Sustainable management in the supply chain

Galp’s activities generate thousands of direct and indirect jobs worldwide. This requires a range of environmental, economic and social impact concerns to be addressed by Galp when dealing with its contractors and suppliers, through its commitments and sustainable procurement initiatives.

This partnership is governed not only by compliance with commercial and technical conditions, but also by compliance with the provisions of our Purchasing policy, our Code of Ethics and Conduct and the related normative documents, (e.g. Anti-Corruption Policy; Health, Safety and Environmental Policy; Quality Policy; Corporate Social Responsibility Policy), as well as compliance with current legislation in the countries in which the suppliers operate, for the purpose of creating shared value in a sustainable manner.

The relationship between Galp and its suppliers is founded on four key principles:

  • Respect for Human Rights and Working Conditions;
  • Acting with transparency and integrity;
  • Quality as a critical success factor; and
  • Protection of the environment, people and assets.
Galp does not establish or maintain relationships with suppliers who are not aligned with the above principles, and adopts appropriate measures in cases where the ethical and professional conduct or the sustainability requirements of suppliers are in any doubt.

We endorsed the BCSD Charter of Principles and invited our suppliers to do so.

Risk management in the supply chain

Galp has a risk management methodology that involves distinct stages, namely the process of selection, qualification and performance assessment of our suppliers of goods or services.

In 2019 we restructured the supplier qualification and risk assessment process by including a reference system into our Procurement Supply4Galp platform. This new hybrid model which combines the financial and nonfinancial information available in the market, the one provided by our partners, the available knowledge in our systems and the introduction of risk levels into the stratification model, means greater scope in monitoring several risk areas in our supply chain, namely ESG, cybersecurity, GDPR and business continuity.

Risk is managed in the supply chain through several practices, namely:

  • Assessing the supplier’s financial strength in the qualification process and in the procurement processes, whenever justified;
  • Monitoring information on the supplier's economic situation;
  • Tender qualification and evaluation of suppliers for services with risk in HSE, cybersecurity, GDPR and business continuity framed within the risks associated with each procurement process;
  • Audit and evaluation of services rendered in terms of ESG;
  • Conducting questionnaires, through S4G procurement platform, Procurement Catalyst and Achilles, on social risks (mandatory for new suppliers).

Within the E&P assets not operated by Galp, are signed Joint Operating Agreements that govern acquisitions of goods and services within joint ventures, for example. This ensures alignment between all partners in terms of the quality, social responsibility and HSE criteria for the pre-qualification of suppliers in purchasing processes.

ESG risk assessment

Type of supplier Percentage of suppliers assessed in the last 3 years Target
Tier 1 suppliers 92% 90% by 2020
Critical non-tier 1 suppliers 87% 100% by 2020

ESG risk assessment results

Sustainability risk (Number of tier 1 suppliers) 2019
with high economic risk 33
with high HSE risk 0
with high social risk 65

CSR risk assessment results

We assess our tier 1 and most critical suppliers in terms of their corporate social responsibility risk:

Risk level Description No. of suppliers invoicing in 2015 No. of suppliers invoicing in 2016 No. of suppliers invoicing in 2017 No. of suppliers invoicing in 2018 No. of suppliers invoicing in 2019
    Tier 1 Critical Tier 1 Critical Tier 1 Critical Tier 1 Critical Tier 1 Critical
A+ No risk 102 57 103 49 140 57 131 66 145 44
A Low risk 140 85 129 51 141 64 159 75 177 51
B With risk 28 10 16 7 57 16 55 19 65 15
By 2020, 80% of our critical suppliers will be rated as A or A+ in corporate social responsibility. In 2019 we achieved 65%.

Certifications

At Galp, we value suppliers that hold certifications as a guarantee of their commitment to improving their sustainability performance.

