CHAPTER 3 We advance in sustainable performance

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WEPIONEER PROGRAMME: THE IMPORTANCE OF RECOGNISING LEADERSHIP We recognise suppliers that excel in their own ESG management and their commitment to sustainable and responsible performance. We want these suppliers to lead and set an example in sustainable management. The theme chosen for this third edition of the programme was diversity and inclusion.

3.5.2 Our supply chain We have a supply chain of around 1,426 suppliers in the procurement area.

Setting aside raw materials1, 80% of the amount contracted relates to services and the remainder to various kinds of goods such as materials, spare parts and equipment.

SEGMENTING SUPPLIERS

At Cepsa we carry out an exhaustive analysis of expenditure in our supply chain by means of an integrated system that allows us to monitor total expenditure by business unit, taking account of geographic distribution, purchase category and core business. This analysis allows us to segment our supply chain on the basis of criticality:

· Segments I, II and III. They include around 15% of our suppliers and account for more than 85% of annual expenditure. We focus all our initiatives on this group and adapt our approach as advisable.

· Segments IV and V2. For these suppliers, we monitor operational, economic, health and safety, and environmental criticality before assigning a risk level.

We have procedures, tools and regular reporting systems in place to control and monitor management effectiveness throughout the supply chain. The monitoring of these reports and indicators of target achievement and control helps to ensure continuous traceability.

1 The information reported within the procurement scope excludes the purchase of crude oil, raw materials, energy products and maritime transport related to these products; primary logistics (CLH); financial products and services; internal operations; donations; and payments of taxes and duties.

2 At Cepsa, we have developed a more efficient supplier management approach in segment V, known as the spending tail, through automation and digitalisation to preferentially identify products with sustainability certificates. The spending tail is considered to include suppliers with contracted purchases of less than 25,000.

COMMUNICATING BEST PRACTICES

We have shared throughout the supply chain our success stories in applied innovation and digital transformation, as well as our best practices for the integration of ESG aspects, in various external forums in 2021. Also in these forums, we have communicated our commitments and roadmap to meet ESG objectives, as well as what we expect of our suppliers in this area. We have surveyed our suppliers to understand and prioritise the ESG issues relevant to them.