Ethics, Integrity and Sustainability

Please find below our performance indicators related to sustainability and integrity in supply chain management:

 

Indicator	2023	2024	2025	2026 target
% of critical suppliers monitored in relation to sustainability risks	100%	100%	100%	100%
% of critical suppliers who have environmental, labor, integrity, human rights or social clauses	100%	100%	100%	100%
Number of suppliers subject to assessments of environmental, labor, integrity, human rights or social aspects	1491	412	1669	-

AXIA Energy adopts a structured screening process for the identification and registration of suppliers, with the objective of ensuring responsible procurement practices and compliance throughout the entire relationship cycle with its business partners.

 

This approach is grounded in risk management, aiming to minimize impacts and to ensure that suppliers are aligned with the company’s values and commitments. During the registration process, several risk-related aspects are considered, including:

 

• Country-specific risks: associated with the political, economic, regulatory, and social environment of the supplier’s location of operation.
   
• Product/service-specific risks: related to technical compliance, applicable regulations, and sensitive characteristics of the product or service provided
   
• Industry-specific risks: involving sectors that are highly regulated or have a history of risks, such as corruption or unethical practices.
   
• Environmental risks: potential negative impacts on the environment resulting from the supplier’s activities.
   
• Governance risks: failures in management practices, corporate ethics, transparency, and compliance.
   
• Social risks: working conditions, respect for human rights, and the use of outsourced or subcontracted labor.
   
• Business relevance: the supplier’s criticality to operations, considering strategic impact, supply volume, and the difficulty of replacement.

The company maintains a structured process for the evaluation and development of suppliers, with the aim of promoting responsible practices, ensuring compliance, and strengthening sustainability across the supply chain.

 

Supplier Evaluation

 

The process includes:

 

• Documentary assessments: systematic analysis of evidence provided by suppliers, such as policies, certifications, and operational practices.
   
• Second-party on-site assessments: conducted by purchasing company employees or contracted consultants.
   
• Third-party on-site assessments: carried out by independent and accredited organizations, ensuring impartiality and compliance with international standards.
   
• Corrective Action Plan: As part of the evaluation process, the company implements corrective action plans whenever non-conformities or improvement opportunities are identified. These plans are developed jointly with suppliers, establishing clear deadlines, responsibilities, and targets for resolving issues.

 

This process forms an integral part of the company’s commitment to ethics, transparency, and socio-environmental responsibility. All signed contracts include specific clauses addressing integrity, human rights, environmental protection, and social aspects. In addition, suppliers are continuously monitored and evaluated throughout their relationship with the company, ensuring compliance and fostering continuous improvement in their practices.

The company offers technical support to suppliers for implementing improvements, with follow-up and documentation recorded in institutional reports. If a supplier refuses or fails to comply with the corrective action plan, the contract will be terminated and the supplier will be blocked from future engagements.

In 2025, 110 suppliers were identified as requiring an action plan. All of them received support for the implementation and monitoring of corrective measures. As a result of this process, one contract was discontinued for failing to achieve the agreed development.

This program is continuously monitored through the generation of reports, analyses, and periodic updates, aimed at providing system feedback, strengthening existing controls, and identifying opportunities for improvement.

 

The company’s procurement practices are also continuously reviewed to ensure full compliance with the Supplier Code of Conduct, maintaining alignment with ESG (Environmental, Social, and Governance) requirements. 

 

Suppliers that fail to meet the minimum ESG criteria within a defined timeframe are excluded from the contracting process, reinforcing the company’s commitment to sustainability and social responsibility. With the implementation of the supplier performance evaluation process, those demonstrating superior ESG performance are prioritized during selection, thereby fostering a more ethical and sustainable supply chain. 

 

To further strengthen this approach, the company provides targeted training to buyers and internal stakeholders, equipping them to effectively fulfill their strategic role in supplier engagement.

The supplier selection and evaluation process at AXIA Energy involves:
 

• Supplier screening based on structured data (sanctions lists, politically exposed persons – PEPs, state-owned companies, etc.) and unstructured data (adverse media).
   
• Continuous monitoring to detect changes in the supplier’s risk profile, such as involvement in financial crimes, regulatory violations, or reputational issues.
   
• Global coverage using licensed sources of news and regulatory data, including sanctions lists.
   
• Integration with internal systems via APIs, enabling automated and integrated processes for improved risk and compliance monitoring.
   

Examples of risks that may be identified include:
 

• Involvement in forced labor or human rights violations 
   
• Relationships with sanctioned individuals or entities 
   
• Negative media coverage related to environmental, social, or governance (ESG) practices 
   
• Connections with politically exposed persons (PEPs)

 

Supplier Assessment	FY 2025
Total number of unique suppliers	4536
Number of unique significant suppliers	1669
Number of unique significant suppliers supported with development measures	110
Number of unique significant suppliers assessed via desk assessments/on-site assessments	1669
Number of unique significant suppliers assessed with substantial actual/ potential negative impacts	143
Number of unique significant suppliers with substantial actual/ potential negative impacts with agreed corrective action/ improvement plan	110
Number of unique significant suppliers with substantial actual/ potential negative impacts that were terminated	1