Responsible procurement

TeliaSonera’s annual purchasing volume is over SEK 60 billion, with purchases from about 38,000 suppliers and countless sub-suppliers from all parts of the world. A large share of our spending relates to network equipment and services for building and maintaining our networks. We also buy mobile handsets, other consumer electronic devices, electricity and much more that we need to deliver our services.
Strategic objective

2018 Goals

2015 Outcome

  • All suppliers and sub-suppliers comply with our sustainability requirements.
  • All suppliers have signed our supplier code of conduct.

  • 75 percent of assessed suppliers compliant with supplier code of conduct.
  • 25 percent reduction of supplier base (baseline 2015).
  • 58 percent of asssessed suppliers compliant with supplier code of conduct.

Context

We expect our suppliers, sub-suppliers and distributors to implement sustainable business practices and to be transparent about their challenges. Choosing suppliers with good sustainability practices is a way for us to positively influence our supply chain.

Major challenges in the supply chain

We face major challenges in our supplier management as a result of the vast number of suppliers we rely on and the fact that in some markets, the general level of compliance with our supplier requirements is significantly lower than what we require. We address these issues through developing and implementing policies and procedures as well as supplier qualification and development activities. Ensuring solid supplier sustainability management, such as reducing the risks related to labor rights and occupational health and safety, and implementing common ways of working in all parts of TeliaSonera will take several years. Despite our efforts, the risk remains that suppliers and sub-suppliers will not comply with TeliaSonera’s sustainability, security and quality requirements thereby putting their employees and TeliaSonera’s operations and reputation at risk.

TeliaSonera's supply chain

Governance

Our approach to responsible procurement is governed by the group procurement policy, the group procurement instruction and the procurement handbook.

The supplier code of conduct, security directives and other governing documents are used when dealing with suppliers. The updated supplier code of conduct, which was approved in February 2015, is the guiding document that outlines sustainability requirements for suppliers and shall be included in all new contracts. The security directives describe security requirements, such as IT security and information security related to data privacy, that are applicable when a supplier provides services to TeliaSonera.

Local procurement teams in all local companies in regions Europe and Eurasia are responsible for initiating the supplier due diligence process and supporting group procurement during supplier audits.

The Supply Chain Excellence (SCE) function in group procurement supports local procurement functions in sustainability related issues. It is responsible for defining sustainability requirements for suppliers as well as ensuring that appropriate risk assessment is carried out before suppliers and contractual agreements are approved. Exceptions from these requirements are approved on group level. SCE is also responsible for evaluating and developing suppliers’ sustainability performance, for example, through on-site audits.

Activities during the year

Reduction of supplier base in Sweden

A step in reducing our supplier base was taken in Sweden where we carried out a significant consolidation of our field maintenance operation suppliers. Field maintenance operations are now carried out by two main suppliers, each of which manages activities regardless of technology in one of two large areas.

External stakeholder engagement

Apart from daily contact with suppliers, the SCE team participated in a series of knowledge-sharing and cooperation discussions with Joint Audit Cooperation (JAC) members as well as other Nordic multinational companies to discuss responsible procurement. We also presented our approach at a number of external conferences. See more about JAC at www.teliasonera.com/sustainability/supply-chain/joint-audit-cooperation/.

Supplier due diligence

A new sustainability due diligence process was implemented during 2015 for all suppliers used by region Eurasia companies. In the process we use a supplier risk identification tool to determine high risk suppliers and ask potential suppliers to complete a due diligence questionnaire. For suppliers identified as high-risk suppliers (e.g. suppliers and sub-contractors in construction, field maintenance, repair and network rollout services) we seek to identify politically exposed persons, fraudulent persons and companies, ultimate beneficial owners and also to check compliance with the supplier code of conduct.

80 out of 1,002 potential suppliers analyzed were not recommended due to the high risk involved for TeliaSonera, mainly as a result of compliance deviations from the supplier code of conduct, refusal to provide ownership information or ownership by a high-ranking local public official. During the year, 50 suppliers in region Eurasia that did not meet our requirements were given, or are awaiting, conditional approval by TeliaSonera group. In these cases we found compliance deviations which we would normally not accept, but the suppliers were approved due to monopoly status or them delivering business critical services and products. Exception cases are documented, and mitigation activities are defined.

TeliaSonera's supply chain due care process

Supplier assessments

2015

2014

Valid1 supplier assessments
(accumulated)

1,035 due diligence

573 self-assessments

289 audits

33 due diligence

311 self-assessments

123 audits

Suppliers compliant

58%2

50%3

Supplier compliance deviations

2,067 open

829 closed (since 2013)

Not available

1 Self-assessment and audit valid for three years.

2 Based on number of audits and self-assessments.

3 Based on number of self-assessments.

Supplier self-assessment

At the start of large procurement projects or procurement projects involving high risk suppliers, suppliers are required to complete a self-assessment in EcoVadis, which scores the supplier’s sustainability performance. The self-assessment covers a broad range of topics such as environmental management, labor practices, human rights compliance and anti-corruption programs. Some suppliers do not carry out the requested self-assessment in due time, which makes supplier selection more challenging.

Supplier audits and development

At the end of 2015, suppliers corresponding to approximately 43 percent of global spend have been assessed for compliance with our requirements. On top of “desktop study” assessments we carry out on-site evaluation audits, training and other activities to improve suppliers’ sustainability capabilities.

During the year we conducted 201 on-site audits. The focus areas for audits were field service and IT services suppliers. Compliance deviations were addressed through dialog with the respective suppliers. The main areas for improvement were occupational health and safety, where over a third of the deviations were identified, and privacy.

A challenge remains in handling the number of deviations, and following up more rapidly on actions taken by the supplier to close the compliance deviations.

Supplier and sub-supplier audits

2015

2014

Target 2015

Audits performed by TeliaSonera

140

11

100

Audits performed by JAC

61

37

50

Total

201

48

150

Examples of compliance deviations found during audits

Supplier accidents and fatalities

During the period, one work-related fatality was reported by a field service supplier in Azerbaijan. TeliaSonera was in contact with, and also audited, the supplier to understand the root cause and to agree on measurements to prevent future accidents.

Planned activities in 2016

We will continue the implementation of procurement processes as defined in the procurement handbook in regions Eurasia and Europe. We will revise and roll out the supplier due diligence process in regions Sweden and Europe.

We need to support suppliers in improving their sustainability, quality and security understanding and performance. Therefore we will develop and run supplier programs addressing specific patterns found during our audits.

Other focus areas will be to close compliance deviations, and to improve suppliers’ reporting of work-related accidents.

CASE:

Audit supporting supplier development

In February, TeliaSonera conducted an on-site audit at Venava Grup, a supplier performing network installation and maintenance in Moldova. The supplier was selected for an audit due to poor EcoVadis results. The audit team noted 13 findings in the areas of compliance, labor rights, and health and safety. It became clear that Venava Grup lacked experience in working with these areas.

Subsequently Venava Grup and TeliaSonera agreed on a corrective action plan. TeliaSonera monitored the actions and can confirm that Venava Grup has taken fast and positive action to improve. Among other things, the company has started to forward TeliaSonera’s requirements to sub-suppliers that deliver materials.

“Thanks to the audit by TeliaSonera, we understood how to improve our way of working. Without the TeliaSonera audit and support, it would have been impossible to improve,” says Venava Grup.

 

© TeliaSonera 2015
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