Supply Chain

Material Topic: Supply Chain

Considering social and environmental factors (e.g., business ethics, safety, and carbon footprint of suppliers) in supply chain management.

Key GRI

  • 204: Procurement Practices 2016
  • GRI 308: Supplier Environmental Assessment 2016
  • GRI 414: Supplier Social Assessment 2016

NaDiVeG

  • Respect for human rights
  • Employee and social concerns
  • Corruption prevention
  • Environmental concerns

Most relevant SDGs

Implementing sustainable procurement means caring about the environmental, social, and economic impacts of the goods and services the Company intends to purchase. At OMV, 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.

Specific Policies and Commitments

To mitigate supply chain risks including forced labor, slavery, human trafficking, and corruption, OMV imposes the legal requirements and internal rules and standards applicable to OMV 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 the General Conditions of Purchase, which further detail our business standards (e.g., labor rights), as an integral part of our contractual agreements. OMV 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.

Governance

OMV Procurement is organized as an integrated function and covers day-to-day procurement activities across the entire OMV Group (e.g., including OMV Petrom and Borealis). OMV Procurement is led by the Chief Procurement Officer who reports to the Chief Financial Officer. From an organizational perspective, OMV Procurement is split into several departments that cover aspects such as Operations & Materials, Raw Materials & Packaging, and Retail & Business Services.

Management and Due Diligence Processes

Prequalification

Supplier prequalification is part of precontractual activities during which OMV collects information from a potential supplier for the purpose of evaluating compliance with our 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. The prequalification is based on a standardized list of elements and objectives according to the OMV Group’s HSSE Management System (e.g., HSSE Policy; 9001, 14001, 45001) and our Sustainability Strategy (e.g., Sustainability Policy, Human Rights Policy, Grievance Mechanisms). In Borealis, especially for raw materials and packaging, suppliers located in a so-called “high-risk” country are asked to submit a positive Together for Sustainability () audit and assessment report. We define high-risk countries by considering human rights, environmental, and ethical aspects.

Supplier Selection

Following prequalification, Procurement together with business representatives select the best suppliers based on a predefined 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 ) in several pilot projects.

Risk Assessments

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 conduct a preventive risk management process. Furthermore, OMV has a screening process in place to ensure that parties sanctioned by the or international organizations, such as the United Nations, are not accepted as procurement partners.

Audits

OMV conducts supplier audits as part of the prequalification process and/or during contract execution. 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 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 a new cybersecurity 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.

2021 Actions

24 audits performed by OMV Procurement with sustainability elements included

149 TfS (re)assessments

More than 90 buyers across all locations attended awareness sessions on sustainable procurement.

Together for Sustainability (TfS)

24 audits performed by OMV Procurement with sustainability elements included

149 TfS (re)assessments

More than 90 buyers across all locations attended awareness sessions on sustainable procurement.

OMV is transforming from a traditional oil and gas company into a global gas, oil, and chemicals group. Borealis has been an active member of Together for Sustainability (TfS) since 2017. Together for Sustainability, a joint initiative and global network of 34 chemical companies, sets the de facto global standard for environmental, social, and governance performance of chemical supply chains. The TfS program is based on the Global Compact and Responsible Care® principles.

In 2021, OMV joined TfS and expanded the membership to Group level. OMV aims to build on Borealis’ expertise and cover a broader range of assessments for our suppliers in the coming years. Becoming a member of Together for Sustainability will help OMV to further embed sustainability in day-to-day business operations and cascade sustainability requirements in our supply chain.

Training

In 2021, we conducted several awareness sessions on sustainable procurement. More than 90 buyers from OMV, OMV Petrom, and Borealis 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 goods and services, sustainability in tenders).

COVID‑19

In 2020, OMV Procurement 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 OMV’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 OMV 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.

Outlook

OMV Procurement is constantly striving to improve in various areas, and in the coming years, sustainable procurement will be a high priority. Our three focus areas for the future will be:

  • Sustainable suppliers (e.g., only suppliers who meet OMV’s sustainability requirements will be eligible to participate in tenders)
  • Sustainable sourcing (e.g., we aim to integrate sustainability criteria into award decisions, such as emissions per kg product)
  • Low-carbon procurement (e.g., we aim to continuously manage and decrease the carbon volume of purchased goods and services)
GRI
Global Reporting Initiative
HSSE
Health, Safety, Security, and Environment
ISO
International Organization for Standardization
TfS
Together for Sustainability
KPIs
Key Performance Indicators
EU
European Union
UN
United Nations
ESG
environmental, social, and governance
CO2
carbon dioxide
TfS
Together for Sustainability