Social and environmental management Sustainability 2019 · 2020. 6. 17. · Entérate (Get Informed), a space where the most important news on EPM are announced. • The supplier

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Social and environmental management

Sustainabilityreport 2019

Contribute to the harmony of lifefor a better world

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management

Social andenvironmental

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Materialtopics

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Responsible procurementfor local development

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ContentsResponsible procurement for local development...........................................................................6

Engagement with suppliers and contractors.....................................................................10

Strengthening and development of suppliers and contractors........................................15

Purchasing and procurement..............................................................................................21

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Responsible procurement for local development

Procurement criteria and practices that promote sustainable development and competitiveness of the territories where Grupo EPM operates.

Develop local capacities and foster sustainability through practices that promote the local business networking.

Relevance

It is a fundamental tool to leverage the sustainability and competitiveness of the territories. It potentially strengthens economic dynamics with income for the community and promotes local business networking. It contributes to improving the trust and reputation of Grupo EPM among its stakeholders, as well as to avoiding pressure from demands outside its business area that generate less value in terms of development.

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Main achievements

Program, project,

initiative, or action

Challenges Company Achievements in 2019 Accomplishment

Purchasing and procurement

Identify the regional procurement potential according to the annual purchasing and procurement plan.

EPM

The procurement plan was analyzed with each vice presidency in order to identify the regional procurement potential; the result of this analysis did not show any possibilities of implementing this modality.

Total

Strengthening and development of suppliers

Implement a supplier development initiative through the allies identified in the sustainable ecosystem for suppliers.

EPM

The following initiatives were implemented:1. Development of two suppliers with the Centre for Science and Technology of Antioquia (CTA, as per its acronym in Spanish).2. Closure of the third cohort with the graduation of 249 people in the thermofusion and electrofusion course through the Water Sector Industrialization Program (PISA, as per its acronym in Spanish).3. Completion of the implementation of the Water Technical Skills School, which will start operating in March 2020.

Total

Fulfill the supplier development plan proposed for the year. Emvarias

The work plan for the development of two vehicle maintenance service providers was fulfilled in its entirety, improving their productivity by at least 10%.

Total

Fulfill the supplier development plan proposed for the year. EPM

The work plan for the development of 26 providers was fulfilled in its entirety, of which 24 improved their productivity by at least 10%.

Total

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Challenges

Program, project,

initiative, or action

Challenges Year in which it is achieved

Scope and coverage

Company Business Territory


Fulfill the supplier development plan proposed for the year. 2020 EPM Power - Gas Colombia -

Antioquia

Strengthening and development of suppliers

Put into operation the Water Technical Skills School and start level 2 training courses in thermofusion and electrofusion to achieve accreditation in labor skills.

2020 EPM All the businesses

Colombia - Antioquia

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Related sustainable development goals

Related stakeholders

Community State Suppliers and contractors

GRI standards and EPM indicators

102-9 Supply chain.103-1 Explanation of the material topic and its boundary.103-2 The management approach and its components.103-3 Evaluation of the management approach.204-1 Proportion of spending on local suppliers.EPM-06 Number and value of social procurement contracts.EPM-07 Number, value, and type of contracts in Grupo EPM. EPM-08 External employment generated in Grupo EPM contracts. EPM-09 Suppliers’ satisfaction.

Scope and coverage

TerritoryColombia - Antioquia Colombia - Caldas Colombia - Quindío Colombia - SantanderColombia - Norte de Santander Colombia - Malambo, Atlántico ChileMexico Guatemala El Salvador Panama

BusinessesWater Sanitation Electrical energy Natural gas

CompaniesEmpresas Públicas de Medellín – EPM Aguas de MalamboAguas Nacionales EPM Aguas Regionales EPMCentrales Eléctricas del Norte de Santander - CENS Central Hidroeléctrica de Caldas - CHEC Empresa de Energía del Quindío - EDEQ Empresa de Aguas del Oriente Antioqueño Electrificadora de Santander - ESSAAguas de Antofagasta - Adasa Distribuidora de Electricidad del Sur - Delsur Empresa Eléctrica de Guatemala - Eegsa Elektra Noreste - ENSATecnología Intercontinental -Ticsa

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Engagement withsuppliers and contractors

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Engagement with suppliers and contractors

Progress was made in the strengthening of engagement, clear and timely communication, and closeness to this stakeholder group.

