Supply Chain

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 throughout our supply chain. This involves working closely with our partners, contractors, and suppliers. 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 when managing our supply chain. By integrating sustainability requirements throughout our supply chain (e.g., audits, assessments, sustainability criteria in sourcing) we aim to drive a positive change in the sustainability performance of our suppliers and contractors while mitigating potential negative impacts such as economic disturbance due to delays in payment. Our purchased goods and services are for all our business areas (Chemicals & Materials, Energy, and Fuels & Feedstock) and include, among others, those related to raw materials, wells, IT, consultancy, engineering, logistics, and retail.

Specific Policies and Commitments

To mitigate supply chain risks, including forced labor, slavery, human trafficking, and corruption, the OMV Group 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 OMV Code of Conduct, and our supply chain partners are required to sign the OMV Code of Conduct. In addition, our suppliers must accept the OMV 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.

OMV’s Corporate Procurement Directive was revised in 2023. Two of the main changes were the introduction of sustainability criteria as part of the commercial evaluation and sustainability embedded in the Supplier Relationship Management process. To ensure we have a standardized approach to payment conditions for our suppliers and contractors, we have 60-day standard payment terms stipulated in the Corporate Procurement Directive.

Governance

OMV Procurement is organized as an integrated function and covers day-to-day procurement activities across the entire OMV Group (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 Procurement Units that cover aspects such as Operations & Materials, Raw Materials & Packaging, and Retail & Business Services. A dedicated Sustainable Procurement & Supplier Innovation department established in April 2022 continued to work toward meeting the sustainable procurement ambitions and targets for 2025 and 2030.

Management and Due Diligence Processes

Supplier Relationship Management (SRM)

A new SRM framework was developed in 2022 and subsequently rolled out in 2023, with the focus on managing the strategic relationship with our suppliers and contractors.​ Thanks to the new SRM framework, sustainability is now part of supplier segmentation, supplier performance, supplier meetings, and supplier innovation.

To support the OMV Group on its transformation journey to become a leader in innovative sustainable fuels, chemicals, materials, and the circular economy, it is crucial to ensure that suppliers are encouraged to innovate. This helps unlock their potential, and the innovative solutions they develop provide an opportunity to enhance and strengthen partnerships between the Company, Procurement, and suppliers.

Prequalification

Supplier prequalification is part of precontractual activities, during which OMV collects information from a potential supplier with the purpose of evaluating compliance with our HSSE and sustainability requirements. The goal of the prequalification process is to screen potential suppliers before bringing them on board to ensure that only those suppliers that meet our HSSE and sustainability standards can be considered for future collaboration.

The prequalification is based on a standardized list of elements and objectives that aligns with the OMV Group’s HSSE Management System (e.g., HSSE Policy, ISO 9001, 14001, 45001) and our Sustainability Framework (e.g., Sustainability Policy, Human Rights Policy, and Grievance Mechanisms). At 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 (TfS) Audit and Assessment report. We categorize high-risk countries by considering human rights, environmental, and ethical aspects.

Supplier Selection

Following prequalification, Procurement and business representatives select the best suppliers based on a predefined set of commercial and technical criteria during a tender process. To support the overall OMV Group Sustainability Targets 2030 and the Sustainable Procurement ambition to give sustainability a “value” in sourcing, the Procurement department included two criteria to assess the sustainability performance of the bidders in their commercial evaluation: the EcoVadis score and participation in the CDP Supply Chain.

Risk Assessments

Understanding a supplier’s risk is an important factor in deciding whether and how we conduct business with the supplier. Since 2019, we have been 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 apply a preventive risk management process. Furthermore, OMV has 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.

Audits

OMV conducts two types of audits of its suppliers and contractors: on-site Together for Sustainability audits that focus on the sustainability performance of a company, and remote full-scope audits performed by an external auditor. The audits are carried out 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 full-scope audits, we pay special attention to the financial stability of our suppliers, their strategy and organization, supply chain, sustainability (e.g., social and environmental issues), and their cybersecurity performance.

