How BBVA Embedded ESG Criteria into Supplier Risk Assessment

BBVA began by creating a working group with representatives from Procurement and Sustainability. This ensured that the model was not developed only as a procurement procedure or only as a sustainability exercise, but as a shared risk management tool. 

The Procurement team contributed knowledge of supplier management, sourcing processes and operational requirements. The Sustainability team contributed ESG expertise, helping define which sustainability dimensions should be included and how they should be assessed. A dedicated team was set up within the Procurement department, with members contributing to the project.

Before defining its own model, BBVA analyzed different sustainability assessment models to identify a suitable approach for evaluating suppliers.

This step helped the company consider whether to adopt an external supplier sustainability assessment solution or develop an internal model. BBVA’s process recognized that the solution needed to fit the company’s governance model, procurement processes and risk management expectations.

One of the most important design decisions was to establish common minimum standards at Group level. BBVA described these as “minimum sustainability assessment criteria”: common criteria that would provide a consistent risk baseline across geographies and suppliers. These criteria include, for example, considering ongoing litigation related to environmental or social issues, low sustainability questionnaire scores and reputational concerns.

This was central to the model because BBVA operates across different markets, each with its own regulatory environment, supplier base and operational realities. Without common minimum standards, the supplier sustainability assessment could become fragmented, inconsistent or difficult to compare.

BBVA embedded sustainability as a core dimension of supplier risk assessment. The process applies to all suppliers assessed under the model, including both new suppliers during onboarding and existing suppliers already working with the Group. Suppliers are evaluated through a structured methodology that results in a sustainability risk classification: Low, Medium or High. 

This classification determines the level of oversight applied to each supplier. Higher-risk cases are subject to enhanced expert review, helping incorporate sustainability considerations into procurement decisions. The follow- up approach depends on the nature and materiality of the identified risk and is integrated into BBVA’s broader supplier governance framework. The assessment is carried out annually or every two years, depending on the supplier’s risk level. 

BBVA also complements the supplier assessment with external reputational information sources to support the sustainability risk analysis. This helps the Group avoid relying only on supplier self-declarations and provides an additional view of potential ESG risks.

The sustainability module covers the three ESG dimensions. 

• On the environmental side, the model considers aspects related to compliance with environmental regulations and the management and measurement of environmental impacts. 
• On the social side, it addresses issues such as compliance with social regulations, working conditions, human rights and labour rights. 
• On governance, it considers areas such as regulatory compliance, sustainability reporting and the application of sustainability standards within the supplier’s own supply chain. 

This scope helps procurement teams to incorporate ESG-related information into supplier assessments.

Before rolling out the framework more broadly, BBVA conducted a pilot with a group of its most relevant suppliers, selected based on procurement spend. Most of the suppliers included in the pilot were global companies from sectors such as IT, infrastructure, business supplies and professional services. The pilot was used to test and validate the model.

This step helped the company understand how the framework worked in practice, how suppliers responded to the assessment and whether the methodology produced useful risk insights. The pilot program also allowed the company to better understand the market’s level of maturity regarding certain sustainability aspects. 

The pilot also gave suppliers an active role in shaping the model. Their participation helped BBVA test the framework against real supplier information and operational conditions. Based on the pilot results, BBVA adapted the questionnaire before rolling out the model more broadly.

After the pilot, BBVA developed a standardized procedure for implementation across its footprint. The procedure set a common approach for applying the sustainability risk module and helped promote a more consistent application across the Group.

To support the rollout, BBVA updated its vendor risk management tool so the new risk module could be applied and monitored within existing procurement processes. This helped incorporate sustainability assessment into existing operational workflows, rather than a separate or parallel exercise.

By integrating the module into procurement tools, BBVA strengthened the comparability and quality of supplier information collected across the Group and improved transparency in the application of common sustainability risk standards.

In addition to assessing supplier sustainability risk, BBVA promoted sustainability training for suppliers through the UN Global Compact’s Spanish Network.

This program has supported hundreds of suppliers, helping them strengthen their sustainability management capabilities and better understand emerging sustainability requirements.