The subjects addressed included regulations, procurement, human rights, code of conduct, prevention of frauds to EPM, permanent information on the contingency of the Ituango

hydroelectric project, occupational health and safety, registration in the Ariba information system, Global Compact, among others. These topics have been communicated and shared

with all the national affiliates.

The suppliers and contractors engagement plan, formerly called Recyproco, promotes the interaction, communication, and implementation of different mechanisms of discussion, consultation, and participation of suppliers and contractors with Grupo EPM.

Management in 2019

The contractors satisfaction and loyalty assessment and the reputation analysis (EPM’s own measurements) were conducted with the purpose of showing that the actions taken through the engagement plan are aimed at meeting the suppliers and contractors engagement and reputation goals.

The following are the events held in 2019 in EPM, its power and water supply affiliates in Colombia, Emvarias, and Fundación EPM. These events were discussion, engagement, and communication spaces to address different topics of interest with suppliers and contractors.

Number of events

16 events

27 events

Number of attendees

1,887

1,455

Company

EPM

Affiliates inColombia

In the contractors reputation assessment, a score of 867 points was obtained out of a goal of 762 points set for 2019. The goal was exceeded by 12%.

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In the contractors loyalty assessment, a score of 60.9 points was obtained out of a goal of 52.8 points, which indicates the contractors’ intention to remain loyal and satisfied, exceeding the goal by 13%.

In the contractors satisfaction assessment, the organization obtained a score of 89.7 points, which means a decrease of 0.5 points compared to the previous year.

Indicator

Reputation

Result 2018

930

52.1

Result 2019

867

Contractor loyalty 60.9

90.2Contractor satisfaction 89.7

In 2019, the suppliers and contractors engagement plan was developed, which involves various actions that seek to strengthen the relationship, communication, and closeness to this stakeholder group.

• Three workshops were conducted in collaboration with contractors specialized in the design and construction of water supply and sewerage systems, with the participation of 17 companies and EPM employees. The purpose of the first workshop was to disseminate the results of the analysis conducted based on the opportunities for improvement identified in previous workshops. The second workshop, on trenchless technology, was carried out with the objective of sharing experiences among the companies that develop this technology and finding opportunities for improvement in its implementation. Eight people from five companies attended this workshop. The third workshop was aimed at informing designers, constructors, and suppliers involved in the infrastructure of water supply and sewerage systems on the investments planned in the POIR 2020-2024 (Regulated Investment and Work Plan). These workshops received 56 attendees.

• Sustainable Ecosystem for Suppliers and Contractors Development program. Three workshops on project management were conducted in partnership with the Center for Innovation and Technological Development of the Electricity Sector (CIDET, as per its acronym in Spanish), which were attended by five people from four companies.

• The event Innovar+ (Innovate+) brought together representatives from the academic community, the state, suppliers and contractors, and EPM staff. The topics addressed included short- and long-term technical events, workshops on innovation and co-creation tools, supplier and contractor recognition program, networking, and trade fair. The event received 1,200 attendees.

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• Annual event with suppliers and contractors: it was held in Medellin with the participation of 340 people. The topics addressed included progress in supplier development initiatives through the Sustainable Ecosystem for Suppliers Development, changes in the supplier registration process, internal assessment of the requirements by the Occupational Health and Safety Management System (OHSMS), electronic billing, progress in the EPM supply chain, and tips on public risk. In addition, EPM disclosed its innovation challenges, as well as its intentions to develop, along with suppliers and contractors, diverse alternatives to solve some current problems.

• A workshop on electronic billing for suppliers, contractors, and community action boards was carried out in order to create a space for talking and solving questions. The event had 70 attendees.

• A communication was sent to suppliers and contractors via Recyproco, in order to introduce Entérate (Get Informed), a space where the most important news on EPM are announced.

• The supplier development program—which involved Innpulsa Colombia and the consulting firm Causa & Efecto—was closed. 19 suppliers participated in this program.

• Suppliers and Contractors were invited to participate in the sixth version of the Global Compact Lecture, held at Universidad EAFIT.

