Embedding sustainability at the core of Iberdrola’s procurement Case study 1 Iberdrola is a Spanish company that operates in many countries, promoting and building renewable energy and electricity networks. Sustainability has long been a core element of its corporate strategy, with procurement playing a leading role. Since 2004, Iberdrola has been measuring supplier practices and, in 2019, it introduced a new sustainability standard to assess supplier performance across environmental, social and governance dimensions. A key move along the way was linking 10% of long- term incentives for its top executives – including the CEO – to supplier sustainability. How? Iberdrola’s green procurement is anchored in governance, data systems and cross-functional collaboration, with these enablers: –Executive alignment through incentives: Long-term compensation is tied to the percentage of spend with sustainable suppliers among top vendors. –Structured sustainability supplier assessment: The company evaluates suppliers across 47 criteria via an external platform. Those falling below the defined thresholds receive tailored improvement plans and are given a period of time to improve. –CPO-led internal alignment: The procurement team tracks sustainability at the individual buyer level, reviewing metrics weekly alongside cost, financial and strategic indicators. –Cross-functional collaboration: Procurement works closely with the sustainability and finance teams to align targets (such as scope 3 emissions) and promote procurement of low-carbon alternatives (such as green steel). Impact By integrating sustainability into procurement, Iberdrola has achieved both broad organizational buy-in and strong supplier engagement. Practically, that has meant tying sustainability to executive incentives, embedding new KPIs into decisions and providing suppliers with clear improvement pathways. Iberdrola has thus transformed procurement into a lever for achieving corporate goals. Even suppliers that initially fell short of expectations have responded positively – many crediting Iberdrola for pushing them to strengthen their sustainability practices and future-proof their business. Green Procurement Playbook: The CPO’s Guide to Delivering Value for Business and Planet 21

Green Procurement Playbook 2025