To mitigate supply chain risks including forced labor, slavery, human trafficking, and corruption, OMV Petrom imposes the legal requirements and its internal rules and standards on its suppliers. Our suppliers are obligated to fully comply with the content of the Code of Conduct and our supply chain partners are required to sign the Code of Conduct. In addition, our suppliers must accept our General Conditions of Purchase, which further detail our business standards (e.g., labor rights), as an integral part of our contractual agreements. Our commitment to implement sustainable procurement practice is the focus of the Supply Chain material topic. Specific information on how each of the aspects of the Supply Chain topic is managed is found throughout this chapter and other parts of the report. Specific Supply Chain risks and impacts are detailed in the Mapping Our Sustainability Risks section.
Why is this important?
Implementing sustainable procurement means caring about the environmental, social, and economic impacts of the goods and services the company intends to purchase. At OMV Petrom, we aim to foster innovation, maximize value contribution, and enable supply chain growth. We achieve this by applying our sourcing and logistics expertise to ensure that the highest-quality materials and services are provided through our supply chain. It is of paramount importance to our organization to be fully compliant with all applicable legal requirements, as well as with our internal safety, environmental protection, and human rights standards while managing our supply chain.
We aim to continuously manage and decrease the carbon volume of our purchased goods and services. OMV Petrom is fully committed to climate change mitigation and responsible resource management. Only by working together with our suppliers we will be able to define joint low-carbon initiatives to continuously decrease the carbon emissions in the supply chain and meet our commitments to the Paris Agreement. For this reason, OMV became a Climate Disclosure Project (CDP) Supply Chain member in 2021.
Together for Sustainability (TfS) – In 2021, OMV as a Group joined TfS. The TfS program is based on the UN Global Compact and Responsible Care® principles. Becoming a member of Together for Sustainability will also help OMV Petrom to further embed sustainability in day-to-day business operations and cascade sustainability requirements in our supply chain.
We are committed to increasing the number of supplier audits; over 20 supplier audits, covering sustainability topics shall be performed by 2025.
We measure our suppliers’ performance and their compliance to the contractual requirements through supplier audits and assessments on five dimensions: financial, organization, supply chain, sustainability and cyber security.
OMV Petrom reserves the right to terminate relationships with suppliers if non-compliance with applicable policies is discovered or if non-compliance is not addressed in a timely manner.
Understanding a supplier’s risk is an important factor in deciding whether and how we do business with the supplier. In 2019, we began receiving daily alerts about our registered suppliers through SAP Ariba. These enable us to monitor their risks in four categories: Environmental and Social, Finance, Regulatory and Legal, and Operations. These risk alerts help us to conduct a preventive risk management process. Furthermore, we have a screening process in place to ensure that parties sanctioned by the EU or international organizations, such as the United Nations, are not accepted as procurement partners.
OMV Petrom conducts supplier audits as part of the prequalification process and/or during contract implementation. The aim of the audits is to measure the performance of our suppliers and define actions that will enable them to optimize their performance and meet OMV Petrom’s requirements. During the audits, we pay special attention to the financial stability of our suppliers, their strategy and organization, and the supply chain and sustainability (e.g., human rights, carbon management, environmental management, certifications, and social responsibility). In 2021, we added the cyber security dimension to our supplier audits. We also perform yearly subject-specific audits on topics such as process safety, quality, and efficiency. During the supplier audits, we place great emphasis on understanding not only the management approach of the topics within the scope of the audits (e.g., HSSE aspects), but also how the topics are understood and applied by the employees on site (e.g., through on-site discussions with workers and managers). All the audits with in-scope sustainability elements were performed remotely in 2021 due to COVID-19 travel limitations.
Following prequalification, Procurement department together with business representatives select the best suppliers based on a pre-defined set of commercial, legal, HSSE and technical criteria during a tender process. In 2021, we started embedding sustainability elements into the evaluation matrix (e.g., technologically innovative elements, carbon emissions, energy efficiency KPIs) in several pilot projects.
Individual meetings and webinars were organized in 2021 to help suppliers understand how to fill out the CDP questionnaire and why this information is important to OMV Petrom.
