48 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Maintaining Trust continued
Responsible Supply Chain We spend €25 billion a year with around 8,700 suppliers globally to meet our business requirements and customer needs for network infrastructure, IT and services related to fixed lines, mobile masts and data centres that run our networks. The majority of this spend, 70%, is managed centrally by Vodafone Procure and Connect (‘VP&C’), based in Luxembourg. This approach helps to maintain a consistent approach to risk and supplier management. The complexity of the supply chain, nature of the products and our sourcing locations coupled with the inherent risk of some of the components we buy, creates many areas for potential risk. We are actively engaged and monitoring the four standard pillars of supply chain due diligence: labour and human rights, environment, ethics and business practices. Within these pillars, we have identified three material topics for supply chain: Scope 3 GHG emissions, network equipment e-waste and circularity and human rights in the supply chain. Read more about our Scope 3 GHG emissions and network equipment e-waste on pages 30 to 32 We recognise that risks can be correctly mitigated to drive positive change, and we see this as an opportunity to collaborate with suppliers and industry partners to advance opportunities for local communities in which our products and services are sourced. Strategy We view a responsible supply chain as an ethical commitment which strengthens our commercial position by enhancing customer trust. As ESG performance becomes a key differentiator in business tenders, strong due diligence and supplier standards help reduce risk, reinforce brand credibility and secure long-term customer relationships. Every supplier that works with us must comply with our Code of Ethical Purchasing which is based
on international standards 1 and stipulates the social, ethical and environmental standards that we expect of suppliers, which must be extended into tier 2 and beyond by our contractual partners. When suppliers tender for business, they are assessed on ESG criteria and must demonstrate policies and procedures that support their claims. This assessment accounts for up to 20% of the overall evaluation criteria and supplier selection in 100% of RFQs. In addition, we have comprehensive contractual terms for all suppliers in relation to ESG topics and specific ones (on people and environment) for contracts of high impact. Our Supplier Assurance Risk Management (‘SARM’) system identifies suppliers who pose risks that are material to our business. These are related to money laundering, bribery, conflict minerals, conflict of interest, corporate security, cyber security, environment, human rights, safety, health and wellbeing, privacy, responsible sourcing and sanctions and trade control. Any identified risks require an independent policy expert to approve suppliers before they are onboarded and if necessary, to establish a mitigation plan. We use industry alignment to increase both leverage and impact with suppliers. Through the Joint Alliance for CSR (‘JAC’) we collaborate with other telecommunications operators to address ESG risks as well as improve standards in the technology supply chain. We currently hold the Vice-Chair of the Board of this organisation that develop initiatives with suppliers and measure the progress specifically in relation to human rights, reducing Scope 3 emissions and reducing e-waste. This year We established a new ESG team in VP&C that is responsible for human rights, environmental strategy, sustainable procurement, supplier engagement and ESG governance of our suppliers. The team lead has a seat on the VP&C Senior Leadership Team (‘SLT’) and reports into Group External Affairs to ensure alignment with the Sustainable Business and Human Rights strategies.
The CEO of VP&C sets ESG objectives and KPIs that are cascaded to SLT members and to all procurement teams, with progress reported quarterly. New governance was established to mitigate risks and drive strategic development in ESG programmes. The VP&C Human Rights SteerCo and the Environmental SteerCo meet bi-monthly and are chaired by the CEO of VP&C. Due diligence and progress for these topics is reported to the ExCo and Board. With independent partners 2 , we conducted a risk assessment on our strategic suppliers and on the wider supply chain to identify ESG risks and prioritisation to identify, monitor, mitigate and remediate across our procurement categories and sourcing locations. Of our strategic suppliers, 27 present a high risk and have been placed into an enhanced due diligence programme that includes an on-site audit, mandatory training, assessments, and heightened contract clauses. We scaled our supplier engagement programme by onboarding an independent ESG platform to assess the maturity of our suppliers’ ESG programmes and have onboarded 238 strategic suppliers this year. The platform monitors suppliers’ performance, identifies areas for improvement and issues trainings and action plans directly to suppliers. Looking forward We intend to focus on accelerating suppliers’ adoption of our environmental and social standards. This includes a review of our Code of Ethical Purchasing and driving improvements in human rights, due diligence, Scope 3 emissions reductions and ethical labour practices, with a focus on high-risk categories. This includes strengthening collaboration with commercial teams so that ESG criteria are consistently applied during category strategy design, negotiation and procurement decision making. We will work towards increased transparency and granularity of supply chain data and work with suppliers to build capability and engagement.
We rely on complex international supply chains that span across approximately 8,700 suppliers. This complexity and geographical spread presents potential risks which we mitigate with a robust due diligence programme. We also have engagement programmes with our suppliers to drive positive change for our business and the communities in which we operate.
100% of suppliers must comply with our code of ethical purchasing 20% ESG criteria in RFQ for supplier selection
Notes: 1. Universal Declaration of Human Rights and the International Labour Organisation. 2. Business for Social Responsibility (‘BSR’) and EcoVadis.
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