PASCAL DECARY CHIEF PROCUREMENT OFFICER AUTHOR : BENJAMIN HULOT VERSION - DATE : V1 : IMPLEMENTATION DATE :

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1 GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASING REPORTING DAG PASCAL DECARY CHIEF PROCUREMENT OFFICER AUTHOR : BENJAMIN HULOT VERSION - DATE : V1 : IMPLEMENTATION DATE : OBJECTIVE 1. Definition This procedure aims at describing the Sustainable Development KPI reporting process for Veolia. It is also used as the terms of reference for the external verification of data, and, in this respect, it must be accessible to the readers of Veolia Sustainable Development Report. Furthermore, some of these KPIs are included in the entities quarterly procurement dashboard. 2. Update This reporting process is revised and approved each year before December 31st of the year in progress to reflect the results of the latest national and international work, and to take into account the scope s changes and KPIs evolutions. 3. Definition of the scope The scope covers the Procurement departments of Veolia, the Global Procurement Department (DAG), and the entities Procurement Departments (Country and Worldwide companies) The Procurement Departments are the suppliers main contacts, with whom they deal on the basis of the need expressed by users. Their mission is to support the activities of entities, by guaranteeing the best possible choice of suppliers according to needs; contribute to the company s economic efficiency through the implementation of contracts, monitor their application and cost control; and finally help create value by managing relationships with suppliers. Are included in this scope, entities with Procurement departments managing purchasing action plans, spends reporting and managing framework agreements and tenders: Germany (VES, Braunschweig and Wasser excluding VWS), Australia (VES, Water excluding VWS), Benelux (Dalkia), Canada (VES), China (Water excluding JV s), South Korea (Water), Hong Kong (Water), Japan (Water), United States of America (Water, VES, Veolia Energy excluding VWS), Spain (Dalkia), France (Corporate, Water France Excluding SEM, SADE, VES, SARP, Dalkia excluding SARPI/VWS), Ireland (VES), Italia (Dalkia), Poland (Dalkia excluding VWS), Czech Republic (Water and Dalkia), United Kingdom (VES, Water, Dalkia excluding VWS), Romania (Water and Dalkia) and Slovakia (Water and Dalkia). For the 2013 period, Veolia Transdev is not included in the reporting. DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 1/7

2 CONTROLS AND VERIFICATION External verification The protocol and some data are liable to undergo external verification by an independent organization. The verification program (objective, work, schedule and scope) is compiled and communicated to the entities before January 31 st of the year N+1. The protocol must be forwarded to the organization before December 31 st of the period. sources (exports from the contract management tool, supporting documentation), as well as data consolidation documents (sums, multiplications), must be available for consultation. MEASUREMENT AND CALCULATION PROCEDURES 1. calculation and approach ranking Various levels of precision can be achieved depending on the type of methodology used and the source of the data. Various methods are as follows: Continuous readings Site-specific models Periodic readings Standard calculation models per type of source Standard emission factors The minimum requirement for a contract or a supplier to be considered active on a given period in 2013 is of one (1) day. For instance, an active contract until 01/01/2013 included will be considered active on a given period in Measurement and calculation methods, and standards used All sampling, measurement and analysis methods used shall comply with the appropriate national and international standards where they exist. If none such exists, complete documentation regarding the methods used shall be kept and made available to ensure traceability. The data provided shall come from the following sources: A: Measurements made by an external organization B: Measurements made internally C: Accounting or financial documents D: Invoices/delivery dockets E: Estimate (to be explained) F: Internal technical management G: Other (to be explained) DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 2/7

3 DDHA 01 : BUYERS COMMITMENT TO SUSTAINABLE DEVELOPMENT DDHA 0101 Percentage of buyers trained in Sustainable Development for the last three years. Entities concerned : Water Environmental services Energy Corporate Any buyer who attended a sustainable development training course or module is considered trained; this course or module can take various forms: presentation of sustainable development and related issues, update on sustainable development issues for Veolia, and sustainable development integration into the purchasing process. The criteria required to consider the training as compliant with the protocol are as follows: presentation of the action as a training action to the trainees, availability of the list of participants and session dates, availability of the training support. Examples of trainings: Sustainable Purchasing training (Corporate), Sustainable Sourcing module in the frame of the Fundamentals of Purchasing (Corporate), training of the buyers in the frame of the sustainable development audits (Veolia Water France for its operations of water services and sanitation). Accounting for the trained buyers who have changed division during the given period: attachment to the division in which they were trained. Training is valid for 3 years. The list of buyers is issued from the procurements system (SAVE), the buyers of the Group are registered with a buyer profile as long as they carry out one of the following actions: creation/update of contracts, suppliers evaluations, management of an action plan, and management of a tender (see Group Management Procedures) The Global Procurement department validates every creation/removal request issued from the Entities Procurement Department. Buyers issued from subsidiaries of specialization or Purchasing agents can also attend a sustainable development training course; in this case, their participation is subject to the approval of entity CPO. Training supporting documents are communicated by the entity in charge of the training. The percentage of buyers trained in sustainable development is calculated based on: a: the number of buyers who attended a sustainable development training course between 01/01/Y-2 and 31/12/Y and employed by the company as of 31/12/Y, and b: the total number of buyers identified by division and/or registered on SAVE and employed by the company as of 31/12/Y. Calculation: % of buyers trained in Sustainable Development over the last 3 years = (a/b)*100 Entities (in charge of the training): Number of buyers trained between 01/01/Y-2 and 31/12/Y and employed by the company as of 31/12/Y Entities (lists of buyers), SAVE: Total number of buyers as of 31/12/Y B B + F DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 3/7

