Sustainability in the supply chain has become a key issue in the telecommunications sector, in which companies share more and more parts of the value chain with our suppliers and outsourcers.
Each company is responsible for identifying and managing the associated risks, as set out in the United Nations Guiding Principles on Business and Human Rights and in the Sectoral guides drawn up by the European Union, presented in June 2013.
At the same time, global risks require sectorial and multi-stakeholder solutions in order to ensure that the goods and services purchased are increasingly sustainable. An example of this is the collaboration initiatives which have arisen for the uniform evaluation of the performance of suppliers. These projects make it possible to share the evaluations and actions deriving from them with outsourcers from the same sector or from various industries. Telefónica is aware of the impact associated with purchasing goods and services due to our volume of purchases – over 25.000 billion euros a year — and the high local component — over 11,000 suppliers and almost 83% awarded to local suppliers.
In the company, we understand sustainability in the supply chain within a management framework which enables us to mitigate risks and identify opportunities. In addition, in some services, it is a key element for the satisfaction of our customers, and it is, in short, a critical point for our reputation.
Our Business Principles, Telefónica’s code of ethics, lead us to take on a commitment to sustainability throughout the process of relations with suppliers:
- Our Purchasing and Business Lines Teams know the sustainability criteria and are aware of the benefits of responsible action in the supply chain.
- Telefónica Procurement teams are regularly trained on sustainability issues (in particular any changes to the Supply Chain Sustainability Policy or specific clauses to be included in high risk contracts).
- We inform and assess our suppliers with regard to the contents and objectives of our Principles and Policies, in order to guarantee that we all share the same vision.
- We ensure that our suppliers respect current local legislation, encouraging them to be proactive and to go one step further, considering more demanding legislations in this regard.
- We promote ongoing training and improvement programmes of our suppliers, based on our prior knowledge and their performance.
- We encourage our suppliers to undertake initiatives of this kind in their own supply chains in order to multiply the positive impact on the social, labour and environmental aspects.
This commitment is detailed in a policy and is regulated in internal standards and external requirements such as the General Conditions for the supply of goods and products, which outline the ethical, social, environmental and privacy behaviour standards for the supply chain. All of this forms part of our global purchasing model and it is complemented by our commitments to Human Rights and responsible minerals trade.
Telefónica requires its suppliers to carry out their activities applying similar principles and respecting existing laws and regulations in the countries in which they operate. To make them aware of the importance of being aligned, we use communication, dialogue — through forums — and training.
Telefónica belongs to JAC (Joint Audit Committee), the association of telecom operators for the realization of common audits to critical suppliers
To ensure that they comply with our policy and standards, we use a wide range of measures, from pre-evaluation processes through to audits in situ. We consider it basic to evaluate the risk level of our suppliers a priori, through an external, independent source. At present, we promote self-evaluation through the EcoVadis, solution, a platform based on international corporate responsibility standards which take into account 21 sustainability criteria and which is used by the leading telecommunications companies. Telefónica already has evaluated more than 300 critical suppliers.This evaluation model is complemented by the Annual Audit Plan, developed in accordance with critical aspects in Europe and Latin America, and the local audits of the Allies (Aliados) programme.
If a supplier does not reach the required level or is not able to provide the information requested, an internal process is started, with different phases and tools, in order to reach an agreement with that supplier so that it meets our requirements. In extreme cases, if this is not feasible, and depending on the agreement reached, relations are suspended until it has demonstrated that it has corrected the situation and has reached the required levels.
Allies is an initiative of transformation and commitment to the companies which collaborate with Telefónica and third parties. The importance of the programme, which began in Latin America in 2008, lies in the fact that almost 80% of direct contact with our customers in the region is made by third parties.The aims of Allies are:
- To build strategic allies.
- To guarantee fulfilment of the organisational objectives and technical security and to develop early detection and risk prevention mechanisms.
- To raise awareness among outsourcers regarding fulfilment of Telefónica’s regulations.
The programme aims to ensure fulfilment of the social, labour and ethical standards, promotes excellence of service to customers and facilitates the progress of allied companies with regard to sustainability, guiding them, avoiding interferences. The global model for managing third parties materialises in shared tools, notably a policy of minimums, a risk detection and management model, labour audits, an online platform for supplier the training, communication and good practices.
The cornerstone of Allies is the Allies Committee, the body responsible for putting the model into practice and monitoring and updating it. The Committee, present in the main countries in the region, is composed of the Human Resources Department (guarantor of labour and health and safety aspects), the Purchasing Department (which guarantees that the sustainability criteria are incorporated into the Purchasing process), the Sustainability Department (which assesses the sustainability performance of suppliers: evaluation and monitoring), the General Secretariat and management and requests departments (they identify the key suppliers for the provision of the service to be incorporated in the sphere of Allies, following analysis by the Committee).