OMV Petrom imposes the same legal requirements and internal standards applicable to OMV Petrom, on its suppliers, in order to mitigate supply chain risks such as forced labor, slavery, human trafficking and corruption. 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. As part of our contractual agreements, our suppliers must also accept the General Conditions of Purchase, which detail our business standards (e.g., labor rights).
The supply chain material issue is centered on our dedication to implementing sustainable procurement practices. This chapter and other sections of the report provide detailed information on how each area of the supply chain topic is managed. The Mapping Our Specific Sustainability Risks section provides details on specific supply chain risks and effects.
Our Supply Chain actions contribute to the following UN Sustainable Development Goals:
- SDG 8 – targets 8.7 and 8.8: by taking action through rules imposed along the supply chain aimed to eradicate forced labor, end modern slavery and human trafficking, and protect labor rights and promote safe and secure working environments
- SDG 16 – target 16.5: through our supply chain rules towards corruption
- SDG 17 – target 17.16: by engagement in of our suppliers in partnership s that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustain-able Development Goals
Why is this important?
To implement sustainable procurement, a company must consider the economic, social, and environmental effects of the products and services it plans to purchase. Our goals at OMV Petrom are to promote innovation, increase value contribution, and facilitate supply chain expansion. We accomplish this by utilizing our knowledge of sourcing and logistics to make certain that the best products and services are offered throughout our supply chain. Our organization places a high priority on maintaining complete compliance with all applicable legal requirements, as well as with internal standards for human rights, environmental protection, and safety, while managing our supply chain.
We strive to continuously control and reduce the carbon volume of the products and services we consume. OMV Petrom is wholly dedicated to responsible resource management and reducing global warming. We won’t be able to develop cooperative low-carbon programs to steadily reduce carbon emissions in the supply chain and contribute to Paris Agreement targets unless we collaborate with our suppliers. For this reason, OMV Petrom joined the CDP supply chain 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. Being a member of Together for Sustainability helps OMV Petrom to further embed sustainability into its day-to-day business operations and further cascade sustainability requirements within our supply chain. During TfS audits and assessments, suppliers are screened in detail on their approach with regard to the Environment, Social Responsibility, Labor & Human Rights (e.g., Employee Health & Safety, Working Conditions, Social Dialogue, Career Management & Training, Child Labor, Forced Labor & Human Trafficking, Diversity, Discrimination & Harassment, External Stakeholder Human Rights), Ethics, and the supply chain.
We aim to continuously increase the number of sustainability evaluations (respectively TfS audits and EcoVadis assessments) of our suppliers. In this regard, we defined TfS related targets for 2025 and 2030:
- By 2025, we aim to run sustainability evaluations (respectively TfS Audits and TfS Assessments) for all suppliers covering >80% of the Procurement spend.
- By 2030, we aim to extend sustainability evaluations (respectively TfS Audits and TfS Assessments) to all suppliers covering 90% of the Procurement spend.
Also, our short and medium term targets are:
- Over 20 supplier audits covering sustainability topics by 2025
- By 2030 all new suppliers screened against mandatory ESG criteria during supplier pre-qualification prior sourcing projects (baseline 2022)
- By 2030 yearly spend with local suppliers to be at least 85% out of total Procurement spend
Through supplier audits and assessments on five dimensions—financials, strategy & organization, supply chain, sustainability & HSSE, and cyber security—we gauge our suppliers’ performance and their adherence to the contractual criteria.
OMV Petrom imposes all legal requirements and internal rules and standards applicable to OMV Petrom on its suppliers. Our suppliers are obligated to fully comply with the content of our Code of Conduct.
If OMV Petrom discovers non-compliance with applicable policies or if non-compliance is not promptly resolved, OMV Petrom has the right to end partnerships with suppliers.
Understanding a supplier’s risk is crucial when determining whether and how to work with them. Through SAP Ariba, we started getting daily alerts regarding our registered suppliers in 2019. These allow us to keep an eye on their risks in the following four categories: operations, regulatory and legal, financial, and environmental and social. These risk alerts aid in the process of proactive risk management. Additionally, we have a screening procedure in place to make sure that parties which have been sanctioned by the EU or other international bodies, such the United Nations, are not accepted as procurement partners.
As part of the prequalification procedure or during the execution of the contract, OMV Petrom undertakes supplier audits. The audits’ objectives are to assess our suppliers’ performance and specify the steps that will allow them to improve upon it and adhere to OMV Petrom policies. During the audits, we pay special attention to the financial stability of our suppliers, their strategy and organization, supply chain and sustainability (e.g., human rights, carbon management, environmental management, certifications, and social responsibility) as well as their cyber security performance.
