At Con Edison, we recognize that our suppliers are an important part of our value chain and their performance can impact our sustainability. While we have an established purchasing program and have made progress in a number of areas related to sustainability. In 2013, we joined the Electric Utility Industry Sustainable Supply Chain Alliance. We continue to partner with our utility peers to share and learn best practices to address sustainability issues throughout our supply chain as we look to improve our processes at Con Edison of New York and Orange Rockland, and better understand the social and environmental impact of our upstream suppliers.
The regulated utilities have a strict vendor qualification process, ensuring that the companies we contract with are able to provide the highest quality goods and services at the most reasonable cost for our customers. Once approved, Con Edison monitors key risk indicators of all suppliers via periodic review of financial stability, sound policies and procedures regarding supplier performance and disclosure information, and monitoring of market trends and economic and financial forecasts.
Con Edison’s Purchasing department defines select “critical suppliers” as critical component suppliers and non-substitutable suppliers. For these select critical suppliers, Purchasing collaborated with the Corporate ERM team and developed specific risk profiles outlining causes and consequences of loss of these critical suppliers and specific Key Risk Indicators and are continually monitored.
Con Edison’s award-winning supplier diversity program invites entrepreneurs and executives to partner with us in mutually beneficial business relationships. As we continue to serve the energy needs of the world’s most dynamic marketplace, we look forward to expanding our commercial relationships with New York’s vibrant community of women and minority entrepreneurs and business owners.
Our unique model is based on the premise that our company can not only have a positive impact through its direct operational and supply chain activities but also that our sustainability efforts can realize a multiplier effect through our interaction with internal and external stakeholders. Our initiative is a collaboration with the Supplier Diversity program, Public Affairs, and Energy Efficiency.
We have partnered with the non-profit organization Green City Force to develop a pipeline of employment for residents of the New York City Housing Projects to do energy efficiency related work. We have begun to receive commitments from minority-owned and women-owned business enterprises (MWBEs) to hire graduates of the Green City Force program and the first group of graduates has been hired.
We collaborated with Con Edison’s Energy Efficiency team to host a “Tech Expo,” in which we gave major real estate owners a chance to learn about Con Edison-funded incentives that can help them use less energy. We introduced them to MWBE contractors and MWBE businesses that have cutting-edge technology to dramatically reduce the cost of their buildings and enhance the value of their real estate.
We also worked with external groups to support our company’s commitment to sustainability. Working with the New York/New Jersey chapter of the National Minority Supplier Development Council we co- sponsored a major “Sustainability Summit.” This conference was organized with the purpose of identifying and promoting companies that foster a green supply chain and promote energy efficiency. Participants included representatives from major corporations, and investors interested in supporting the growth of companies in this field.
A cornerstone of the supplier diversity program is company expenditures. Goods and services purchased from minority- and women-owned business enterprises totaled more than $277 million in 2014. Including fuel and gas, expenditures with minority- and women- owned businesses totaled more than $286 million.
Along with a commitment to invest in our supplier diversity program, we also recognize that as a Fortune 500 company, the money we spend can also help to develop emerging markets, such as the development and supply of green products. For this reason, we have committed to spend $3 million annually on green products, which we exceeded in 2014.
Ethical behavior is a priority at Con Edison, but in recent years we have been victimized by company employees and retirees as a result of several kickback schemes. The company immediately initiated an internal investigation after the uncovering of the first scheme and has cooperated with both federal and local authorities in their investigations. The company terminated employment of the arrested employees and ended its contracts with the vendors.
We have made numerous procedural and organizational changes to help prevent these issues from recurring in the future. After the initial scheme was discovered in 2009, the company began to re-evaluate how critical positions in our Purchasing, Construction Management, and Energy Services departments are filled, which resulted in implementing a rotational policy to ensure that employees in these organizations periodically shift work and responsibilities.
These changes reflect the company’s commitment to maintaining the trust of our ratepayers, shareholders, and community stakeholders. Moving forward, we continue to aggressively investigate all allegations of fraud, misconduct, and unethical behavior of our employees, and will continue to work with law enforcement when necessary.
For more information on the company’s commitment to ethical behavior with suppliers, please see our Standards of Business Conduct and Business Ethics section of this report.