AEP Sustainability - Supply Chain Management

Supply Chain Management & Diversity

Supplier Code of Conduct

In September 2020, we released a new Supplier Code of Conduct reflecting expectations for suppliers to uphold our values around safety and health, environmental performance, ethics and compliance, anti-bribery, human dignity, diversity and inclusion, and security. This reinforces our expectations of suppliers when they are conducting business with AEP or on our behalf. It is also part of our commitment to transparency of our values and supply chain engagement and is supplemental to our contract Terms & Conditions.

We are sometimes asked by supply chain partners or customers to support or commit to additional pledges or Codes of Conduct related to a range of issues. Often, these requests require adherence to specific protocols that are oftentimes not suitable for AEP. We are sensitive to the complexities of supply chain management and we have policies, procedures, terms and conditions, and a Supplier Code of Conduct in place to address these issues. In addition, we must comply with supply chain-related regulations designed to protect the bulk electric power system. We strive to clearly communicate our expectations to those doing business with us, including regulatory compliance. When we have questions or concerns, we address them directly with our suppliers. We believe this is a more effective way of managing our relationship with suppliers and builds a stronger, trusting relationship with them.

Responsible Supply Chain Management

We are committed to proactively reporting our sustainability performance, governance and practices, including supply chain management. We joined EcoVadis; one of the most commonly used platforms by thousands of companies across the globe, to complete its annual Supply Chain Survey, which generates a company scorecard. This scorecard outlines AEP’s performance in four key areas: Environment, Labor and Human Rights, Ethics, and Sustainable Procurement. We are proud to have earned a silver medal in 2020.

Supplier Diversity

Small and diverse suppliers enable innovation, increase competition, improve savings and enhance the AEP brand. We want our pool of suppliers and business partners to align to the diversity of our communities by making it easier for diverse suppliers to do business with us.

The Supplier Diversity Program focuses on maximizing opportunities for diverse businesses, which include those owned by women, minorities [including Hispanic, African American, Asian American, Indian (subcontinent) and Native American], LGBTQ, veterans and service-disabled veterans as well as HUBZone and disadvantaged businesses. Our goal is to develop a pool of diverse, strategic suppliers and business partners that mirror the customers we serve, and we set a target of 13% diverse spend by 2023 [includes Tier 1 (prime) and Tier 2 (subcontractors) suppliers]. In 2020, we increased our diverse spend to 10.17% of the spend that is managed through Procurement, compared to 7.4% in 2019.

We continue to improve our Tier 2 supplier program, which allows us to understand the impact of our diverse supplier spend through our direct suppliers. The Tier 2 program demonstrates the importance we place in understanding how our spend trickles down through our supply chain to affect the communities we serve.