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In 2019, 100% of TIM’s new suppliers enrolled in the Register signed a specific questionnaire in which they undertook for themselves and for any authorised subcontractors, collaborators and employees to observe the principles of behaviour contained in the Group’s Code of Ethics and Conduct.

For a company to be sustainable, sustainability has to be integrated into the supply chain:  because of this, at TIM it is therefore very important to rate and monitor suppliers based on the potential risks associated with their sustainability performance. In 2019 all the Domestic Business Unit suppliers were analysed to assess their socio-environmental risk and 42 (no change from 2018 and -18% compared to 2017) were found to present a higher risk.

But the evaluation of our suppliers began a few years ago. Since 2014, we require all those suppliers with an interest in qualifying for sustainability risk areas to complete a socio-environmental risk self-assessment questionnaire.

The questionnaire is based on the main requirements of the relevant standards on responsible corporate management relating to respect for ethical values and to safeguarding the environment (SA 8000, UN Global Compact and ISO 14001) and is regularly updated based on results and on the development of the qualification process.

In 2019, a sustainability self-assessment questionnaire was sent out to 71% of suppliers in Brazil, i.e. the 831 suppliers whose orders exceed one million reais. The results will help direct future selection processes.


Critical suppliers - the Key Risk Indicator

Critical suppliers - the Key Risk Indicator

As part of the Supplier evaluation and monitoring process, the “riskiness of suppliers” is one of the fundamental aspects examined: the Key Risk Indicator (KRI) tool adopted stems from the need to systemically structure the evaluations made, for example in terms of Qualification, Vendor Rating, Incoming Quality, and Economic/Financial Assessment.

This makes the KRI a tool that can be applied to Suppliers/Subcontractors already in the Register and to potential ones, providing a thorough framework of the risk factors of suppliers as part of the acquisition process, also in relation to the markets they operate in, through the use of specific performance indicators.

The tool defines 3 main categories of risk factors: strategic, operative and financial. This evaluation is in addition to the one linked to the risk on the market sector the supplier operates in.

The tool produces a risk indicator for each supplier which places it in a risk band and evaluation band with the relative actions to be taken. Suppliers identified as critical are those whose evaluation places them in a high risk band and a low evaluation band.

The analysis of suppliers 'environmental, social and governance risks

In order to assess risks which might jeopardize the sustainability of its supply chain - the so-called Environmental Social and Governance or ESG risks - TIM assesses:

·       the risks peculiar to the industrial sector (the so-called "Procurement Market") to which each supplier belongs, and

·       the risks of individual suppliers, based on the findings of sustainability surveys and audits.

Risks of Procurement Markets

According to the ESG risks management model adopted by TIM, the phases of the analysis for the Procurement Markets are:

·       Risk Identification and definition of an appropriate metrics;

·       Risk assessment of each ESG procurement market;

·       Definition of four major classes of risks in which a procurement market might fall, based on  two parameters: ESG risk and "spending" (the amount TIM spends for purchases made in that procurement market):

 AA = high ESG risk, high-spending
 AB = high ESG risk, low-spending
 BA = low ESG risk, high-spending
 BB = low ESG risk, low-spending

ESG Risks of a single supplier

Each supplier is assigned an ESG risk profile determined by:

·       the results of socio/environmental audits conducted by TIM on that supplier and its subcontractors;

·       its answers to the sustainability questionnaire sent by TIM;

·       the procurement market to which the supplier belongs.

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Key risk indicators

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