Iberdrola, a global provider of energy and electricity, has made a new commitment to ensure that more than 85% of its purchases are made from suppliers that comply with environmental, social, and governance (ESG) criteria starting this year.
This will promote best practices in 20,000 suppliers, representing almost €18 billion in purchases. This new target represents a significant increase from the company’s previous goal, set in 2021, of requiring ESG criteria, sustainable development policies, and standards from 70% of suppliers with over €1 million purchases.
Iberdrola’s Global Supplier Sustainability Evaluation Model measures suppliers’ performance in various areas, including objectives linked to Sustainable Development Goals (SDGs), climate change risk management, circular economy strategy, human rights due diligence, compliance, good governance, and business ethics.
Suppliers are required to provide supporting evidence and documentation. The company aims to encourage the entire supply chain to align with its principles rather than excluding companies. The mechanism for proposing ESG improvements has attracted over 1,000 suppliers that initially did not meet the requirement. Over 77% of suppliers awarded contracts from 2020 to 2022 met the established criteria and followed sustainable development policies and standards.
Iberdrola plans to maintain the ESG measurement model integrated into procurement decision-making for 2023-2025. However, new climate-related action plans are under consideration 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 reach net zero across its entire value chain by 2040.
