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Human rights Suppliers and contractors

Suppliers and contractors

We use a supplier management system to prevent the risk of human rights violations that may arise from our supply chain relationships.

We promote respect for human rights by suppliers, contractors, and distributors, and we check that our business relationships' conduct is in line with our commitments through our selection, rating, and monitoring processes.

Each year, we work to strengthen our relationship with our supply chain. This allows us to exercise our influence and prevent the risk of human rights being violated. We also make an effort to see that they maintain adequate ethical, social, and environmental standards in line with our internal regulations. Furthermore, we also include special clauses concerning respect for human rights in our contracts.

Responsible management of our suppliers and contractors

Responsible supply chain management is one of the fundamental aspects of our risk prevention and mitigation process because it identifies specific risks and is linked to job creation and local economic development, one of the main expectations of the communities in which we operate. 

We have regulations and a supply chain management system that ensure the integrity of the Company's relations with its suppliers and contractors, thereby ensuring that the behavior of our contractors and suppliers is in line with our commitments. Through our action criteria and our General Conditions for Purchasing and Contracting, we seek integrity in our relationships with our value chain in regard to the environment, safety, ethical behavior, and human rights. Furthermore, our Code of Ethics and Business Conduct for suppliers sets out behavior guidelines for the companies we work with.

Similarly, in our business relationships we require compliance with internationally recognized standards, as well as the provisions on safety, the environment, ethical behavior, and respect for human rights that are currently in force in our internal regulations. When a supplier or contractor is not able to fulfill these principles, it is not authorized to take part in requests for quotations, nor can it be awarded orders or contracts. Subcontractor companies must also pass our rating process, depending on the level of criticality of the service that they are providing and the type of Repsol facility where they will perform their activity.

The structure of our General Conditions for Purchasing and Contracting replicates all the obligations of our contractors to their subcontractors and checks them throughout the the entire supply chain process. These include the requirements demanded in the tender specifications, aspects qualified and weighted in the technical evaluation, contractual obligations, performance assessment, etc.

In addition, by distributing the Code of Ethics and Business Conduct for Suppliers to our suppliers, we ensure that their subcontractors comply with these ethical, social, and environmental standards.

Supplier evaluation process

Our supply chain management system evaluates suppliers to identify the financial, technical, social, ethical, or environmental risks at the different stages of the business relationship that we are setting up:

  • Using the supplier register, we identify potential suppliers for different goods and services and we supply them with the requirements that they must meet in order to qualify, such as the conduct guidelines in the Code of Ethics and Business Conduct for Suppliers.
  • During the rating phase, we check whether the supplier is suitable to supply a good or service by analyzing business, financial, and technical aspects and the quality, safety, and environmental management systems implemented, in addition to ethical and human rights factors.
  • During negotiations with the supplier, we add a special sustainability clause to the General Conditions for Purchasing and Contracting, with which the supplier must comply.
  • After the work has been done or while it is underway, we evaluate the supplier's performance. In this evaluation, we analyze whether the work carried out by the supplier meets the required standards in terms of management, quality, safety, environment, employment, ethics, and human rights. This assessment also helps to complete the information on the supplier or contractor during the re-rating process and serves to establish a systematic, documented assessment process containing the most significant aspects of the relationship with current suppliers. At least one performance assessment of all suppliers who have a high level of criticality and have delivered goods or performed services during the past year must be carried out annually.
  • With the results of the assessments, and taking into account the needs of the business, we can decide to develop a supplier by following various alternatives permitted by the regulations.

Control mechanisms

The rating process 

Our supplier rating process tries to mitigate the risks originating in the supply chain by identifying critical suppliers and checking their suitability to supply the different goods and services in a sustainable manner. It analyzes business, financial, and technical aspects and the quality, safety, and environmental management systems implemented, in addition to ethical and human rights factors. The depth of the process depends on the amount and the criticality of the purchase or contract in question. 

