network management. Reuse of network components limits the use of new raw materials and reduces carbon emissions. Following its introduction in 2019, this programme was further optimised during the course of 2020 and has now been embedded in our logistics systems and processes. As a result, the reuse of components is now seen as our first procurement channel. Thanks to our increasing reuse of components (such as 10kV/50kV transformers, legacy and smart meters, magnefix installations, and cables), we achieved a cost saving of €5.8 million in 2020, besides this making a substantial contribution to a sustainable Alliander.