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 Sustainable Procurement 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;
• Act with transparency and integrity;
• Assume quality as a critical success factor; and
• Protection of the environment, people and assets.

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.

With the objective of better managing our supply chain and the inherent risks associated to it, Galp tender qualification process and risk assessment procedures have improved significantly. By including a reference supplier evaluation platform connected with our Procurement platform: Supply4Galp, resulting in a more automatic, integrated, and agile process. GDPR and Cybersecurity risk are managed through One Trust platform, connected, with S4G and automatized, for tender processes containing such risks, as well as action plans to mitigate such risks. Compliance assessments, prior to the contracting of suppliers, with the objective of identifying potential red flags, corruption, money laundering, in accordance with law requirements of KYS and due diligence.

The new hybrid model which combines financial and non-financial 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, Business Continuity and HSE.

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).

ESG risk assessment

ESG risk assessment results

CSR risk assessment results

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

In 2021, 69% of our critical suppliers have low risk or no risk in corporate social responsibility. 

Goals 2022:

• Assess 100% of critical non-tier 1 suppliers in ESG risk matters
• 70% of our critical suppliers have low risk or no risk in corporate social responsibility

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:

In 2021, 34.6% of our Tier 1 critical suppliers were certified.

Please consult "Definition of critical supplier".

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
• Business continuity
• Contract SLA

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, we performed, in 2021, 217 audits to suppliers. 

Our goal for 2022 is to conduct 50 in-site audits to suppliers.

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.

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. As result, and as in previous year, in 2021 we 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