Management and Monitoring

Supplier ESG Program

​The Supplier ESG Program is a set of activities and measures that allow you to identify and evaluate potential ESG risks and, consequently, plan corrective measures to ensure solid sustainability performance throughout the supply chain.

Sustainable development
In the contracts promoted by Eletrobras companies, the environmental, social, economic and governance aspects must be observed.

Suppliers of Eletrobras companies are required to allow due diligence and other measures aimed at monitoring contractors on sustainability aspects.
In the contracting promoted by Eletrobras companies and in the work processes of the supply chain, the adoption of measures that contribute to the achievement of the Sustainable Development Goals (SDGs) of the United Nations Development Program (UNDP) should be sought.

Environmental dimension
The contracts promoted by Eletrobras companies must seek to reduce, throughout the life cycle (extraction of raw materials, manufacture/preparation, use and disposal) of the material or service:

a) waste generation;
b) greenhouse gas emissions;
c) energy consumption, in its various modes;
d) water consumption;
e) use of products potentially toxic to the environment.

Social dimension
The contracts promoted by Eletrobras companies must seek, throughout the material manufacturing or service supply chain:
a) Respect for human rights - respect human rights throughout the supply chain;
b) Occupational health and safety - no accidents at work and/or occupational diseases;
c) Worker well-being - worker-friendly working environment and conditions;
d) Gender and racial equity and diversity - promoting gender and racial equity and respect for diversity;
e) Inclusion of micro and small enterprises - participation of small or micro enterprises;
f) Local development - participation of local companies and job creation.

Economic dimension
Contracts promoted by Eletrobras companies must comply:
a) Energy production and transmission - impact on the availability of energy supply in the material manufacturing or service delivery chain;
b) Efficiency of the purchasing process - optimization of the purchasing process, purchase of recurring items, consideration of the total cost of ownership, including Economic Lot Purchasing;
c) Image or reputation risk - impact on the image or reputation of Eletrobras companies in the material manufacturing or service supply chain;
d) Regional supply - regional supply capacity.

To ensure planning, implementation, and improvement cycles, it is necessary to identify and address risks and material impacts resulting from supply activities, with clear and structured governance, together with internal communication and employee training. To this end, in 2023 a multidisciplinary Integrated Supplier Management Committee was created, with representatives from partner areas such as Sustainability, Environment, Social Responsibility, Compliance, Information Security, Occupational Health and Safety, Data Management and Risk Management.

The committee meets monthly to discuss and issue recommendations on purchasing practices, ensuring that they are aligned with the company's strategic planning and the Guide of Conduct for Suppliers of Eletrobras Companies.

The purchasing practices of Eletrobras companies do not only consider the choice of material, service or supplier from which to purchase. They also consider costs, quality, delivery times, supplier technical qualifications, as well as verifying that suppliers are aligned with the company's ESG requirements.

Suppliers must meet minimum ESG requirements to be registered and more robust requirements to be selected. Those that do not meet the requirements, but present non-conformities that can be corrected, receive guidance and development opportunities, with a defined deadline, in order to improve their performance and thus become eligible. Suppliers that are not able to meet the minimum ESG requirements are excluded from the list of potential suppliers, or are prevented from participating in the contracting processes.

Our Suppliers

Eletrobras companies identify and classify their suppliers through a screening process that considers a combination of methods and criteria that consider the adherence of the supplier's practices to ESG requirements, cost assessments, product quality, delivery times and technical qualifications.

​The supplier screening process is conducted through systematic documentary research to assess and classify suppliers' risk for negative ESG impacts and their commercial relevance, starting at registration, considering available data sources and requesting documents. In the following stages, technical and financial capacity are verified, application of a due diligence questionnaire to assess integrity, environment and Human Rights, with verification of authenticity of documents and information provided.

The company may also approach its suppliers, through interviews and technical visits (due diligence) at the locations where the contracted services are carried out or at the supplier's premises, always by prior appointment.

​Understanding that it is essential to know, manage and monitor all elements that may impact the supply chain, the Company established a process to identify and classify its critical suppliers, evaluating environmental, social and governance risks and impacts.

The assessment considers risks related to the political, social, economic, environmental or regulatory situation of the country; those related to the distinctive characteristics of a sector in relation to the employment situation, energy consumption, resource intensity, emissions or pollution potential of the sector; as well as risks related to the structure of the supply chain.

Supplier Assessment and Development

Suppliers are monitored and evaluated throughout their relationship with Eletrobras. Based on the classification of the criticality matrix, suppliers are identified to be monitored in a dedicated manner, with the possibility of applying questionnaires, participating in awareness-raising events on ESG topics, technical visits (on-site assessments, with prior scheduling) and documentary assessments with systematic verification of evidence, as established in the Guide of C​onduct for Suppliers​.

​Critical suppliers of Eletrobras companies - 2023

Critical supplier is one that supplies inputs, essential services for the company's core activity, however, other characteristics also define a supplier's criticality, such as:

• Be unique or exclusive;

• Directly impact the final quality of products and services;

• Have access to information or a critical process;

• Be hired for large amounts;

• Demonstrate high probability for risks and negative impacts related to the environment, human rights, occupational health and safety;

• Present a high risk to corporate integrity (for example, fraud or corruption, etc.).
  

In our hiring, the aspects of corporate integrity established in the Eletrobras Compliance Program. Among them is the Due Diligence Form, a tool in the supplier evaluation process that aims to ensure compliance with anti-corruption laws.

All our suppliers must observe the Guide of Conduct for Suppliers​, which brings together the rules of conduct and anti-corruption, human rights, environmental, labor and occupational health and safety practices that must be followed.

Supplier performance evaluation

Eletrobras companies have a systemic process that aims to monitor and record the performance of suppliers in the execution of agreements. Suppliers are evaluated in two categories, supply of material and provision of services, where several criteria are considered and weights are assigned, resulting in the evaluation score, which allows identifying suppliers that need a corrective action plan or those that may be eligible for recognition of good performance.

In July 2023, we pioneered a Human Rights Impact Assessment (HRIA) at the Paulo Afonso Hydroelectric Complex, which gathers our oldest operating plants. The initiative is conducted independently by two external consulting firms, and involves listening to different segments, including professionals, service providers and local leaders.

This is the first independent HRIA in the Brazilian electricity sector, a milestone that reinforces our leadership role in the business and Human Rights agenda. Our plan is to replicate this study for more of the company's operations from 2024 onwards, including SPEs.

Employee training on ESG topics

Periodically, Eletrobras companies promote training on topics for professionals who work in direct relationships with suppliers.

The Sustainability Track is our corporate education program, on ESG aspects in our internal culture, dedicated to training and developing responsible socio-environmental skills, abilities and attitudes among our professionals. The training includes topics such as integrity and ethical culture, privacy, diversity and inclusion, moral and sexual harassment, environmental policy, energy efficiency, human rights, climate change and sustainable supplier management. The Track includes courses from the Academy platform, from the UN Global Compact, of which we highlight the courses Sustainable Supply Chain and How Procurement Decisions Can Provide Decent Work in Supply Chains, among others that address environmental, social and governance topics.​