Supplier Assessment and Development​

SUPPLIER PERFORMANCE ASSESSMENT

The supplier performance assessment contemplates the comprehensive management of sustainability (ESG) in the execution of contracts; therefore, it seeks to measure the compliance with the Environmental, Social and Governance management commitments, acquired by the supplier for the contract execution Ecopetrol.

This assessment is based on 5 indicators distributed in each ESG dimension: 

•  ENVIRONMENTAL MANAGEMENT: 

Measure the compliance of the “HSE Aspect” criterion to monitor and reduce the potential negative impact on people, the environment, and facilities during the execution of contracts.

• SOCIAL MANAGEMENT: 

Measure the compliance of:

• Labor and Commercial Aspects Criterion: Monitor and measure compliance with legal and contractual obligations of a commercial, labor, or social security nature. It also contemplates the inclusive labor employment or local employment.
• Milieu Management Criterion: Monitor and measure incidents, complaints and claims that affect the milieu and that are attributable to the supplier. Likewise, it measures the level of compliance with the commitment acquired by the supplier for the local contracting of goods and services and the activities for value generation.

• GOVERNANCE MANAGEMENT: 

Measure the compliance of:

• Operational efficiency criterion: Monitor and measure the efficiency of the contracted service and compliance with the value promise in economic, technical, object and scope of the contract and/or supply strategy.
• Contract terms: Evaluate compliance with the agreed work plan and the monitoring and control of the delivery of administrative documents, which contemplates the supplier qualification in the Supplier Information System, complying with the legal, financial, commercial, HSE and ethics and compliance requirements.
   

SUPPLIER VERIFICATION AND QUALIFICATION

The supplier verification process evaluates the suppliers ´minimum requirements fulfillment for the company’s approval in Ecopetrol’ s Suppliers Information System. The requirements that suppliers must meet are determined by the following variables:

• HSE certifications: The requirement for HSE certifications is carried out in accordance with the characteristics of each contract, considering the risk level analysis, the place of execution and the criticality of the activities. 
• Economic impact: Determines the obligation to present financial information
• Goods and services classification in the Kraljic matrix: Indicates the commercial information requirements.
• Categories with specific requirements: Commercial activities that by their nature require the endorsement of national or international institutions.
• Ethics and compliance requirements: These are transversal to all suppliers, therefore, they must fill out the asset laundering, financing of terrorism and commitment to integrity forms and, as mentioned above, the suppliers, and its related parties, are consulted in restrictive and control lists. 

Additionally, certain goods and services needed by Ecopetrol require an external evaluation and certification to be invited, verified, and establish a commercial relation. Therefore, they must carry out the assessment through a third party and present it to Ecopetrol in a current state and guarantee its update, otherwise the supplier will not be able to participate in the selection methods.

The type of certification the supplier must have, is determined according to its economic activity. These accreditations are detailed below:
 

SECOND PARTY ASSESSMENT

To guarantee the correct execution of the contractual relations, Ecopetrol has generated an Integral Ecosystem of Risk Management Measures and Contracts Execution Verification Mechanisms:

INTERNAL EARLY WARNING SYSTEM: Monitors suppliers´ compliance regarding claims and complaints, incidents reported in site, contract´s economic deviations, late payments, garnishments, and insolvency. This system also supervises the non-compliance impact in Ecopetrol´ s operations (measured by concentration of contracts with Ecopetrol, estimated value of non-compliance obligations and number of workers - exclusive labor force).

INTERNAL RISK MANAGEMENT SYSTEM: Designed by AON and used by Ecopetrol to identify and control risks associated with third parties sourcing, including policy coverage design, negotiation with the insurance market, issuance, and monitoring of polices, among others.

PRECRITICAL AND CRITICAL CONTRACTS ANALYSIS: Monitors the historic suppliers´ non-compliance with payment obligations with its third parties.

THIRD PARTY ASSESSMENT

COMMERCIAL VERIFICATIONS

The Commercial Verification Model for Goods and Services in Critical Contracts at Ecopetrol is a mechanism designed to assess compliance with legal, commercial, and contractual aspects by contractors operating in critical territories. This model enables the generation of alerts and recommendations for both contractors and contract management professionals, ensuring regulatory compliance and minimizing operational and environmental risks.

