Responsible Purchasing

In 2007, Telefónica assumed a commitment to assess the risk arising from the breach of its business principles regarding the supply chain in 1,000 suppliers and to audit 50 in 2008. At the close of the year, more than 1,100 assessments and 55 audits have taken place with suppliers in the various countries in which the company operates. This figure represents approximately 50% of the Telefónica Group's risk suppliers. In 2009, it plans to continue assessing the risk of its supply chain, optimising its processes, designing joint plans for improvement with its suppliers and fostering sustainable purchasing.

Through its assessment process, Telefónica seeks to consolidate a transparent relationship of alliance with its suppliers in the area of corporate responsibility, enabling the identification of hazards on the one hand and, on the other, the management of the hazards through the establishment of improvement plans. The regulations for extending the business principles to the supply chain upholds this spirit of collaboration and the supplier will only be suspended if it fails to complete the questionnaires, repeatedly does not send the evidence that is requested or fails to accredit the adoption of the corresponding improvement plans, where applicable.

The improvement plans that arise from the assessments are designed for each supplier and foster the adoption of better practices by suppliers.


Assessed suppliers

• 319 suppliers, in other words, 29% required a second stage of assessment to collect evidence.

• 84% of the suppliers that were assessed revealed a low or moderate risk in the aspects that were analysed.

• The main area of improvement in 74% of low-risk suppliers is the application of CR. Telefónica will continue to foster CR on its supply chain by training its suppliers.

• Of the 380 moderate-risk suppliers (35% of the total number of suppliers that were assessed), the aspects with the worst score in 56% of them were environment-related.

Audited suppliers

• 100% did not present risks of the practice of child labour.

• 96% of the suppliers that were audited showed incipient or zero development of CR. Telefónica will continue to foster CR on its supply chain by training its suppliers.

• The personnel selection companies and the equipment installation, maintenance and safety services sector were those with the best practices in the environment, labour, and health and safety, with no high risk identified in 100% of these companies.

• The suppliers with the highest risk in environmental issues are located in Brazil, Colombia, Mexico and Venezuela, where said risk represents 62% of the total risk detected regarding the environment during the audits. Mention must be made of the fact that, in many cases, the local legislation in effect in these countries is less demanding than the practices outlined in Telefónica's Business Principles.