In the course of our business activities, from the planning and construction of our plants to the procurement of materials and services for operations and fuels for generating power, we call upon the services of numerous suppliers and their sub-contractors. Within our procurement processes we aim to minimize the negative impacts on people and the environment. This is why we've embedded social and ecological criteria into our procurement processes, installed risk screening measures and introduced standardized Group-wide supplier assessment processes. We report in detail on further progress in these areas in our Performance Report 2010.


Targeting Social and Ecological Compatibility

Since 2007 we have had globally binding Principles of Responsible Procurement in place. They form part of our company's Standard Terms and Conditions of Purchase in which we insist that our suppliers maintain appropriate working conditions, adopt ethical business practices, minimize environmental impacts and respect human rights. Our Principles of Responsible Procurement are based on the principles of the "United Nations Global Compact". In 2009 we also introduced a Group-wide guideline for Biomass Purchasing that governs which types of biomass may be used by E.ON for energy and biogas generation.


Collaboration between Procurement and CR Experts

The CR function supports our purchasers as they implement our Principles of Responsible Procurement, including the appraisal of strategic suppliers. Our Procurement departments work closely with our CR experts to analyze risk areas, conduct supplier audits or engage in dialog with representatives of government, NGOs or local communities, if appropriate. Our responsible procurement activities also support the implementation of our Group-wide CR Strategy.


Multi-stage Process

Our Principles of Responsible Procurement are implemented in several stages:

• As part of our supplier pre-qualification program, we check new suppliers for their compliance with our CR requirements. Our purchasers carry out risk analyses and training for all our main suppliers. Concrete action plans with defined goals and measures help further improve collaboration with suppliers. In the process, we try to take account of country-specific risks in our procurement policy and thereby indirectly drive the improvement of social and ecological conditions.
• At local level, for example, we have on-site audits of the production and processing sites of our fuel suppliers conducted by internal or external experts. Since 2008 we have been organizing Group-wide training courses for the auditors to prepare them for this demanding role. The audits conducted to date, e.g. of our main coal suppliers, will be followed by further audits. An audit program is also planned for biomass procurement.
• As part of the audit process, we work with our suppliers to identify concrete areas for action and establish timeframes for implementing measures with our support. When suppliers show no willingness to cooperate or do not improve, we reserve the right to terminate the contract.

Joining Forces to Make a Sustainable Difference

We are convinced that the systematic integration of sustainable procurement criteria and processes presents the best option for joining with our suppliers to assume corporate responsibility along our supply chain. That is why we are gradually extending our activities in this respect. See the Performance Report 2010 and our Fuel Procurement Focus Topic for further information.