Learn about Transparency in the Supply Chain

Engaging with Suppliersfor Sustained Success

José Figueiredo SoaresCorporate Sustainability and Environment OfficeEDP Energias de Portugal, SA

Learn about Transparency in the Supply Chain

Agenda:

EDP in brief

Managing for sustained success

Building trust with stakeholders

Suppliers relationship management

Transparency in the supply chain

Conclusions

Trustof shareholders, customers, suppliers and other stakeholders;

Excellencein the way we implement;

Initiativedemonstrated through behavior and attitude of our people;

Innovationwith the objective of creating value within the various areas in which we operate

Sustainabilityaiming at improving the quality of life of current and future generations.

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In brief:

A global energy providing company,leader in creating value, innovation and sustainability

Vision

Values

In brief (2009, aprox.):

12 096 employees20 624 MW installed capacity76 590 GWh distributed energy10,9 million clients12,2 billion€ turnover3,3 billion€ EBITDA

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Implementing a strategy:

Steered

GrowthGreater

EfficiencyControlled

Risk

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Strategic guidelines 2010-2012, concerning Sustainability:

Improve integrationof sustainability and environmental

management intoGroup’s managementand control systems

Identify best practicesand promote internal and

external partnerships

Improve internal skillson environmental responsibility

and risk management

Develop a corporate cultureof excellence in

sustainability performance

Improve knowledge on stakeholders’ expectations

and assess Group's performancevis a vis those expectations

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Summary of 2009 performance indicators:

10.393 10.751

13.46811.796

2006 2007 2008 2009

Direct economic value generated

7.419 7.893

10.089

7.797

2006 2007 2008 2009

Economic value distributed

Summary of 2009 performance indicators:

163.471 157.897 163.783

118898

2006 2007 2008 2009

Environmental Investments Environmental Costs

Summary of 2009 performance indicators:

0,00

2,00

4,00

6,00

8,00

1 2 3 4

76

68

64

72

67

63

78

70

66

Sat

isfa

ctio

nw

ithco

man

y

Sat

isfa

ctio

nw

ith w

ork

area

Mot

ivat

ion

2006 2008 2009

Tf total

2006 2007 2008 2009

Environmental Dimension (Weight: 36%)

Summary of 2009 performance indicators:

+4%

EDP Sustainability Index (points)

+6% ~0%

Economic Dimension (Weight: 33%)

+7%

Social Dimension (Weight: 31%)

Recognition of the company’s performance and of the maturity of its economic, social and environmental management

EDP performance: 2004-2009 evolution(points)

• In 2009, EDP was listed on the DJSI,

for the second consecutive year,

ranking only 2 points below the world

leader in the electricity sector;

• EDP improved its performance from

“Silver Class”, in 2009, to “Gold

Class”, in 2010, in the worldwide

“Sustainability Yearbook 2010”

published by SAM (Sustainable Asset

Management).

Building Trust

by improving performance reporting

1997GRI Guidelines adoption

2001 2002

Institutional, Corporate Governance and Sustainability Report

National award

National award

National award

National award

1º Report on Environmental Performance

1º Sustainability Report

2003 2004

2008200720062005

(…)

2009

Building Trust

by measuring, benchmarking and disclosing management systems performance

For the second consecutive year, EDP was rated #1 in Portugal, by Accountability Rating Portugal, Sair da Casca.

In 2009, EDP was also rated #2 in the Iberian Peninsula outperforming on “Management and Governance Systems”.

EDP’s CSR practices are regularly assessed internationally

Building Trust

by measuring, benchmarking and disclosing management systems performance

For the first time, in 2009, EDP disclosedits CO2 management approach and resultsunder CDP project. EDP scored #17 global, #8 Europeand #1 Portugal.100% assessment in “scopes 1 and 2 reporting”;“energy use reporting” and “public reporting”.

GRI OS 2004, 2005, 2008, 2009, 2010 LBG Partner since 2008 WBCSD and BCSD Portugal, member since

2004 Instituto Ethos (Brazil) Global Compact

Partnering to develop knowledge:

To acquire knowledge and support its strategies, EDP maintains partnerships with a large variety of organizations (universities, NGO’s, professional and technical entities, etc), in all geographies where it operates. Some of these, are relevant knowledge centers for sustainability management:

Deepening stakeholders’ engagement:

The materiality matrix

• Distribution of Procurement activity (not including energy) in the EDP Group by nature and geography

Managing the supply chain:

2009 Procurement activity in EDP Group (not including energy) totalled circa € 3,3 billion

Managing the supply chain:EDP has about 30 000 suppliers, 11 000 of which are included in our SRM (suppliers relationship management) system, due to their relevance to the business.