To define the levels of criticality, we take into account the impact that a failure to supply goods and services could have on operating processes and on aspects such as safety, accidents, employment, environment, brand image, and ethics and human rights, etc. Therefore, we set four levels of criticality: very low, low, medium, and high. The level of criticality assigned to an activity sets the minimum requirements for supplier rating, but in certain circumstances it may be considered advisable to increase the requirements when entering into long-term or large-volume contracts, or in the case of activities that could have a significant impact on nearby communities.

To rate a supplier with very low criticality, at Repsol we require the supplier's identification details.

To rate a supplier with low criticality, the supplier must fill out a simple rating questionnaire that includes business, economic-financial, and technical information, details of the quality, safety, and environmental management systems in place, and ethical and human rights topics, which will be validated by the different specialists.

For suppliers rated as having medium or high criticality, we require the supplier to fill out an advanced rating questionnaire, which takes a more in-depth look at the same business, economic-financial, and technical aspects, details of the quality management, safety, and environmental systems in place, and ethical and human rights topics. This questionnaire also requires the approval of the different specialists. 

After being rated, suppliers receive approval to supply a good or service for a maximum period of four years. At the end of this period, their abilities are re-analyzed to evaluate whether it is possible to extend this validity for the same period of time. For the first rating renewal, it will be possible to simplify the process by passing an analysis of their economic and financial situation, in addition to positive performance during the period for which they were rated.

Under our spirit of continuous improvement, we are reviewing our supplier rating process, studying the introduction of changes in three areas: 

  • Not basing the rating on the completion of questionnaires but on the provision and verification of rating evidence, which will be specific to each activity. 
  • Not continuing the supplier rating for the maximum of four years, but to have the period of validity depend on the expiry and renewal of the required rating evidence, so that these must be continually updated. 
  • Incorporating occasional and periodic checks of suppliers using external verification services for aspects related to integrity, corruption, and bribery. 

We are also working on a new supplier rating procedure that will include the supplier's explicit acceptance of the Code of Ethics and Business Conduct for Supplier as a mandatory requirement for rating.

Lastly, to rate a supplier with high criticality, they must undergo an audit in which we review the accuracy of all the information handed in by means of a visit and interviews with various employees at the supplier's facilities. 

These analyses are complemented by technical audits if the technical specialists deem it necessary, and social audits of ethics and human rights aspects is the activity-country combination acquires a high reputational risk. In this latter case, we can also conduct audits of suppliers whose relations with the country of supply does not involve any high potential risk. 

Audits 

Part of the supply chain management system involves conducting audits and performance assessments to identify social, ethical, or environmental risks and taking action to correct them in time. Our concern for the economic development of the places in which we operate is ongoing, especially in regard to the local suppliers that we contract. For this reason, we use a variety of Supplier Management tools during the Purchasing Process. 

Our purchasing and contracting regulations require the performance of:

  • Rating audits on suppliers to check the information provided during the rating process. 
  • Performance assessments that analyze the work performed and are used to complete the information on the supplier or contractor should they have to be re-rated. 
Before beginning their commercial relationship with us, suppliers and contractors must have passed a mandatory rating audit in accordance with the criticality of the goods or services they are to provide. In the case of high-criticality suppliers, we also require an audit. These are mainly conducted by external firms, although some are conducted by Company employees. These audits look at economic and financial aspects; quality, safety, and environmental management; and manufacturing processes. 

Our performance assessments set up a systematic, documented evaluation process of the most significant aspects of our relationship with current suppliers. By assessing performance, we can identify potential risk situations. When we identify breaches, we work with our suppliers to propose correction measures. Through this assessment we aim to: 

  • Quantitatively measure performance to make decisions in the most objective way possible. 
  • Have a tool to maintain or modify the supplier rating status. 
  • Take additional criteria into account when selecting suppliers to take part in requests for quotation. 