Our suppliers hold the following certifications:

International standard 2014 2015 2016 2017 2018 2019
ISO 9001 1,638 1,667 2,098 2,938 2,791 3,127
ISO 14001 572 588 908 1,305 1,474 1,872
OHSAS 18001 385 398 633 1,261 1,330 1,971
Other certifications 23 26 26 581 760 956

 

In 2019, more than 55% of our Tier 1 critical suppliers were certified.

Please consult "Definition of critical supplier".

Supplier audits

In addition to our risk management practices and monitoring of the certifications in the supply chain, we conduct audits to suppliers or potential suppliers in the following areas:

  • Financial
  • Technical
  • Corporate social responsibility
  • Safety
  • Health
  • Environment

These audits may be requested on suppliers in any activity corresponding to the qualification process, and are based on previously defined requirements and comply with the applicable law in their respective geographies. Also, suppliers may voluntarily request an audit to their company.

Selection criteria for suppliers to be audited:

  • The need to deepen the knowledge about a company that provides a certain category of procurement;
  • When there are doubts concerning an answer given by a company in the pre-qualification questionnaire, and we seek evidence thereof;
  • Significantly negative progress of a supplier's performance assessment;
  • When there are complaints to suppliers for non-compliance with technical specifications and contractually defined requirements;
  • When the degree of contract risk in the HSE aspects exceeds the supplier's HSE risk level, either for ongoing consultation processes or for awards already made and whose supplying services are still ongoing;
  • Significant turnover of the supplier

In the scope of the supplier audit program (existing since 2012), in 2019 we performed 49 audits to suppliers These were performed according to Galp process and criteria (27 audits), or to Repro-Achilles process (19 audits) or to APETRO audits (3 audits).

Nº audits to suppliers

49

Nº audits to tier 1 suppliers

19

Critical suppliers (tier 1 and non-tier 1) audited

8.4%

High-risk tier 1 suppliers audited

3.2%

 

Our goal for 2020 is to conduct 35 audits.

The ratings obtained in the audit are available in the Group’s list of suppliers. Depending on the severity of the findings, Corrective Action Plans or Improvement Action Plans may be applied.

Audits to carriers through the APETRO agreement

In the scope ARS agreement (Added Road Safety Agreement) of APETRO, in 2019, 3 audits were carried out to hired carriers that provide direct service to Galp, through an annual plan previously agreed. All drivers attend mandatory training courses, which contents are assessed by APETRO, in terms of defensive driving, product handling, among others.

Service vehicles comply with several requirements, namely the requirement to be equipped with clean EURO6 engines. Also, within the scope of this agreement, initiatives are being developed with Public Entities for legislative revisions.

The Supply4Galp collaborative Platform

The Supply4Galp (S4G) platform was born out of the importance of the Galp/Suppliers binomial.

It is a collaborative solution that allows users to share all information related to supply chain and procurement management processes at Galp, in an integrated manner.

This solution covers the entire procurement cycle, from the sourcing phase to management of supply and contracts, connecting all users and creating benefits of transparency, efficiency, and quality in the activities performed.

The platform was implemented with the following objectives:

  • Increase Galp’s collaborative capacity in procurement processes;

  • Streamline processes, reducing the time spent on provisioning;

  • Implement a logic of continuous improvement by improving processes and integrating and retaining knowledge.

Galp has implemented a pre-qualification and qualification process for several years that minimizes the risk exposure throughout the supply chain, and as result, in 2019 achieved 100% of purchases to qualified suppliers. Our goal is to maintain this performance.​

Get to know our Supply4Galp platform.

Learn more about the qualification process and selection of suppliers

Our supplier’s satisfaction

In 2019, we launched a satisfaction survey to our suppliers in order to assess the quality of services of Galp's collaborative purchasing platform, Supply4Galp. The results obtained indicate a level of satisfaction above 80%.

"The S4G platform gives us a greater visibility into processes, making them simpler and more transparent, efficient and agile, and less bureaucratic - which reduces process execution time and enhances value creation for all stakeholders."

Alfredo Figueira, Head of the Project

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