• A talk titled “The role of the BIM methodology in the context of the 4.0 revolution and the sustainable development goals of suppliers and other companies” was held with the participation of design, audit, and construction contractors.

• Presentation to suppliers and contractors in the areas of influence of the Ituango project, Nechí and Porce, of the comprehensive plan for the prevention of public risk due to social violence. The event was attended by 20 companies.

• The loyalty survey was conducted in order to know the perception of suppliers and contractors on the topics related to registration, proposal submission, and contract execution.

Event with suppliers and contractors. 1,200 attendees

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102-9 Supply chain.EPM-09 Suppliers’ satisfaction.

Scope and coverage

TerritoryColombia - AntioquiaColombia - CaldasColombia - QuindíoColombia - RisaraldaColombia - SantanderColombia - Norte de SantanderColombia - Malambo, Atlántico

BusinessesWaterElectrical energy Sanitation Natural gas

CompaniesEmpresas Públicas de Medellín – EPM Aguas de MalamboAguas Nacionales EPM Aguas Regionales EPMCentrales Eléctricas del Norte de Santander - CENS Central Hidroeléctrica de Caldas - CHEC Empresa de Energía del Quindío - EDEQ Empresa de Aguas del Oriente Antioqueño Electrificadora de Santander - ESSA

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Strengthening anddevelopment of suppliersand contractors

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Strengthening and development of suppliersand contractors

The Sustainable Ecosystem for Suppliers Development was consolidated and is being positioned through the implementation of different initiatives, alliances, and spaces for work with suppliers to drive their capacity-building processes and fulfill the purpose of achieving competitiveness and sustainability in the organization, along with allies such as PISA, the

Causa & Efecto program, government allies, industries, clusters, among others.

Grupo EPM fosters the local business networking in the regions where it operates, through procurement and the development of capacities in its suppliers and contractors. In this sense, for EPM, the strengthening and development of suppliers and contractors aims to increase the competitiveness and sustainability of the production chains in the short, medium, and long term, through the creation and consolidation of relationships between Grupo EPM and this stakeholder group. It, therefore, generates bonds of trust to create processes of specialization and complementation that benefit the parties, articulating their strategic plans to improve economic, social, and environmental conditions.

Management in 2019

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Sustainable Ecosystem for Suppliers Development

Suppliers andcontractors

SustainableEcosystem for

SuppliersDevelopment

Grupo EPMand anchorcompanies

Allies (governments,

clusters, industries,

etc.).

Developmentprograms

Water Sector IndustrializationProgram (PISA). 3 cohorts(249 people trained).

3 workshops with the watersupply businesses.

1 Water Technical Skills School.

Innpulsa program 1 and 2(19 participating companies).

Program with EPM(9 participating companies).

Training of 2 companies.

Supplier development program with Causa & Efecto and EPM

• The supplier development program continued with the financial support of Innpulsa Colombia and the participation of Causa & Efecto and EPM. A total of 19 companies improved their productivity and quality levels thanks to the methodologies provided in this program by the consulting company.

PISA: Water Sector Industrialization Program

• Initiative that brings together the companies from the water sector (water supply and wastewater management). It seeks to improve the productivity and competitiveness of these companies and of the country in general, based on the training and specialization of the human resources from the supplier and contractor companies, including the EPM staff at the different levels (operational, technical, technological, professional, and specialized). In this program, 249 people (three cohorts) have been trained in the areas of electrofusion and thermofusion.

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Skills Training School

• This school was established and put into operation to improve the skills and abilities of employees and assistants for the construction, operation, and maintenance of EPM’s water supply and sewerage networks. Initially, it will provide services to the operations staff of the contractors engaged in the water supply business and projects and engineering; as well as the operating staff related to the Vice Presidency of Water and Sanitation of EPM and the community in general. The school operates through a training camp with 12 modules where people can receive training and develop skills in areas such as shoring, electrofusion and thermofusion, fills, pavements, use of basic tools, among others. The above, complying with the technical standards and occupational health and safety systems required in this type of activities. Trainings will start in February 2020.

