Supply chain responsibility and circular procurement

The energy transition poses major procurement and logistical challenges for our organisation. Our supply chain partners play a crucial role in achieving our objectives. Alliander’s annual procurement expenditure is approximately €2.6 billion for products and services. This will increase considerably in the coming years due to the energy transition. Contractors, components, energy purchasing and transmission tariffs are the main areas of procurement expenditure. Our societal role means that our procurement needs to be socially responsible. 

Alliander wants to continue accelerating in a sustainable manner, despite the scarcity of raw materials in the market, shortages due to high energy prices, a tight labour market and geopolitical conditions. Our goal is to always weigh up price, quality and sustainability when procuring parts, materials and services. 

Contributing to sustainability

Our procurement policy contributes directly to Alliander’s CSR policy. Together with our suppliers, we aim to make a net positive contribution to SDG 12 (Responsible Production and Consumption). We do so by entering into new forms of collaboration with our suppliers, adopting innovations as they appear on the market and forming partnerships. Our procurement department upholds the principles of procurement law, such as being transparent and non-discriminatory. Sustainable procurement is an integral part of our tender invitation and evaluation criteria. They include, for example, provisions relating to human rights, working conditions, use of raw materials, recycling and carbon emissions. For each category, we will determine where we can have the biggest impact. Alliander requires work to be performed in line with specific safety protocols and standards for working with gas and electricity infrastructure, such as VIAG and BEI. The employees of contractors and subcontractors must comply with these protocols and standards as well.  

CO2 score in tenders

When assessing our tenders, our award criteria include the energy consumption of components during their useful life as much as possible. 

Code of conduct for suppliers

Alliander is committed to ensuring that suppliers comply with the Alliander Code of Conduct for Suppliers. This code is based on OECD guidelines and requires suppliers, as well as their suppliers and manufacturers, to adhere to ethical and fair business practices. If the code is violated, we may impose sanctions. Suppliers can also expect Alliander to deal with them in accordance with ethical business practices. We subscribe to and apply the principles of the EU taxonomy, including the OECD guidelines and ILO convention. We want suppliers to see us as an attractive business partner. We aspire to be a ‘Customer of Choice’.

Compliance with agreements made with suppliers

Each year, we carry out multiple supply chain audits. In 2023, we performed a total of nine audits to assess the quality of the products and services supplied (2022: 23). Five audits were performed as a result of tender procedures where the CSR criteria were also assessed. No critical deficiencies in respect of CSR aspects were reported. The other four audits were specifically aimed at product quality. During the audits, compliance with the Code of Conduct and with supply chain responsibility aspects is discussed, as well as the actions taken or to be taken in relation to any issues discussed. On top of the customary quality and product checks, we look at compliance with CSR requirements such as universal human rights, working conditions, health and safety, and the environment. Outsourcing, investments and production in other countries sometimes lead to an increased risk regarding these aspects and for the recognition and observance of fundamental human rights. An organisation can involuntarily become involved in dubious practices such as child labour. Findings are shared with the supplier. We did not implement any measures with regard to suppliers in 2023. 

In the event of proven negligence or violation of the agreements, we terminate the relationship or impose other sanctions in accordance with the contract and Alliander’s Supplier Code of Conduct. In the event of damage or risks, we communicate with our stakeholders, carry out investigations and implement temporary or structural measures. We keep in touch with the parties concerned and inform them about the progress we make.

Circular operations

Working on the energy transition requires large amounts of materials. Alliander believes that respect for people and the environment is paramount here, as we want to make choices that contribute to keeping our planet liveable: we want to build in an energy-efficient way, but we also want to use sustainable materials and focus on maintaining a healthy living environment. In procurement terms we want to be aware of what we really need.

Circular procurement

Each quarter we investigate what we can obtain through circular procurement. We do this for all of our primary assets: low-voltage and medium-voltage cables, gas pipes, distribution and power transformers and (smart) electricity and gas meters. We use the term ‘circular procurement’ to refer to the procurement of materials made largely from recycled constituents or materials that are recyclable after use. In line with our target, circular procurement accounted for 31% of our total in 2023 (2022: 28%). In the component mix, the share of transformers obtained through circular procurement increased. They have a high level of circularity.

The percentage of recycled or recyclable materials is determined based on raw material passports provided by our suppliers, which state these percentages. We therefore rely on the support and expertise of our suppliers to identify these percentages, and we validate them with data provided by DNVL, an independent research and consultancy firm. We aim to achieve 45% circularity in our procurement by 2027. We want to do this together as a sector and be able to manage the process. This is why we are working on a common policy that should provide guidelines for the application of circularity within all the procurement processes of the three joint network operators.

Raw materials passports

In order to calculate our circular procurement, our suppliers issue raw materials passports that include these percentages. In 2023 we managed to make the raw materials passport formally certifiable within the sector. An assessment guideline was developed in collaboration with KIWA and two of our cable suppliers were the first to be formally certified. As a result of this, the truthfulness of the raw materials passport is guaranteed by an independent party. It means that we comply with relevant EU laws and regulations, and the government’s requirements that make us eligible for tax subsidies. This certification does not affect our circular procurement percentage, but it does make data more transparent and more easily verifiable. We intend to expand this certification to other assets in 2024. 

Circular materials flow

This figure shows the key materials that support our primary process. The percentages of plastics (jacketed pipes, cables, gas pipes), copper and aluminium (base metal for cables) are high. Understanding the composition of our materials helps us manage risk against the backdrop of internationally increasing demand for raw materials for the energy transition. The impact of the use of materials is not only determined by the quantity of the material used, but also depends on the impact on human health, the ecotoxicity and scarcity of the material, and its CO2 footprint. These impacts are expressed in the eco-costs per kilogram of material. If materials are recycled or reused, these eco-costs will be significantly lower. 

Making the best use of what already exists: reuse

The development of the ‘Herinzet’ (Reuse) team is in full swing. Due to the growth of the team and the broad potential of the topic both inside and outside of Alliander, the team will continue under the name Alliander Circular from 2024.

One example of circularity is our reuse of network components from the low-voltage, medium-voltage, high-voltage and gas domain. This directly contributes to the feasibility of our work and allows for cost and (lead) time savings. The development of the ‘Herinzet’ (Reuse) team is in full swing. Due to the growth of the team and the broad potential of the topic both inside and outside of Alliander, the team will continue under the name Alliander Circular from 2024. A few examples from 2023:

  • The regional recycling stations are a success. We use them to collect uncoded and incomplete materials. In 2023 a total worth of more than €1,850,000 of materials was returned to the organisation, of which over €850,000 originated from the reuse of components and €1 million originated from the reuse of tools.

  • Together with suppliers we are overhauling compact stations, transformers, switching systems and gas couplings. 

  • We have donated overhauled and used materials and tools following the earthquakes in Turkey, Syria and Morocco.

  • We have supplied materials to the University of Twente for the development of a live field lab for research into underground infrastructures, in particular the ground radar system. 

Circular energy economy

The aim of the Circular Energy Economy (CEE) is to take significant steps with all the partners in the energy infrastructure towards achieving a circular energy economy. The partnership between InvestNL, network operators Liander, Enexis and Gasunie, and several manufacturers once again emphasises the importance of the government’s objective to reduce the use of primary raw materials by 50% in 2030. Last year we laid the foundations for the development and upscaling of circular initiatives, such as the overhaul and reuse of components, and further circular improvements for our cables. Network operators and manufacturers are becoming more knowledgeable and managerial commitment is growing. This is accelerated by the requirements regarding sustainability reports, like those in the CSRD, from 2024 onwards.