Universal Registration Document 2020

3.4.2.3.2 Responsible procurement strategy and practices

Procurement strategy

EDF works with around 12,100 suppliers each year.

The Group Purchasing Department manages EDF’s purchases, excluding fuel purchases and a portion of tertiary, IT and telecommunications purchases for certain subsidiaries. This totalled more than €7.2 billion in orders in 2020 (compared to nearly €8 billion in 2019), excluding suppliers belonging to the EDF group, broken down as follows: €4.3 billion in engineering and production purchases, €1.8 billion in tertiary and services purchases and €1.1 billion in IT and telecom purchases.

In 2020, EDF’s top five suppliers accounted for 11.5% of the total amount ordered by EDF (excluding fuel purchases), and the top ten accounted for 18.6% of that amount.In alphabetical order: Cap Gemini Technology Services, Clemessy, Demathieu Bard Construction, Endel SAS, GE Steam Power Service France, Onet Technology TI, OranoDS Demantèlement et services, Orys, Spie Nucléaire and Westinghouse Électrique France SAS.

Suppliers are considered strategic based on a criterion of non-substitutability and the purchasing volume. The supplier dependency rate is also monitored. EDF implements suitable monitoring actions.

Responsible purchasing practices

EDF’s responsible purchasing policy is at the heart of the Group’s social and environmental responsibility practices in its supply chain. It is structured by the Group Purchasing Department, which sets the general framework and manages the Purchasing function while respecting the management independence of network managers.

Further information about the Group’s responsible approach to tackling the health crisis can be found in the introduction to this chapter (“EDF, a responsible approach to tackling the health crisis”).

Under the Group Purchasing policy, as updated in 2019, its suppliers are required to comply with the Group’s values and all contracts must include environmental, social and human rights clauses. Suppliers may not take part in any tendering procedures unless they have signed a compliance undertaking⁽¹⁾, relating to bribery and corruption, money laundering, terrorist financing and conflicts of interest. The “Sustainable Development Charter between EDF and its suppliers”⁽²⁾ forms one of the contract documents making up each contract and is binding on all suppliers and their own value chain. Even when these mechanisms are not directly applied, the major subsidiaries use equivalent methods of commitment adapted to their specific industrial or geographic characteristics. For example, all of EDF Renewables’ qualified suppliers have signed its sustainable development charter.

Likewise, buyers are also educated about the importance of the responsible purchasing approach, mainly through their training (special module on this subject).

The Group Purchasing policy encourages local sourcing and value creation in the regions⁽³⁾. More than 97% of its purchases are made in France, mainly due to the mechanism used to split contracts into various lots, which facilitates access to the Group’s contracts. Through this policy, it has a long track record of giving preference to relationships with SMEs and using the sheltered worker sector and structures for integration through economic activity. EDF makes full use of the new possibilities offered under Directive 2014/25/EU, allowing certain purchases to be reserved for these sectors. In 2020, EDF’s purchases from the solidarity sector amounted to €13.5 million.

The voluntary development of industrial synergies between EDF entities reinforces the Group’s coherence in its relations with suppliers and service providers. This is the case, for example, for purchases of wind turbines (for which Luminus and EDF Renewables cooperate) and also for hydro, nuclear, thermal and HVB power and tertiary and IT purchases, for which nearly all of the European subsidisers benefit from EDF framework agreements.

When implementing purchasing contracts, the Group Purchasing Department ensures that financial balance is maintained with respect to suppliers, in particular through compliance with payment deadlines and pricing actions. Each buyer shall sign the mandatory ethical undertaking which lists the principles to be complied with in relationships with current and prospective suppliers.

In July 2019, EDF was sanctioned by the Directorate-General for Competition,Consumer Affairs and Fraud Control (DGCCRF) with regards to late payments to its suppliers. It quickly launched a proactive action plan to ensure that all invoices are paid on time. The renewal of the Supplier Relations and Responsible Procurement (RF&AR) certification, confirmed at the end of September 2020, after a follow-up audit, recognises the progress made. This certification awarded to EDF in 2015 by theMinistry for the Economy, Médiation des Entreprises and the French Procurement Board (Conseil national des achats) rewards companies that have sustainable and balanced relationships with their suppliers⁽⁴⁾.

The EDF group offers its suppliers collaborative reverse factoring, granting them the possibility to pre-finance their invoices before the contractual due date, as soon as EDF issues the payment voucher⁽⁵⁾.

Responsible, balanced supplier relations

The EDF group has used a company mediator since 2010. Suppliers may refer a matter to the mediator directly, free of charge, through its website or by post⁽⁶⁾, as stated in the General Terms and Conditions of Purchase and on the Group’s purchasing platform.

Finally, as is the case for all stakeholders, suppliers can use the Group’s whistleblowing system, set up in accordance with the Sapin 2 and Duty of Care laws, which guarantees anonymity and is available in the Group’s six languages⁽⁷⁾.

In order to foster dialogue and promote local sourcing and skills development for local businesses, the entities in each country organise regular forums or specific schemes such as “CAP ENR” and the “One River, One Territory” workshops.

The Group Purchasing Department continued its proactive programme of“Productivity Partnerships”. The aim is to improve contract performance through cooperation between EDF and its suppliers, to their mutual benefit. The benefits maybe financial, organisational or technical (indirect gains, such as shortened construction times or avoided costs). In 2020, the Group Purchasing Department decided to switch the focus of the “Productivity Partnership” monitoring to accurately measurable gains⁽⁸⁾.