Development program with Grupo Pares

• It is worth highlighting the work carried out with Grupo Pares with the purpose of promoting external collaboration networks with companies from different economic sectors. The program is led by Isagen, Haceb, and EPM and consists of a joint initiative for the recognition of those companies that have active programs aimed at the development and strengthening of suppliers, seeking to improve productivity and competitiveness of the industry and the country. Four meetings were held in 2019 with the participation of 40 people representing 20 companies.

• The Occupational Health and Safety Management (OHSMS) survey was sent to suppliers and contractors and 753 answers were received. The results will be used to design an action plan to be implemented in 2020, taking into account the conclusions and opportunities for improvement identified.

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Photographs of PISA trainings and thermofusion and electrofusion courses conducted by SENA

Modules of the Water Technical Skills School

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102-9 Supply chain.

Scope and coverage

TerritoryColombia - AntioquiaColombia - CaldasColombia - QuindíoColombia - SantanderColombia - Norte de SantanderColombia - Malambo, Atlántico


CompaniesEmpresas Públicas de Medellín – EPM Aguas de MalamboAguas Nacionales EPM Aguas Regionales EPMCentrales Eléctricas del Norte de Santander - CENS Central Hidroeléctrica de Caldas - CHEC Empresa de Energía del Quindío - EDEQ Empresa de Aguas del Oriente Antioqueño Electrificadora de Santander - ESSA

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Purchasing andprocurement

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The transaction agreements were signed with the international affiliates Elektra Noreste S.A. - ENSA (Panama), Distribuidora Eléctrica del Sur - Delsur (El Salvador), and Empresa Eléctrica de Guatemala S.A. – Eegsa (Guatemala) for the first joint national and international purchase of

goods; specifically, aluminum conductors and insulators.

Support to the Ituango hydroelectric project continued through the temporary import and reexport of equipment to deal with the contingency and through consulting services and

economic assessments for the acquisition of new equipment.

The purpose of contracting goods and services is to meet the operational and administrative needs of the organization. It also supports social and environmental policies to contribute to the development of sustainable and competitive territories in the areas where Grupo EPM operates.

Grupo EPM procurement

2017

40,158

4,579,726

2018

31,694

5,724,682

2019

48,333

4,646,121

Number of contracts

Value of contracts(million COP)

EPM procurement in 2019 was mainly related to consulting services, civil works, and service provision.

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Grupo EPM total procurement

Company

2017 2018 2019Number

of contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)EPM 35,474 2,701,567 27,551 4,251,922 39,270 3,320,730Aguas de Malambo 48 3,577 109 39,335 115 17,367

Aguas Nacionales 41 32,635 35 13,415 0 0

Aguas Regionales 182 22,564 100 25,253 193 32,489

Aguas del Oriente 53 753 31 1,006 37 1,885

Empresas Varias de Medellín

220 984,288 190 178,667 166 154,066

Central Hidroeléctrica de Caldas - CHEC

1,413 111,358 1,472 114,830 1,232 115,290

Centrales Eléctricas del Norte de Santander - CENS

543 33,982 411 212,711 328 86,545

Electrificadora de Santander - ESSA

455 248,002 531 528,674 614 181,636

Empresa de Energía del Quindío - EDEQ

379 38,446 240 31,680 486 110,117

Empresas Públicas de Rionegro - EPRio

52 14,627 31 137,272

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Grupo EPM total procurement

Company

2017 2018 2019Number

of contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)Aguas de Antofagasta - Adasa

100 101,035 109 123,581 153 183,298

Delsur - El Salvador 36 5,651 46 14,022 36 7,838

Eegsa - Guatemala 1,009 123,298 651 24,797 5,534 164,441

ENSA - Panamá 124 140,119 83 66,156 86 107,292

EPM Chile - Chile 4 633 8 729 N.A N.A

HET - Panamá 3 344 0 0 4 1,815Ticsa - México 74 31,474 75 83,277 48 24,041Grupo EPM total procurement

40,158 4,579,726 31,694 5,724,682 48,333 4,646,121

Source: Vice Presidency of Supply and Shared Services.

