Iberdrola to Require Suppliers Representing 85% of Spend to Meet ESG Criteria
Global energy and electricity provider Iberdrola announced today a new commitment for more than 85% of its purchases to be made from suppliers that comply with ESG criteria beginning this year, resulting in the promotion of best practices in 20,000 suppliers representing purchases of nearly €18 billion.
The new target represents a significant increase from the company’s prior goal, set in 2021, for ESG criteria requirements and sustainable development policies and standards from 70% of suppliers with purchases of more than €1 million.
Iberdrola’s e Global Supplier Sustainability Evaluation Model measures supplier’s performance in areas including objectives linked to SDGs, management of climate change risk, circular economy strategy, human rights due diligence, compliance, good governance and business ethics, with suppliers required to provide supporting evidence and documentation.
Iberdrola stated that rather than seeking to exclude companies, its ESG plan aims “to encourage the entire chain to align itself with the company’s principles,” noting that its mechanism for proposing ESG improvements has attracted over 1,000 suppliers that initially did not meet the level of requirement, and more than 77% of suppliers awarded contract in the 2020 – 2022 period meeting the established criteria and following sustainable development policies and standards.
While Iberdrola said that the ESG measurement model integrated into procurement decision making will be maintained for the 2023 – 2025 period, new climate-related action plans are under consideration in order to help the company meet its 2040 sustainability goals. In November 2022, Iberdrola announced targets to achieve carbon neutrality in its power generation plants by 2030, and to reach net zero across its full value chain by 2040.