When selecting external partners, WDP envisages a long-term partnership rather than a single time cooperation. By doing so WDP is establishing a long-lasting collaboration which e.g. enables to keep a newly built warehouse in good shape during the life time of the building, to maintain a high-standard customer service and to promote continuous exchange of knowledge and best practices
WDP opts for partners with the relevant experience (e.g. construction partners which are familiar with the logistic development sector, exist already since a long time and have a solid track record).
Furthermore WDP selects those partners capable of providing the (legally) necessary guarantees on the level of product or construction liability (e.g. 10 years construction warranty) as well as financial guarantees.
WDP selects the financially and operationally sound suppliers
And last but not least, potential partners are screened in advance, not only from a financial point of view, but also on their activities, quality, reputation and track record in terms of operations, clients, activities, safety regulations and corporate social responsibility.
WDP performed a formal critical supplier identification at the end of 2020, amongst others with a view on the implementation of the new Supplier Code of Conduct.
WDP has taken a pragmatic approach for identifying its critical tier 1-suppliers and we have chosen not to create any further sub-groups (and for the record, for the moment we do not define our tier 2 suppliers). This approach may be finetuned in the next coming years and the supplier identification process may therefore evolve in the long run.
WDP applied the following parameters on our complete list of suppliers:
a) selection on high-volume suppliers (as a first threshold, an annual turnover over 125K EUR was taken into account).
b) the suppliers that have a high probability of causing an adverse impact on the organization due to social, environmental and/or economic misconduct: in practice this leads to the selection of parties qualified as contractor, architect, ... being the parties active in a critical business path of WDP, namely the development of the warehouses. Evidently, their activities imply increased vigilance towards for example health & safety, employment of personnel, environmental impact, ... compared to e.g. service companies
c) consequently we took two other parameters into account, which would render it more difficult to substitute a supplier with another:
• repeat business: the parties with whom WDP regularly enters into a contractual relationship (more than once)
• if the supplier is active in several countries where WDP conducts business (Belgium/France/Luxembourg - The Netherlands - Romania)
d) at last, we aimed for a balance selection over the various platforms (Belgium/France/LuxembourgThe Netherlands - Romania) where WDP is active
This assessment is repeated on a yearly basis, taken into account all the supplier partnerships throughout the specific year That way, a change in volume for example can be taken into account.
PROCESS 2021/2022
After the first experiences in 2021 with the implementation of the Supplier Code of Conduct, we have upgraded our process.
For the identification of critical suppliers for 2022 based on annual turnover data for 2021, we decided to set the threshold for the selection of high-volume suppliers higher, namely at 1 mio EUR The main reasons for this change are the following:
(1) When considering supplier contracts with construction partners, in principle a bank guarantee is asked for which (for an average warehouse) amounts to 500k EUR.
(2) WDP has on average an amount of 500 mio EUR of annual outgoing payments, therefore the amount of 1 mio EUR is more aligned. By focussing on those high-volume suppliers, we cover a material proportion of such annual outgoing payments.
(3) Moreover, the tightening of the scope on annual turnover level, gives us the opportunity (in function of internal resources for monitoring) to include some other type of suppliers, also active in the critical business path of WDP but not as a contractor. For example, our insurance broker.
Besides, we decided to perform in any case a sanity check on the complete list of suppliers, including those below 1 million euro. For those suppliers, the parameters under b), c) and d) were taken into account.
PROCESS 2022/2023
Given the focus on solar panel projects by WDP for the realisation of its targets set out in the Climate Action Plan, we decided to have every EPC contractor sign the Supplier Code of Conduct as from May 2023.
IDENTIFICATION OF POTENTIAL SUSTAINABILITY RISKS IN WDP'S SUPPLY CHAIN
WDP takes the parameter 'high risk on sustainability' into account in order to classify a tier 1-supplier as a critical supplier (see above: parameter b) The above approach and definition enables us to detect and identify WDP’s high risk suppliers and serves as the groundwork to identify the potential sustainability risks in WDP’s supply chain.
• criterium = type of supplier, namely those parties active in a critical business path of WDP, i.e. the development of the warehouses (contractor, architect, engineering offices, ….)
• rationale for this criterium = the value chain of these parties might be considered as being potentially more risky towards ESG topics (such as health & safety, employment of personnel, environmental impact, ...) compared to the value chain of e.g. a supplier of services such as a translation company and therefore having a higher probability of causing an adverse impact on WDP due to social, environmental and/or economic misconduct
• risk level identification process = this is performed through and embedded in our general risk management process where the risk level is determined on the basis of the evaluation of the potential impact of the risk, the control over such risk, the likelihood and the appetite of WDP with respect to such risk (COSO-framework). Please see our Annual Report 2022 where we descirbe the Supply Chain Risk as one of our key risks (page 158) and our Enterprise Risk Management Policy
ASSESSMENT METHODOLOGY OF CRITICAL SUPPLIERS
WDP decided to take the following approach for an assessment of our suppliers:
• Focus on the critical suppliers, being equally the ones with a 'high risk on sustainability' (as described above)
• Such critical suppliers were asked to formally approve and comply with the WDP Supplier Code of Conduct, while to others these principles are highly recommended. A formal approval of the WDP Supplier Code of Conduct will be solicited each time the code of conduct is updated. We expect WDP suppliers to report to us any environmental or safety issues, and legal changes affecting their corporate statute so that appropriate Supplier Code of Conduct acceptance can be determined and applied. For all our project sites where our critical suppliers are working we ensure an infographic is hung up in the work sheds. Such infographics shows (in icons) the attention points for the workers on site and the #SpeakUp contact point. Next to that, th WDP Supplier Code of Conduct is a fixed item on the (weekly) site meetings which offers a person the opportunity to mention a breach on or a concern with respect to the SCOC.
• As clearly stated in our Supplier Code of Conduct, WDP wants to work with suppliers through cooperation, dialogue and support to ensure compliance with the WDP Supplier Code of Conduct. Therefore, WDP invests extra energy in liaising closely with the suppliers while they perform their services (whether or not on construction sites). We therefore continuously monitor the suppliers through our (bi)-weekly site visits during the construction of a development project. The topics of Health&Safety and compliance with the Supplier Code of Conduct are monitored by WDP’s project managers and are explicitly adressed during the project site meetings.
• In case of reparable non-compliance, WDP reserves the right to engage the supplier and assist in establishing an improvement action plan with clear deadlines, the fulfilment of which will help the supplier to keep the business relationship intact. Nevertheless, WDP reserves the right to review and, if deemed necessary, to terminate contracts with the supplier should a serious violation or continuous non-compliance with this Supplier Code of Conduct occur. This also applies if the supplier fails to implement mutually agreed corrective measures within a defined timeframe.