Responsible supply chains
Advancing sustainability beyond the limits of the company also in the supply chain supports the promotion of international standards on environmental conservation, human rights, occupational safety and the fight against corruption. In this regard we are not only producers but also customers and suppliers. Sustainability in the supply chain is increasingly becoming a precondition for participating in tenders made to industrial customers and is being included in public procurement.
Key elements of our value chain are the procurement of hard coal and natural gas and biomass, as well as trading in combustion fuels. International wholesale markets are the most important source of procurement. Even though environmental and social compatibility play an important role for us in production, we have virtually no opportunities at this point to exert any direct pressure on production conditions.
Furthermore, we procure goods, services and plant components for the operation, maintenance, new-build and decommissioning of our plants. We are in regular and close contact with our suppliers.
In cooperation with our suppliers, we intend to comply with and promote international environmental and social standards. This is an obligation defined by our Code of Conduct and our principles of conduct. Before we enter into any business relationships with our suppliers, we review all potential trading partners. The review takes place in a standardised and multistage process. We use international databases and information systems in order to see whether there is any potential misconduct. Since 2014, we have also had access to the information garnered in the Bettercoal Initiative. All our trading partners are checked in this way.
Collaborations with other energy companies are absolutely essential. These allow us to exert more pressure in order to meet the requirements for sustainable production and transport conditions in view of the fact that direct delivery relationships are usually lacking. In 2012, we therefore joined forces with other large purchasers of hard coal to launch the Bettercoal Initiative. The organisation audits coal mining sites worldwide. The aim of Bettercoal is to bring about improvements in all the important production countries and leverage coal production at an acceptable environmental and social standard across the world.
Certificates guarantee compliance with sustainability aspects along the entire supply chain for the wood pellets imported by us. We use the new industrial standard of the Sustainable Biomass Partnership (SBP). RWE has been involved in the SBP Initiative since it was established. So far, the United Kingdom and Denmark have acknowledged the SBP Standard as being compliant with the national sustainability criteria. All the biomass supplied by our trading house RWE Supply & Trading is provided with certificates. The pellets are certified in accordance with differing standards, but in each case they are produced in compliance with at least one standard.
When procuring goods, services and plant components through Group Procurement, all suppliers of RWE must take account of the relevant international environmental, social and compliance standards. Where necessary they should also consider other detailed requirements. We therefore include information about how our suppliers comply with sustainability requirements in our purchasing decisions. The ten principles of the UN Global Compact (UNGC), our Code of Conduct and other detailed guidelines form the basis for these requirements.
We can make our Code of Conduct and the principles of the UNGC a constituent element of individual contracts when we have direct relationships with suppliers. This enables us to communicate a clearly defined set of expectations to our suppliers and service providers. We use an initial appraisal of potential suppliers based on a self-assessment to gather information on matters including environmental protection, occupational safety and compliance.
We are in regular and close communication with strategic suppliers. Across the Group, our supplier management is a key building block for these contacts within the strategic procurement process. This management encompasses supplier selection, evaluation, classification and development. We always take account of the perspective of the suppliers. When any problems occur in the course of a business relationship, we address the matter with our suppliers and work together with them to achieve improvements jointly. We routinely monitor the proportion of the purchase volume in which the requirements of our Code of Conduct are a constituent element of the contractual relationship.