Each audit finding classified with a red flag is followed up and analyzed by the Procurement team in collaboration with business representatives and any other relevant function (e.g., HSSE, Legal, Internal auditing, and Compliance). Information on the outcome of the audit is made available to the supplier, and the supplier is requested to submit a proposed corrective plan with concrete measures and an implementation timeline. In 2023, 22 audits resulted in follow-up measures.

Together for Sustainability (TfS)

Since 2021, OMV has been a member of Together for Sustainability (TfS). As a joint initiative and global network of 50 companies, TfS sets the de facto global standard for the environmental, social, and governance performance of chemical supply chains. The TfS program is based on the principles of the UN Global Compact and Responsible Care®^®. Being a TfS member helps OMV further embed sustainability into its day-to-day business operations and further cascade sustainability requirements within our supply chain.

The OMV Procurement department has defined TfS-related targets for 2025 and 2030:

• By 2025, we aim to run sustainability evaluations (TfS Audits¹ TfS Audits are conducted by an approved external auditor and can be on site, remote, or a hybrid of the two. They cover a single or combined business location such as a production site or warehouse. Sustainability performance is verified against a defined set of audit criteria. and TfS Assessments² TfS Assessments are conducted by TfS partner and service provider EcoVadis, a global leader in CSR assessments, via a secure online platform. The assessment questionnaire is adapted to the size, country of origin, and business sector of the company being assessed and results in a score at the end (the EcoVadis score).) for all suppliers covering >80% of the Procurement spend.
• By 2030, we aim to extend sustainability evaluations (i.e., TfS Audits and TfS Assessments) to all suppliers covering 90% of the Procurement spend.

Supply Chain Carbon Transparency

We aim to continuously manage and decrease the carbon volume of our purchased goods and services. OMV is fully committed to climate change mitigation and responsible resource management. Only by working together with our suppliers will we be able to define joint low-carbon initiatives to continuously decrease the carbon emissions in the supply chain and meet our Paris Agreement commitments.

As part of its CDP Supply Chain membership, in 2023 OMV invited 394 suppliers to respond to the CDP climate change questionnaire. Suppliers were selected based on spend, estimated carbon emissions volume, and the carbon intensity of the goods and services purchased from them. In addition to reporting their emissions, we asked the 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.

Supplier Capacity Building

OMV works together with its suppliers to improve overall sustainability performance. For instance, in 2023, individual meetings and webinars were offered to our suppliers to help them better understand the requirements of the CDP climate change questionnaire or the TfS Assessment, and why this information is important to OMV. Additionally, the topics of sustainable and low-carbon procurement were also included in the agenda of our annual strategic supplier meetings (e.g., Innovation – How can we create sustainable value through innovation?​ Climate Change – How can we build successful alliances on the path to net zero?​ Circular Economy – How can we collaborate to effectively implement circular solutions?).

Local Content

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, as well as the potential for a lower carbon footprint from the reduced transportation distance of the goods purchased. The spend with local suppliers in 2023 at Group level was 71.2%.

2023 Actions

In 2023, we actively engaged not only with our suppliers, but also with buyers on sustainable procurement and supplier innovation practices. 205 buyers from OMV, OMV Petrom, and Borealis participated in several awareness sessions throughout the year. The focus was on engaging buyers on sustainable procurement, supplier relationship management, and supplier innovation.

In October 2023, we organized the second Supplier Sustainability and Innovation Day, with the aim of interacting and exchanging experiences with our suppliers and having the opportunity to build a stronger and more sustainable supply chain. More than 350 participants from the suppliers’ side and the OMV Group attended the event. Together with our suppliers, we addressed topics such as climate change, the circular economy, and innovation (e.g., Climate Change – How can we build successful alliances on the path to net zero?​ Circular Economy – How can we collaborate to effectively implement circular solutions? Innovation – How can we create sustainable value through innovation?). The key presenters from OMV Group included OMV Group CFO, CEO of OMV Petrom, CEO of Borealis, OMV Group SVP of Innovation & Technology, and OMV Group SVP of Procurement.

Outlook

OMV Procurement is constantly striving to improve in various areas, and in the coming years, sustainable procurement will take 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 will aim to integrate sustainability criteria into award decisions, such as CO₂ emissions per kg product)
• Low-carbon procurement (e.g., we will aim to continuously manage and decrease the carbon volume of purchased goods and services)