The main activities in our supply chain are all those related to the expansion of our distribution infrastructures, networks and assets, distribution systems and ensuring the supply of gas to users in the various municipalities in the Community of Madrid in which we operate.
7.1 Our suppliers
In order to carry out the different activities in our value chain, we have a large number of suppliers, who are a key element in our processes. At Madrileña Red de Gas we consider:
- Critical suppliers
Those engaged in the following activities in our value chain: construction and maintenance of networks, periodic inspection, household operations, readings, emergencies, commissioning of receiving installations, polyethylene (PE) pipe manufacturers, polyethylene (PE) fittings manufacturers and meter manufacturers. - Relevant service providers
These are not necessarily critical. Relevant services are those that are sensitive from a quality perspective as they require compliance with specific technical/legal conditions for
performance of the work, most of which originate from current legislation. Consequently, these suppliers must be registered in our Business Activity Coordination tool.
With regard to the approval of our suppliers, in critical business processes we work with approved suppliers in order to obtain high levels of safety, quality, better deadlines and prices and respect for the environment in our operations.
In addition, relevant service providers who are also critical suppliers, and who intend to carry out any activity for Madrileña Red de Gas, must pass the initial assessment and approval stages.
In this regard, no new outsourcing processes have been carried out during 2023, nor have we had any major changes in our supply chain.
In 2023 we have worked with 170 suppliers of both products and services:
- 13 critical suppliers
- 45 relevant suppliers, 9 of whom also classified as critical.
It should be noted that 80% of all purchases made during 2023 were with 24 main suppliers.
The total turnover during 2023 was close to 25 million euros.
Furthermore, at Madrileña Red de Gas we support and encourage our supply through suppliers close to the place where our significant operations are located, i.e. those located within the Autonomous Community of Madrid. In this way, in addition to securing supply, we help to achieve a stable local economy while maintaining community relations.
65.9% of all our purchases have been made from local suppliers, maintaining a similar percentage to previous years
In this regard, of the 170 suppliers we have worked with during 2023, 112 are located in the Community of Madrid, that is to say: 65.9% of all our purchases have been made from local suppliers, maintaining a similar percentage to previous years.
With regard to the percentage turnover, during 2023 82% of all our purchases have been made from suppliers in the Autonomous Community of Madrid, thus promoting and strengthening local activity.
7.2 Sustainable management of our value chain
At Madrileña Red de Gas we guarantee that our suppliers maintain a commitment to respect and promotion of ethical values and sustainability in all areas of their organisation and activity, in accordance with the values and commitments set out in our Sustainability Policy
Madrileña Red de Gas is aware that sustainable practices in supply-chain management are becoming increasingly important. We therefore seek to manage our environmental, social and economic impacts and promote good governance practices throughout the life-cycle of our goods and services.
At Madrileña Red de Gas we guarantee that our suppliers maintain a commitment to respect and promotion of ethical values and sustainability in all areas of their organisation and activity, in accordance with the values and commitments set out in our Sustainability Policy
Madrileña Red de Gas is committed to respecting and promoting Human Rights in all our operations, our value chain and in all the places where we operate, as stated in our Human Rights Policy.
With the aim of extending the principles of sustainability throughout our supply chain, this commitment is extended to our suppliers through the Sustainable Purchasing Policy and the Code of Conduct for Suppliers, with which they are obliged to comply.
Thus, in order to fulfil the commitment to responsibility throughout the value chain, our suppliers must comply with the Responsible Business Principles set out in our Sustainable Procurement Policy, based on the deployment of core values: Integrity, Commitment, Transparency and compliance with Human Rights, especially those related to eliminating and preventing any form or modality of forced labour, guaranteeing in turn the rights of workers to exercise freedom of association or collective bargaining and decent employment, as well as the rejection of all types of child labour and respect for the rights of ethnic minority communities. None of our operations or suppliers are considered to be at significant risk of non-compliance with these rights.
Our contractual clauses establish the need for our supply chain to identify its potential and actual contributions to the Sustainable Development Goals of the United Nations 2030 agenda.
In addition to the above, the quality and safety of our services, the protection of the environment as well as the health and safety of our employees are basic pillars of our company, in accordance with which, amongst others, our Integrated Management System has been implemented and certified. In this regard, the activities of our suppliers are integrated into this System, assuming the commitments established by Madrileña Red de Gas, which are communicated and supervised during the conduct of their activities, as their own.
In addition, our suppliers, as well as their employees, have the possibility of making complaints, or resolving doubts or disputes, through the usual contact channels. All complaints are treated in strict confidentiality and secrecy.
ESG rating of our suppliers
Madrileña Red de Gas has an external supplier registration and pre-qualification tool available to authorised users of the participating companies. This tool provides an overview of the positioning of our suppliers in terms of Sustainability, as well as a comparison with other companies in the sector, by means of questionnaires in the following areas:
During 2023, 46 of our suppliers have been assessed according to the above axes.
The assessment methodology is based on a score on a scale of 0 to 100 for each block, with the provision of the corresponding documentary evidence, obtaining an overall ESG score and classifying each supplier.
In relation to this assessment, as established in the current contractual clauses with our suppliers, Madrileña Red de Gas expects all its contractors to promote sustainability policies aimed at achieving the maximum sustainability score (Level A) in the suppliers’ portal.
In this context, during September we implemented an ESG Supplier Development Programme. The aim of this programme is to help our suppliers to improve their sustainability assessment by helping them to correct deviations and accompanying them in completing the questionnaires. Thus, in collaboration with a person in charge of the supplier registration and pre-qualification tool, we carried out the following activities:
- The identification of suppliers registered in the tool who are likely to participate in the programme. A total of 11 suppliers were selected.
- Sending communications to these suppliers with information about the programme and a proposal to participate in it.
- The holding of meetings with participating suppliers. A total of three meetings were held, at which the supplier’s answers in the ESG questionnaire were verified and evidence was requested to cross-check the information.
- The creation of an improvement plan based on the non-conforming requirements.
Following the programme, two of our suppliers improved their score from B to A.
At Madrileña Red de Gas, our goal is to promote the development and support of our suppliers to improve their ESG capabilities and minimise their risks, especially with regard to carbon footprint, circular economy, occupational health and safety and cybersecurity.
In addition to the above, the supplier registration and pre-qualification tool we work with also provides us with greater rigour and detail of our suppliers through documentation assessments and on-site physical audits, which are carried out by qualified assessors. These audits provide further validation of suppliers’ documented policies and processes in key areas such as quality, health and safety, sustainability, human resources and environment.
In this context, it should be noted that, during 2023, we have not registered any new suppliers, nor have we identified any suppliers with significant actual or potential negative environmental or social impacts.
It should also be noted that, in 2023, no complaints were received through the complaints channel regarding the supply chain or the company’s procurement model, which is based on free competition, transparency, corruption management and equal treatment.
Promoting more sustainable procurement
Once again, as members of the Spanish Association of Purchasing, Contracting and Procurement Professionals (AERCE), we attended the most recent congress held on 28 June at IFEMA under the slogan “Transforming from Purchasing: It’s time”.
Technology and innovation, sustainability, leadership and talent were the protagonists of an agenda that highlighted the potential of Purchasing to lead the transformation that organisations have to face in a business environment in constant movement due to various factors, such as rising prices of raw materials, supply-chain disruptions, the need to innovate to differentiate ourselves, the difficulties in finding talent, or the growing pressure for organisations to incorporate sustainability criteria in their Purchasing practices.
AERCE is a non-profit professional association whose objective is to promote sustainable purchasing management to optimise costs and increase company productivity.