At least one performance assessment of all suppliers who have a high level of criticality and have delivered goods or performed services during the past year must be carried out annually. The variety of goods and services acquired by the Company makes it difficult to create a single set of assessment criteria, and so the different units have developed criteria suited to their area and gradually incorporated them into their quality, information, and/or supplier agreement monitoring systems. However, these indicators must include management, quality, safety, and environmental factors. 

In all cases, the aspects that are mandatory in supplier assessments are: 

  • Quality: functional aspects and/or the performance of the goods or service.
  • Management: operational, commercial and social responsibility-related aspects of the supplier. 
  • Safety: relating to people or goods. 
  • Environment: Compliant with current legislation and regulations.
The various audits enable us to identify and assess the impact of the supplier on labor practices, human rights, corruption, and safety and the environment. The depth at which we analyze the different factors is greater when the supplier's level of criticality is higher due to the type of good or service provided or the place in which it is manufactured or provided. As a general rule, in rating audits, we mainly review the quality, safety, and environmental management systems, in addition to the code of ethics, respect for human rights, labor practices, and measures against fraud and corruption, verifying that the information provided in the rating process is accurate.
The social audits analyze the aspects covered by the rating audit in more detail, as well as the supplier or contractor's supply chain management. 

Most of our audits are conducted by external auditors. The final reports are sent to all the audited suppliers so that they can implement an action plan, allowing them to improve the aspects identified during the audit. 

When we end a contractual relationship with a supplier, we try to mitigate the possible negative impacts by including measures to ensure the contract is properly transferred within the contract itself. To do this, a period is set during which the previous and next supplier work together. This guarantees process continuity and prevents negative impacts, as well as ensuring the correct transfer of information. We also try to prevent these situations by disqualifying suppliers for poor performance in ethical, environmental, labor, or human rights factors, and we include auditing clauses in the contracts that allow us to review their performance. 

Another preventive measure that helps us to mitigate risks to our supply chain is the meetings we organize to explain all the purchasing procedures and regulations that we demand, in particular our safety days that are aimed at contractors who provide different services at our industrial facilities. Our recognition of suppliers with the best safety performance allows us to further foster a culture of safety and prevent potential impacts on our operations.

In addition, we have introduced a new tool that allows us to conduct occasional and periodic supplier reviews to check and track the information on corruption and bribery that they have provided. Lastly, we continue to review the terms and conditions of our contracts to include specific clauses on safety, the environment, respect for human rights, and anti-corruption, as well as conducting audits of these issues. Suppliers and contractors who do not comply with our standards and requirements are not authorized to take part in our requests for quotation, nor can they be awarded orders or contracts. 

The structure of our General Conditions for Purchasing and Contracting replicates all the obligations of our contractors to their subcontractors and checks them throughout the entire supply chain process. Subcontractor companies must also pass the rating process. Our Code of Ethics and Business Conduct for Suppliers contains guidelines on how they should carry out their activities, as well as their own business relationships. We require all suppliers to share and adopt the Code’s action guidelines.

Supplier evaluation process

Aspect Rating process Rating audit Social audit
Environmental YES YES YES
Environmental management YES YES YES
EmisYESons management YES YES YES
Energy efficiency management YES YES YES
Waste management YES YES YES
Labor-related
Employment practices YES YES YES
Health practices YES YES YES
Safety management YES YES YES
Incidents (verbal, psychological, or phyYEScal abuse; coercion; or harassment) NO YES YES
Wages and remuneration YES YES YES
Work schedule YES YES YES
Human rights
Child labor YES YES YES
Forced labor YES YES YES
Discrimination YES YES YES
Freedom of association and the right to collective bargaining YES YES YES
Rights of indigenous people NO NO YES
Management of security forces and training YES YES YES
Anti-corruption
Policies and code of ethics YES YES YES
Controls and logs NO YES YES
Training NO YES YES
Supply chain management
Supplier evaluation and selection process NO NO YES
Audits and controls NO NO YES
Respect for human rights NO NO YES
Labor practices NO NO YES
Safety management NO NO YES
Environmental management NO NO YES