Efficient practices have been incorporated that add greater value to the different areas of the company with specialized purchasing methodologies, management by category, eligibility lists, strategic allies, supply contracts, operative purchases (with greater participation of local suppliers) and joint purchases (among companies of Grupo EPM). In this way, the capacities of different local, regional, and national stakeholders were involved. The final purpose was to obtain goods and services within the required time, at a fair price, in efficient amounts, and in compliance with the requested technical specifications. This is how the organization seeks the integration of economic, social, ethical, and environmental criteria in its contract awarding process.

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Classification of Grupo EPM procurement in Colombia

Grupo EPMprocurement in Colombia

Type ofprocurement

Local, national,and foreign

procurement

Procurementmodality

Social contractingand

merchandising

• Type of procurement: classification by the most common types: public works, provision of services, supply, among others.

• Procurement modality: classification by contractor selection: single application, private application, or public application.

• Social procurement and merchandising: classification of social procurement (community action boards and community associations).

• Local, national, and foreign procurement: classification by the location of the contractor with whom the contract is signed.

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Type of procurement

Type of procurement in companies of Grupo EPM in Colombia

Type of contract

2017 2018 2019Number

of contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)

Number of

contracts

Value of contracts

(million COP)Supply of goods and services

21,517 756,635 28,204 2,589,588 39,979 1,965,685

Provision of services 1,421 1,361,377 1,325 1,077,302 1,539 1,025,709

Other 15,367 875,195 672 756,779 492 333,815Contract of work 136 743,438 134 722,129 143 621,575

Movables and small purchases

225 205,467 251 164,656 172 74,094

Consultancy 69 173,601 102 81,405 108 71,326Advertising connections and agreements

73 61,459 34 20,261 40 65,193

Total type of procurement 38,808 4,177,172 30,722 5,412,120 42,473 4,157,397


The amounts and values correspond to what the companies of Grupo EPM located in Colombia signed each year.

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Procurement by modality

2017 2018

Modality Number ofcontracts

Value ofcontracts

Number ofcontracts

Value ofcontracts

Number ofcontracts

Value ofcontracts

Publicrequest forproposals

8,997 1,842,880 7,678 3,477,936

Privaterequest forproposals

28,093 366,134 21,634 1,086,614

Singlerequest forproposal

1,717 1,966,393 1,410 847,569

Non-bindingproposalrequest

1 2,765 0 0

Total 38,808 4,177,172 30,722 5,412,120

2019

7,155 2,050,233

33,981 363,003

1,337 1,744,161

0 0

42,473 4,157,397

The amounts and values correspond to what the companies of Grupo EPM located in Colombia signed each year. The values are expressed in million COP.

In 2019, the three procurement modalities were public request for proposals (49%), private request for proposals (9%), and single request for proposal (42%).

The modalities are combined with other purchases that, due to their characteristics, are not processed through the supply chain but directly with the specialized areas, including energy purchase, gas transportation, real estate, and special projects, among others. Procurement is a fundamental lever that seeks to promote sustainable development and competitiveness in the territories where Grupo EPM operates, improving economic dynamics and the generation of local capacities.

Social procurement

It is a strategy through which EPM contracts works and services with community action boards and other community associations, with the purpose of contributing to the strengthening and sustainable development of the communities where it operates.

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It relies on regulatory, procedural, and management resources that, without affecting transparency, economic efficiency, and technical and legal rigor, favor the inclusion of suppliers and contractors from the base of the pyramid, which otherwise could not be considered. Social procurement aims at:

• Creating jobs through a concentric action in the area of influence of the project or service required, in such a way as to effectively contribute to leveraging the development of the communities in the areas of influence of EPM.

• Reinvesting surpluses in the community impacted by the project or service required, in order to improve their quality of life and development.

In the Ituango hydroelectric project, EPM has strengthened the community organizations in the area of influence thanks to the social procurement strategy. This initiative has been conducted with community action boards and associations for the execution of works and services that

are required in the territory, as part of the environmental and social management ofthe project.

Social procurement

Company2017 2018 2019

Number of contracts

Value (million COP)

Number of contracts

Value (million COP)

Number of contracts

Value (million COP)

EPM 62 22,967 60 40,204 116 37,662Emvarias 44 2,030 36 3,251 28 2,018Aguas del Oriente 0 0 1 1,565 0 0

CENS 1 31 0 0 0 0ESSA 0 0 0 0 5 80Total 107 25,028 97 45,019 149 39,760


The amounts and values correspond to the value signed in contracts in Colombian pesos.

