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 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.
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:
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:
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.
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:
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:
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:
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.
|Aspect||Rating process||Rating audit||Social audit|
|Energy efficiency management||YES||YES||YES|
|Incidents (verbal, psychological, or phyYEScal abuse; coercion; or harassment)||NO||YES||YES|
|Wages and remuneration||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|
|Policies and code of ethics||YES||YES||YES|
|Controls and logs||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|