3. Key aspects of responsible supply chain management

a)     Supplier ESG program 

Our ESG Program for Suppliers incorporates comprehensive systems and procedures to foster a culture of accountability and sustainability throughout our supply chain. Our company strongly emphasizes aligning leadership oversight with our ESG program for Suppliers. Our executive management actively engages in the program's development, implementation, and monitoring to ensure its alignment with our organizational values and strategic goals.

b)     Supplier Development  - ESG awareness drive

To ensure inclusivity, we are actively organizing ESG awareness campaigns, with a specific focus on small and medium enterprises. Sustainability throughout our supply chain is a core focus, and to ensure that our collective efforts contribute to minimizing environmental impacts and promoting responsible practices, we consistently collaborate with suppliers with a focus on efficiency, sustainability, energy conservation, community upliftment, and data security.

c)     ESG Benchmarks with Peers

Tata Power after conducting ESG Assessment for Suppliers and Partners conducts benchmarking of scores for all partners internally

d)     Supplier Support

Tata Power provides support to its Supplier and Partners through regular engagements like trainings, Supplier meets, etc.

e)     Technical Support Programs

Tata Power provides technical support to its Suppliers & Partners in areas such as GHG Carbon Footprint, Energy Efficiency, Health & Safety, etc. These support programs are carried out for specific domain partners based on the material issues e.g. – Coal Suppliers (including traders), MSME’s (Micro Small and Medium Enterprises), OEMs, etc.

f)     Capability development through Tata Power Skill Development Institute

(https://www.tpsdi.com/)

We support our supplier to foster a culture of continuous improvement through our TPSDI technical support initiatives. Our programs prioritize the holistic development of suppliers, refining their productivity, safety, delivery, quality, and ESG performance through a structured approach. We ensure that all our suppliers are supported through this capability development program.

This program enhances capabilities, fosters value, following categories of mandatory training programs: L-1: Basic Safety Training; L-2: Technical skill-based Training; and L-3: Overall Training for Supervisors.

4.     Review of Purchasing Policies

New suppliers are onboarded based on stringent pre-qualification requirement evaluation covering following aspects:
 

·        Technical Capabilities

·        Experience

·        Financial Performance

·        Safety Performance

·        Sustainability

ESG framework is mandatory part of all Contracts, and it is integrated with GCC (General Conditions of Contract) document.

Compliance with Tata Power Policies and framework is a contractual obligation for all Suppliers.

5.     Contract Criteria based on ESG Assessments and Requirements

Based on the assessment result, we are supporting suppliers to establish improvement or corrective action plans, and plan to conduct continuous monitoring on the improved outcome.

We advocate sustainable supply chains, urging suppliers to adopt an integrated approach. Screening criteria prioritise scores of 50% or higher, showing dedication to our ESG goals.

6.     ESG screening for Suppliers

As an integral part of our ESG program, we have established an ESG framework that serves as a guiding principle for our associates and reinforces our commitment to stakeholders. To effectively identify and address material risks and impacts arising from supply chain activities, we employ ESG screening procedures for our supplier. Our ESG Framework encompasses a comprehensive approach to addressing supply chain-related risks.
 

The ESG Framework incorporates screening parameters that help in identifying negative environmental, social, and governance impacts related to commodities and sector-specific attributes. It also accounts for country-specific risks, such as overreliance on a single country. Through this screening, we assess suppliers environmental practices and social and ethical responsibilities, ensuring they align with our ESG goals.

 Our screening criteria prioritize scores of 50% or higher, demonstrating our dedication to achieving our ESG objectives. Furthermore, we enforce a zero-tolerance policy regarding health, safety, compliance, and human rights. Mandatory ESG disclosure is required during bidding processes, and comprehensive evaluations consider technical, safety, and commercial capabilities aligned with ESG criteria.

In the fiscal year 2024, 100% Key/critical business associates screened including suppliers and service providers. 

7.     Supplier Assessment and Development

A.    Supplier Assessment

Tata power carries out Supplier Assessment (desk, on-site (2^nd party) and third party) for critical Tier 1 suppliers. Site assessment is mandatory before on boarding of new Suppliers and  assessment is done in alignment with our “ESG Framework for Business Associates”

( https://www.tatapower.com/content/dam/tatapoweraemsitesprogram/tatapower/pdf-root/sustainability/sustainable-governance---policies/ESG%20Framework%20for%20Business%20Associates.pdf)

Suppliers are assessed based on a pre-defined criteria checklist on all material parameters of Environment, Social and Governance. 

a. Verification of evidence

All new suppliers and partners are required to submit documentation as per the checklist provided. These suppliers are assessed based on the checklist and they are given ESG scores.

b. On-site assessment (2^nd Party)

Tata Power carried out 2^nd party On-site assessment for critical suppliers, wherein the suppliers are judged on a pre-defined checklist covering critical areas such as Statutory Compliances, Quality processes, Safety standards, ESG etc.

c. 3^rd party assessment

Tata Power ensures 3^rd party assessment of its suppliers by ensuring that suppliers have requisite certification from ISO (9001:2015, 14001:2015, 45001:2018) and SA 8000: 2014.

These valid 3^rd party certifications ensure that suppliers have requisite systems and processes, addressing critical areas of Quality, Environment, Safety and Human Rights, respectively.
 

B.     Standards and Methodologies for Supplier Assessment

Our standards and methodologies for supplier assessment area aligned to following standards

1. Quality Management System (ISO 9001:2015)

2. Environmental Management System (ISO 14001:2015)

3. Safety Management System (ISO 45001:2018)

4. Social Accountability (SA 8000:2014)

5. Guidance on social responsibility (ISO 26000:2010)

C.     Supplier corrective action/improvement plans

Tata Power carries out continuous evaluation of its suppliers and partners through mandatory SAP based process  covering following areas – Safety, Statutory Compliances, Delivery (timeliness), Quality and Sustainability. 

Suppliers and Partners are categorized  into different classes based on their scores.  

Implications are defined for each category. Suppliers are requested to submit Improvement/Corrective  Action plans for category IV as per recommendation by CFT. 

Classification of vendors based on evaluation score: 

8.     Supplier Screening

·        Tier 1 Suppliers – All suppliers and partners directly supplying products and services to Tata Power
 

·        Significant Suppliers – Significant suppliers are suppliers and partners which are critical to Tata Power business and sustainability goals. These are also categorized under Critical Tier-1 suppliers.
 

9.     Supplier Assessment and/or Development

Tata Power monitors the coverage and progress of a supplier assessment and/or development program to ensure risks are being managed and that the company is acting responsibly by building capacity within its value chain
 

10.    Partners with purpose

We lead the way in adopting innovative technologies and forging partnerships to transform India’s power sector. As the top power utility, we collaborate globally with over 70 partners, including startups, tech firms, academic institutions, and funding bodies, to enhance technology and customer service standards. Our multi-faceted approach addresses diverse use cases and stakeholder needs, focusing on opportunities in Distributed Energy Resource Management, Alternative Battery Chemistries, Non-Silicon PV, Cybersecurity, Behavioural Demand Response, Utility-specific Robotics, Advanced Materials, Industry 4.0, Smart Charging Infrastructure, and Power Quality solutions.