OBJECTIVE:

• Verify legal and contractual compliance in the procurement of local goods and services.
• Make alerts and recommendations to suppliers and contract management professionals for proper handling.
• Serve as an impartial tool for evaluating supplier performance.

VERIFICATION TOOL:

The model is based on a structured tool with standardized criteria that allows evaluating regulatory and contractual compliance in the regions where Ecopetrol operates.

The verification tool is structured as follows:

• General contract information
• Characterization of goods and services
• Verification process for goods and services, covering various topics:
• Clauses on obligations for goods and services.
• Activities for value generation.
• Compliance with the Public Food Procurement Law (Law 2026 of 2020).
• Compliance with legal requirements in contracted services (transport, food, waste, among others).
• Compliance with commercial agreements.
• Management of supply chain integration.

Each of these topics is supported by national regulations and Ecopetrol's internal policies to ensure compliance with the established requirements.

Verification executer:

Commercial verifications are carried out by third parties hired by Ecopetrol to evaluate compliance with contractual obligations. Currently, there are 2 companies to carry out the verifications which are certified in business management systems such as: ISO 9001, ISO 14001, ISO 45001 and ISO 50001.

Impact Assessment and Corrective Actions:

Findings detected during verification are classified according to their impact on contract execution, allowing the definition of necessary corrective actions:

The Commercial Verification Model for Goods and Services in Critical Contracts at Ecopetrol is a fundamental tool for ensuring transparency, regulatory compliance, and efficiency in procurement. Its application allows identifying risks, preventing non-compliance, and strengthening contractual relationships with suppliers and contractors, thus ensuring the sustainability of the company's operations in the regions of operation.

LABOR VERIFICATIONS

As part of its corporate social responsibility policy, Ecopetrol S.A. ensures compliance with labor and social security obligations, both legal and extralegal, by contractors, subcontractors, and suppliers involved in contract execution. To this end, labor verifications are carried out through formal and documentary reviews at contracting companies.
These verifications are conducted by a third party hired by Ecopetrol, responsible for ensuring the proper execution of the process, requesting and analyzing the necessary information, and ensuring a complete and timely resolution of any findings.

OBJECTIVE

Verify legal and contractual compliance with labor and social security obligations.
Ensure that suppliers uphold workers' rights in accordance with Colombian labor law and international standards.
Identify risks related to non-compliance and propose corrective actions.

VERIFICATION TOOL

Labor verifications are conducted using a structured format developed by Ecopetrol, based on international labor standards and best practices, as well as Colombian regulations and company´s labor guidelines. Some of the main topics verified are described below:

• General labor compliance assessment
• Verification of workers' wages and benefits
• Compliance with legal and extralegal labor obligations
• Social security contributions validation
• Adherence to human rights principles and diversity policies

The verification process adheres to key national regulations, including:

• Decrees 284 of 1957 and 3164 of 2003, which mandate equal pay and benefits for contractor employees performing essential petroleum industry tasks.
• The Substantive Labor Code and related labor regulations.
• Law 100 of 1993, which establishes the Integral Social Security System.
• Decree 1668 of 2016, which prioritizes local labor recruitment.
• Law 1636 of 2013, requiring employers to register job vacancies with the Public Employment Service.
• Additionally, Ecopetrol aligns its labor verification process with international human rights and labor protection guidelines, including:
• UN Guiding Principles on Business and Human Rights
• The Ten Principles of the UN Global Compact
• OECD Guidelines for Multinational Enterprises
• ILO Tripartite Declaration of Principles
• ILO Conventions on Freedom of Association (C087)
• In its commitment to diversity, equity, and inclusion, Ecopetrol adheres to:
• UN Women’s Empowerment Principles
• UN LGBTIQ+ Business Conduct Standards
• ILO Guidelines on Ethnic Diversity in the Workplace
• Guidelines on the Rights of Persons with Disabilities

VERIFICATION EXECUTER 

Labor verifications are carried out by a third party hired by Ecopetrol to evaluate compliance with contractual obligations. Currently, 1 company is in charge to carry out the verifications and is certified in business management systems such as: ISO 9001, ISO 14001, ISO 45001 and ISO 50001.
Impact Assessment and Corrective Actions:
Findings detected during verification are classified according to their impact on contract execution, allowing the definition of necessary corrective actions focused in each topic impacted. 
The Labor Verification Model at Ecopetrol ensures compliance with labor laws and best practices, reinforcing the company's commitment to human rights and social responsibility. By identifying and mitigating risks associated with labor relations, the model enhances transparency and promotes fair labor conditions for all workers involved in Ecopetrol’s contracted activities.
 