4 DDHA 02 : SUPPLIER RELATIONSHIP DDHA 0201 % of preferred suppliers evaluated on their CSR performance Entities concerned : Water Environmental services Energy Corporate An evaluated preferred supplier is a supplier under contract, or subject to an action plan, or participating in a tender, who responded to an evaluation requested by Veolia with a view to assessing its corporate social responsibility (CSR). Are considered in this indicator the suppliers active in SAVE on a given period in Y, assessed between 01/01/Y-2 and 31/12/Y. A "CSR evaluation" system has been implemented within Veolia to evaluate the CSR performance of suppliers under contract (or consulted suppliers not concerned by this indicator). The evaluations are conducted by an external service provider (EcoVadis) at the request of Veolia. The supplier is asked to respond to an online questionnaire and provide the required supporting documents. The questionnaire includes 22 criteria covering four aspects: Environment, Social, Ethics, Supplier relationship. The responses are analyzed and presented in the form of scorecards which buyers can access via an online platform. The evaluation is valid for 3 years. The list of evaluated suppliers is given by the person in charge of CSR suppliers evaluations at - Corporate level. The percentage of preferred suppliers evaluated on their CSR performance is calculated based on: a: the number of preferred suppliers evaluated, active on a given period in Y, and b: the total number of preferred suppliers active on a given period in Y. Calculation: % of listed suppliers evaluated on their CSR performance = (a/b)*100 Corporate: Number of preferred suppliers evaluated between 01/01/Y-2 and 31/12/Y and on a given period in Y SAVE: Number of preferred suppliers active on a given period in Y B F DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 4/7

5 DDHA 0202 % of contracts integrating sustainable development requirements Entities concerned : Water Environmental services Energy Corporate A contract is an agreement negotiated with a supplier for given products/services for all (or most of) Veolia companies. It can include a sustainable development clause or explicit references to commitment requirements in terms of sustainable development within the main contract and/or appendices. Minimum requirements for a contract to be considered in this indicator are about respect of ethics and social law and/or protection of the environment. The sustainable development issues integrated in contracts can relate to environmental, social or ethical aspects. The contracts must be uploaded onto the Purchasing consolidation tool, SAVE. When creating or updating a contract, buyers can tick a "Sustainable Development Clause" box if contractual commitments include sustainable development requirements. A standard Veolia sustainable development clause is available on the Veolia Purchasing Intranet. The percentage of contracts with a sustainable development provision is calculated based on: a: the number of contracts active on a given period in Y with a ticked "Sustainable Development Clause " box, and b: the total number of contracts active on a given period in Y. Calculation: % of contracts integrating Sustainable Development requirements = (a/bb*100 SAVE: Number of contracts integrating Sustainable Development requirements active on a given period in Y SAVE: Total number of contracts active on a given period in Y F F DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 5/7

6 DDHA 0203 Spend in the protected and adapted sector (France) Entities concerned : excluding SARPI) France (Corporate, Dalkia, Veolia Water France excluding SEM/VWS, SADE, VES, SARP and Veolia spend in adapted companies ( ESAT and EA ) highlights the use of subcontracting in the protected and adapted sector. Veolia spend in the protected and adapted sector concerns the following purchasing categories: Landscaping, Buildings and plants cleaning, Reception services, Edition, Industrial maintenance subcontracting, Shipping costs subcontracting, Mail collection, Print management This spend (excluding tax) of the French entities is consolidated every quarter in the Veolia Spend Management Tool, VESTA. The amounts are expressed in M and represented per entity (Corporate, Dalkia, Water France, SADE, Veolia and SARP) for the year of reporting. Suppliers of the ERP are gathered in a dedicated hierarchy GESAT, the links between the ERP suppliers and the Group suppliers are based on SIRET numbers and Names. Sum of spends (excluding tax) assigned to the GESAT suppliers. is quarterly reported in Veolia spend management tool, VESTA. Entities : Sum of excluding tax spend from the protected and adapted sector B DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 6/7

7 ROLES AND RESPONSIBILITIES 1. Head of Procurement (country and worldwide companies): The Head of Procurement is in charge of: - Filling out the form provided for this purpose - Checking data completeness, coherency and plausibility - Commenting on these results if necessary - Forwarding to the person responsible for the reporting at - corporate level, before the deadline, the data specific to the entity when the lift is not made at corporate level, and the supporting documents if any. 2. Global Procurement Department : The Global Procurement Department is in charge of: - Preparing the KPIs worksheets - Updating the close planning - Leading the reporting process - Consolidating and communicating the results to the Group. PLANNING Phases Updating of the protocol for reporting Validation of the protocol and presentation to the SD PMO team Preparation and transmission of the calculated KPI s to the Entities Consolidation of results and writing of the comments Validation of the final results Closing of results and sending to auditors Participation in audits for external verification and availability of sources and documents Final audit for consolidated indicators Date Dec N Dec N Feb N Mar N GLOSSARY Buyer: Anyone in charge of establishing contracts with suppliers to provide their organization with the products/services they need (out of project buyers). Prerequisites are as follows: anyone negotiating and/or overseeing a contract, and/or anyone responsible for creating/updating/validating the contracts within the contract management tool, and/or anyone managing a purchasing action plan. Buyers are identified by all entities and/or registered with a buyer profile on SAVE and carry out one of the following actions: creation/update of contracts, suppliers evaluations, management of an action plan, and management of a tender (see Group Management Procedures) Preferred supplier: supplier under contract, or subject to an action plan or a tender, or financially evaluated, listed in the contract management tool (SAVE). SAVE/VESTA: management tools shared by all the Procurement Department. The following modules are available for every buyer: Action plan, contracts management, supplier s management, tender management, and suppliers reporting. DAG GROUP MANAGEMENT PROCEDURE SUSTAINABLE PURCHASINGREPORTING 7/7

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