Through the social procurement program, 149 contracts were signed in 2019 amounting to COP 39,760 million. About COP 3,990 million correspond to contracts signed in the area of influence of the Ituango hydroelectric project. Compared to 2018, there was a 12% decrease in the value of contracts.

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EPM paid 150 contracts amounting to COP 506,324 million. The increase compared to the previous year (COP 49,255 million) is the result of contracts signed before 2017 that were in execution during 2019.

Local, national, and foreign procurement

The origin refers to the place where contracted suppliers are located. It indicates whether the supplier is local, regional, national or foreign.

For Grupo EPM, a local supplier is the one located in the municipalities, small towns, and rural settlements within the metropolitan area of the company under evaluation. A regional supplier is understood as the supplier based in the same region of the company that supplies, but outside the metropolitan area. A national supplier is the one operating in several departments of Colombia. A foreign supplier is that located outside of Colombia.

In 2019, the companies of Grupo EPM in Colombia signed contracts for COP 4,157,397 million, of which 40% was awarded to local suppliers, 7% to regional suppliers, 52% to national

suppliers, and the remaining 1% to foreign suppliers.

2017 2018

Origin of thecontractors

Number ofcontracts

Value ofcontracts

Number ofcontracts

Value ofcontracts

Number ofcontracts

Value ofcontracts

Local 30,073 2,821,704 14,840 3,185,484

Regional 1,916 118,391 9,379 128,347

National 6,757 1,153,273 6,444 2,027,896

Foreign 62 83,805 59 70,393

Total 38,808 4,177,172 30,722 5,412,120

2019

36,414 1,653,036

1,605 288,047

4,415 2,166,515

39 49,799

42,473 4,157,397

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The amounts and values correspond to the contracts signed in 2019 by the companies of Grupo EPM in Colombia. The values are expressed in million COP.

Regarding national contracting, there is an increase in the value, which contrasts with a decrease in the number of contracts.

As for foreign contracts, there is a decrease in both the value and the number of contracts.

External jobs created

It corresponds to the information on the external jobs created in Colombia through the contracts in force during the year.

External jobs created in ColombiaCompany 2019

EPM 24,101Emvarias 3,865ESSA 2,974CENS 2,141CHEC 2,044Aguas Nacionales 692Aguas Regionales 445EDEQ 367Aguas de Malambo 112Empresas Públicas de Rionegro 33Aguas del Oriente 7Total external jobs created 36,780


It corresponds to the external individuals linked to Grupo EPM through contracts and subcontracts of works and services that have a high labor component.

For Grupo EPM, it is important to perform this type of measurements, as they provide a view of the quality, stability, and equity of the jobs created, in agreement with the group’s sustainability purpose and its relationship with this stakeholder group.

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102-9 Supply chain.204-1 Proportion of spending on local suppliers.EPM-06 Number and value of social procurement contracts.EPM-07 Number, value, and type of contracts in Grupo EPM.EPM-08 External employment generated in Grupo EPM contracts.

Scope and coverage

TerritoryColombia - Antioquia Colombia - Caldas Colombia - Quindío Colombia - SantanderColombia - Norte de Santander Colombia - Malambo, Atlántico ChileMexico Guatemala El Salvador Panama


CompaniesEmpresas Públicas de Medellín – EPM Aguas de MalamboAguas Nacionales EPM Aguas Regionales EPMCentrales Eléctricas del Norte de Santander - CENS Central Hidroeléctrica de Caldas - CHEC Empresa de Energía del Quindío - EDEQ Empresa de Aguas del Oriente Antioqueño Electrificadora de Santander - ESSAAguas de Antofagasta - Adasa Distribuidora de Electricidad del Sur - Delsur Empresa Eléctrica de Guatemala - Eegsa Elektra Noreste - ENSATecnología Intercontinental -Ticsa Empresas Públicas de Rionegro - EPRio

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Sustainabilityreport 2019

www.sostenibilidadgrupoepm.com.co/en/

Documents

Social and environmental management Sustainability 2019 · 2020. 6. 17. · Entérate (Get Informed), a space where the most important news on EPM are announced. • The supplier