COMPLIANCE WITH NATIONAL AND INTERNATIONAL STANDARDS AND SUPPLY CHAIN MANAGEMENT BEST PRACTICES

Ecopetrol carries out labor and commercial verifications of its suppliers, to promote and guarantee its compliance based on international standards such as: UN Guiding Principles on Business and Human Rights, the 10 Principles Global Compact, the OECD Guidelines, the Voluntary Principles on Security and Human Rights, ILO Tripartite Declaration, UN Principles for the Empowerment of Women, Principles of Conduct for the Protection of LGTBIQ+ People, the Guide for Companies on the Rights of People with Disabilities, and Diversity Guide ILO, among others. Additionally, the commercial and labor verifications also contemplate the compliance of the national obligations and the Ecopetrol's internal guidelines. 
Ecopetrol’ s Supply Chain is a national and international benchmark due to its remarkable management, therefore, it continually challenges its performance to incorporate the best market practices and accomplish national and international standards, both in its operation and in its suppliers’ performance. The decisions and strategies made for the Process Evolution have taken into account the recommendations and assessments carried out by international consultants, such as Boston Consulting Group, Kearney and Mckinsey, which have allowed the identification of the Process´ maturity level, including suppliers´ management.
According to these assessments, Ecopetrol have been recognized with a high level of performance, being classified within the top quartile of the industry in the "Aspirant" category in the Kearney Assessment of Excellence in Procurement (AEP) measurement and the consultancy for strengthening of suppliers screening carried out by Boston Consulting Group, which have been successfully implemented. 
In 2024, the supplier screening and assessment methodologies and its results were audited by EY with a positive result regarding the practices implemented by Ecopetrol.
 

“ON-SITE” OR DESK VERIFICATIONS

Assessments on demand, carried out in a corrective or preventive manner to the process and the regulations of suppliers´ performance, in order to verify the compliance with the guidelines and methodologies established for this purpose, said assessment must comply with the parameters of: objective, scope, definition of population and sample, verification instrument, report of results and corrective action plans to close gaps or improvement opportunities identified (if applicable). 

However, Ecopetrol may carry out audits, inspections, reviews, or other types of visits to measure and verify the compliance with guidelines and methodologies of the performance process of suppliers. 

SUPPLIER CORRECTIVE ACTION PLAN

In accordance with the results of Supplier´s Performance Assessments, Ecopetrol and the supplier may agree to generate an improvement plan that allows managing and closing the gaps identified during the contract execution. The development of the improvement plan must consider the level of deviation in the qualification of the evaluated criteria and the contract execution term. For its application the suppliers must prepare a proposal of the foreseen improvement plan, and it must be approved by Ecopetrol before beginning its implementation. 
Corrective action plans are only applied to significant suppliers identified through the supplier segmentation which is carried out by Ecopetrol on an annual basis.

With the approval of the improvement plan, the supplier agrees to fully adopt and comply with the agreed actions, and Ecopetrol´ s contract monitoring official must review and ensure the quality of the deliverables and the timely closure of the settled activities.

TRACKING AND MONITORING: 

• The Ecopetrol contract monitoring official must review and ensure the quality of the deliverables and the timely closure of the settled activities. If it is identified that the actions agreed have not been implemented, the improvement plan must be suspended and invalidated. The officer must inform this situation to the supply category leader, the auditor, the technical and functional area (labor, environmental, commercial, HSE, among others) for the respective analysis and decision-making.
• The Supplier Performance Leader will monitor the coverage and effectiveness of the corrective action plans implemented to significant suppliers guarantee their assessment and development.

COVERAGE: 

In 2024, 17 significant suppliers required the development and implementation of improvement plans due to the results of their performance assessments. Therefore, Ecopetrol, in mutual agreement with these suppliers, approved the generation of the respective plans, covering 100% of the suppliers which required corrective action plans to close the identified gaps.

CORRECTIVE ACTION PLAN IMPLEMENTATION SUPPORT: 

The contract monitoring official is the responsible for the follow up and monitoring of the execution of the actions defined in the plan, ensuring the implementation with quality and timeliness of the deliverables, with the support of the functional leaders, as applicable.