Selection

Assesse-ment

Develop-ment

• Registration

• Pré-

qualification

• Qualification

• Monitoring

•

Optimization

• Integration•

Performance

assessment

& reporting

HC Energia

EDP

EDP Gás

Energias do Brasil

Naturgás

EDPR - EU

Horizon

SRFSuppliers

Registration System

Supplier

Sinergie SAPSQF

Supliers QualificationSystem

Managing the supply chain: EDP has about 30 000 suppliers, 11 000 of which are included in its SRM (suppliers relationship management) system, due to their relevance to the business.

Managing the supply chain:distinction between strategic and non strategic suppliers, based on the value of the contracts involved, technical or commercial particularities of certain contracts/markets or the relevance of the product/service to be supplied to EDP's strategical or operational objectives (including sustainability in a broad sense).

Services and products

with strategic relevance

or technical specificities .

High value contracts.

Non relevant commoditiesNon relevant commodities

Strategic relevance

Nível BásicoNível Básico

“Repro” level

Tech

nic

al com

ple

xit

yBasic level

more information inhttp://www.edp.pt/en/fornecedores/Pages/HPFornecedores.aspx

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Building Trust within the supply chain:

In 2009, 46% of the suppliers in Portugal, Spain and Brazil with contracts over € 75 k, were registered in EDP’s SRF. A significant part of them already report the existence of certified management systems

ISO 9001

ISO 14001

OHSAS 18001

59 %

28 %

28 %

Certified management

systems

Building Trust within the supply chain:

Given the continuity of EDP’s presence in the markets and the volumes and levels of technicity of the services and products purchased, influences within the supply chain are bidirectional and significant. Among them: etc.).

EDP's capacity to promote/enforce good practices, both social and environmental, and to drive sustained social developmentand economic growth;

Opportunities to cooperate on technological, product andmarket innovation;

Impact that strategic suppliers have on EDP's sustainabilityperformance (eg. legal compliance, service quality,health&safety, environmental management, etc.).

After joining GRI’s GANTSCh initiative, EDP launchedits CValor Project, and invited its suppliers to participate.Five of them answered positively and received trainingon measuring and reporting on their sustainabilityperformance using the GRI G3 Guidelines.

Building Trust within the supply chain:

Transparency in the Supply Chain: EDP’s CValor Project

Building Trust within the supply chain:

Main objectives of CValor Project were:

To respond to suppliers stated interest in cooperate with EDP on sustainability initiatives, in a non contractual, voluntary context;

To enhance the value and exemplarity of this initiative, giving it an international visibility;

To learn about perceived benefits by EDP’ SME suppliers in implementing GRI guidelines on sustainability reporting;

To promote sustainability performance and commitments disclosure as a mean of maturing management systems, in domains that are critical to EDP’s own performance; and

To increase trust in client-supplier relationship

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Building trust within the supply chain:

Considering the mean maturity level of the participants’ management systems, project duration and structure (number and frequency of workshops) were adequate.

Although, in order to maximize possible benefits, early participation of suppliers representatives should be encouraged by the support team. With some exceptions, we observed a slow gradual development in the initial stages of the project.

Also, the number and the hierarchy involved, were not always enough to provide a guarantee of continuity and integration of sustainability reporting. Nevertheless, despite the motivations of the participants being rather different, the overallquality of the work was of very good standard.

Evaluation of the preliminary results :

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Conclusion:

In conclusion, GANTSCh/CValor Project was a positive step forward in adding value to EDP, concerning its engagement with suppliers, as part of its global stakeholder engagement strategy.

Initial expectations were entirely met and this provides us with renewed confidence to hold a second edition of this project.

For that purpose EDP is already actively looking for interested parties among its suppliers.

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To get detailed information:

www.edp.pt

To get detailed information:

www.edp.pt

Learn about Transparencyin the Supply Chain

Thank you for your attention!jose.figueiredosoares@edp.pt