In addition to reporting their emissions, we asked suppliers whether they have carbon reduction targets in place and invited them to share with us any initiatives or projects to reduce carbon emissions in which they would like us to participate.
We provide awareness sessions on sustainable procurement. A significant number of buyers from OMV Petrom participated in these sessions. The focus was on what sustainable procurement means and what can be done to incorporate sustainability into core procurement processes and day-to-day operations (e.g., carbon footprint of purchased good and services, sustainability in tenders).
Sustainable procurement and low-carbon procurement were also topics included in the agenda of our annual strategic supplier meetings.
In 2021, we worked specifically on increasing the number of suppliers audited. Audits containing sustainability elements were performed at 14 suppliers of OMV Petrom.
We also conducted several awareness sessions on sustainable procurement. More than 20 buyers from OMV Petrom participated in these sessions. The focus was on discussing with buyers what sustainable procurement means and what can be done to incorporate sustainability into core procurement processes and day-to-day operations (e.g., carbon footprint of purchased good and services, sustainability in tenders).
Moreover, in the previous year, Procurement department defined an internal tool to assess the impact of COVID-19 on selected suppliers based on how critical they are to our business. The COVID-19 assessment focused on topics related to the financial stability of suppliers, their risk of insolvency/bankruptcy, downsizing, and Group’s dependence on the products and services delivered by the respective supplier. A COVID-19 supplier risk score was calculated based on the assessment by the Procurement category managers after a prior meeting with the selected suppliers and business representatives. For all high-risk suppliers, we have defined mitigation measures and are monitoring them closely to ensure no interruptions will affect our business. In 2021, we continued monitoring the impact of COVID-19 on our most critical suppliers.
We aim to support the local communities in the locations where we operate by fostering economic development. Local procurement strengthens the local economy and meets the local procurement expectations of neighboring communities. Increased local procurement has had the added benefit of reducing business disruption in recent years. In 2021, OMV Petrom’s spend with local suppliers was 90.3% (e.g., in Romania alone the spend with local suppliers being 90.7%).
Carbon footprint of the Supply Chain
We aim to continuously manage and decrease the carbon footprint of our purchased goods and services. OMV Petrom is fully committed to climate change mitigation and responsible resource management. Only by working together with our suppliers we will be able to define joint low-carbon initiatives to continuously decrease carbon emissions in the supply chain and meet our commitments to the Paris Agreement.
As part of CDP Supply Chain, 38 suppliers located in Romania were invited to answer the CDP Climate Change questionnaire in 2021. Suppliers were selected based on their estimated carbon emissions volume and the carbon intensity of the goods and services purchased from them. We also asked the selected suppliers to submit to us their Scope 1, Scope 2 and Scope 3 emissions, as well as emissions allocated to products and services. Moreover, individual meetings and webinars were organized in 2021 to help suppliers understand those topics.
In addition to reporting their emissions, we asked the suppliers whether they have carbon reduction targets in place, and we invited them to share with us any initiatives or projects to reduce carbon emissions in which they would like us to participate. Sustainable procurement and low-carbon procurement were also topics included in the agenda of our annual strategic supplier meetings. Because OMV became a CDP Supply Chain member in 2021, OMV Petrom’s suppliers are part of the CDP Supply Chain engagement.
14 audits for local suppliers with sustainability aspects included.
More than 20 of OMV Petrom’s buyers attended awareness sessions on sustainable procurement.
38 suppliers located in Romania were invited in 2021 to answer CDP Supply Chain questionnaire on Climate Change.
In 2021, we reached 14 audits performed by the Procurement department with sustainability elements included while in 2020, were performed 12 audits.
Our procurement practices are constantly improving, and, in the coming years, sustainable procurement will be a high priority; our three focus areas for the future will include:
- Sustainable suppliers (e.g., only suppliers who meet our sustainability requirements will be eligible to participate in tenders)
- Sustainable sourcing (e.g., we aim to integrate sustainability criteria into award decisions, such as CO2 emissions per kg product)
- Low-carbon procurement (e.g., we aim to continuously manage and decrease the carbon volume of purchased goods and services)
For the coming years, we plan to expand the CDP Supply Chain initiative started in 2021 and increase the number of supplier engagements.