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 on 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). In 2022, all the audits with in-scope sustainability elements were performed remotely.
As part of OMV Group, we are committed to increasing the number of supplier audits: over 20 supplier audits covering sustainability topics shall be performed by 2025.
Supplier prequalification is part of precontractual activities during which OMV Petrom collects information from a potential supplier for the purpose of evaluating compliance with our HSSE and other sustainability requirements. The goal of the prequalification process is to screen potential suppliers before bringing them on board or during the tender stage to ensure that only those suppliers who meet our HSSE and sustainability standards can be considered for future collaboration.
Following prequalification, the 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.
In 2022, we have intensively and actively engaged with our suppliers on sustainable procurement practices. For all suppliers invited to respond to the CDP Climate Change Questionnaire, two awareness sessions were organized to help suppliers understand how to complete the questionnaire and why OMV Petrom needs this information.
Additionally, in March we held the first Sustainability Supplier Day with the goal of building a stronger, more sustainable supply chain by interacting and exchanging experience. Together with our suppliers we addressed topics like Circular Economy, Climate Protection and Collaboration & Innovation throughout 6 breakout sessions.
Sustainable procurement and low-carbon procurement were also topics included in the agenda of our annual strategic supplier meetings.
We conducted several awareness sessions on sustainable procurement. A significant number of buyers from OMV Petrom participated in these sessions. The main topics covered during the discussions included: what sustainable procurement entails, TfS, EcoVadis assessments, supplier pre-qualification 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).
We are continuously working to manage our supply chain in compliance with all applicable legal requirements as well as our internal standards for human rights, environmental protection and safety. We are doing so by constantly monitoring the risks associated to our suppliers and by carefully selecting them. Regular audits of our suppliers are performed to help us minimize risks while helping our suppliers increase their performance. Engaging with our suppliers to raise awareness on sustainability matters and sharing information to find way to better work together is also a necessary process.
By promoting economic growth, we hope to assist the local communities in the areas where we are active. Local purchases support the neighborhood 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 2022, OMV Petrom’s spend with local suppliers was 82.1% (e.g., in Romania alone the spend with local suppliers being 82.1%).
Carbon footprint of the Supply Chain
Our goal is to continuously control and reduce the carbon impact of the products and services we acquire. OMV Petrom is wholly dedicated to responsible resource management and reducing global warming. We will not be able to define cooperative low-carbon projects to steadily reduce carbon emissions in the supply chain and fulfill our obligations under the Paris Agreement without engaging with our suppliers.
As part of CDP Supply Chain, 43 suppliers located in Romania were invited to answer the CDP Climate Change questionnaire in 2022. Suppliers were selected based on spend, 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 delivered to OMV Petrom.
Sustainable procurement and low-carbon procurement were topics included in the agenda of our annual strategic supplier meetings. We asked the supplier about their carbon reduction targets in place in addition to reporting their emissions, and we requested them to discuss with us any activities or projects to decrease carbon emissions in which they would like us to contribute.
By 2025, suppliers covering 80% of our procurement spend, will be required to assess their carbon footprint as a foundation to define and run joint low-carbon initiatives together with OMV Petrom. We also aim that all suppliers covering over 80% of our annual procurement spend will have carbon reduction targets in place by 2030.
- We reached 11 audits for local suppliers performed by the Procurement department with sustainability and environmental aspects included,
- 65 buyers located in OMV Petrom attended awareness sessions on sustainable procurement
- 43 suppliers located in Romania were invited in 2022 to answer CDP Supply Chain questionnaire on Climate Change
- Local order rate in 2022 for OMV Petrom was 82.1% (spend with local suppliers in Romania is the same percentage 82.1%)
- 274 new suppliers were screened using environmental and social criteria therefore 100% of the new suppliers, during supplier pre-qualification prior sourcing projects
Sustainable procurement will remain a top concern in the coming years as procurement processes continue to advance in many ways. Our three future focus areas will be as follows:
- 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)
We intend to expand the CDP Supply Chain project launched in 2021 and increase the number of supplier engagements in the upcoming years.
A dedicated Sustainable Procurement department was established in April 2022, responsible for defining the Sustainable Procurement agenda, and for implementing and monitoring Sustainable Procurement ambitions and targets.