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Responsible supply chain

Sustaining a responsible supply chain and increasing our value chain focus is a key part of our sustainability efforts. We seek to understand, monitor and report on key ESG risks and performance in our supply chain and select and develop suppliers with strong sustainability practices.

Management approach

Scatec purchases goods and services from a wide variety of suppliers, ranging from large international organisations to specialist local suppliers worldwide. We mainly source services and components during the development and construction phases of our projects. Supply Chain ensures best value sourcing to meet cost targets, deliver quality goods on time and in a sustainable way, whilst supporting the business throughout the project lifecycle interfacing with several internal and external stakeholders.

Our supply chain management work is guided by international standards including the IFC Performance Standards, OECD Due Diligence Guide for Responsible Business Conduct, the UN Guiding Principles on Human Rights and industry best practice.

GRI disclosures

GRI 308-1: New suppliers that were screened using environmental criteria
GRI 414-1: New suppliers that were screened using social criteria

We regularly assess sustainability risks within our supply chain and seek to mitigate these risks through our supplier development programme, transparent and fair tender processes, robust contracting, pre-production audits and monitoring during production.

Our procurement process starts with a three-stage screening process. Before suppliers are invited to tender, they must register on our online portal where a legal due diligence is conducted. The second phase is a desktop due diligence that includes Quality, Health, Safety & Environment (QHSE) systems and ESG aspects, which are submitted as part of the relevant bid. Suppliers are then shortlisted based on their scores after which a final audit and in-depth due diligence is conducted prior to awarding a contract.

Three stage screening process

1. Request for information from suppliers for pre-qualification covering legal due diligence

2. Desktop due diligence of the documents requested during the bid including OHSE and other key ESG aspects

3. Final audit and in-depth due diligence on shortlisted suppliers prior to recommendation to award

After the screening process, we seek to continuously monitor and control our work with and relationship to our suppliers. All suppliers must sign our Supplier Code of Conduct and confirm conformance with the IFC’s anti-corruption guidelines which we integrate into all our contracts, in addition to HSSE, environmental, social, and quality assurance and control requirements. We appoint dedicated resources to follow up directly on quality and policy implementation during the construction phase. In 2022, 100% of our contracted suppliers signed our Code of Conduct.

We audit and conduct performance reviews of all key suppliers of main procurement items and follow an integrated approach by planning for coordinated audits for both QHSSE and ESG. To further strengthen our supplier management and monitoring, in 2021 Scatec enrolled in a three-year program with EcoVadis, a global ESG supplier management platform. All key suppliers are assessed through this platform on four key areas:

  • Environment
  • Labour and human rights
  • Ethics
  • Sustainable procurement

In 2022, we assessed 35 suppliers of key procurement categories through our ESG supplier management platform, EcoVadis and reviewed 173 corrective actions within the areas of Environment, Labour and Human Rights, Ethics, and Sustainable Procurement.

GRI 204-1: Proportion of spending on local suppliers

We work to strengthen our local supplier base by identifying short, medium and long-term services that could be supplied by entrepreneurs in the local communities surrounding our solar plants. This can be achieved through targeted supplier development initiatives that promote local capability and capacity building. 

Typically, aligned to local regulations and our power purchase agreements (PPAs), our engineering, procurement and construction (EPC) scope for local content includes construction, staff, accommodation, travel and other minor procurement. In regions where we have established operations and there is a developed supply chain in country, we strive to engage local service providers for various essential operations and maintenance (O&M) projects such as module washing and vegetation control.

In 2022, 81% of Operations and Maintenance (O&M) spend were on local suppliers in South Africa, Egypt, Malaysia and Honduras.

Accounting Policy

Scatec reports on the percentage of suppliers that were screened using E&S criteria as well as the percentage of local spend during the year. Key definitions used in our reporting:

Suppliers: providers of goods and services to Scatec (primarily within the Solution/Execution business unit), unless otherwise specified.

Key suppliers: suppliers that Scatec directly engages for the supply of goods, and in some cases services (such as transportation management), to deliver our renewable power projects.

Local suppliers: providers of goods and services to Scatec (Solution/Execution) registered in the country that the relevant power plant is based in. 

Main procurement items: unless otherwise specified, include modules, inverters, substructures and wind turbines.

Significant locations of operations: locations that Scatec has identified as key focus markets, namely South Africa, Brazil, the Philippines, Hydro-Africa, Egypt, India, and Poland.

Governing documents and related resources