We make every effort to promote our standards and principles throughout the procurement process - when evaluating and selecting suppliers, in tenders, contracts and agreements, through risk-based verification, monitoring and follow-up.
In general, we expect all our partners, including suppliers, to follow our standards or an equivalent set of standards. However, we also recognise that, in many of the countries where we work, local suppliers may not currently meet these requirements. In such cases we aim to work with our suppliers to improve their skills and capacity.
All suppliers based in Norway or Denmark, or supplying our operations on the Norwegian or Danish continental shelves have to be prequalified through the Achilles Joint Qualification System (JQS).
Potential suppliers are informed about our HSE requirements in the invitation to tender and the pre-qualification phase prior to contract award. The specific HSE requirements are then included in the contract and form the basis for follow-up of the supplier's performance through the contract administration phase.
Prior to contract award, suppliers are screened for material integrity risks and, when relevant, subject to further Integrity Due Diligence (IDD). Through the IDD procedure we screen all potential business relationships, including those with suppliers, for integrity and human rights reputation risks. A business relationship with a potential supplier is only established if the resulting relationship is considered to represent a non-material integrity risk, or has previously been approved by Statoil.
All our potential suppliers for contracts worth more than NOK 7 million are also required to sign a Supplier Declaration in the pre-qualification phase, whereby they commit to a set of minimum standards for ethics and anti-corruption, HSE and CSR, including core labour standards and employment conditions. Moreover, as part of this, suppliers agree to promote these principles among their own sub-suppliers. The Supplier Declaration is then made part of the contract agreement. Throughout 2009, we have strengthened the Supplier Declaration follow-up and monitoring routines and provided training for company representatives in implementation and follow-up of the Supplier Declaration..
Throughout 2009, we also continued to review our supply chain management procedures and systems in order to assess their effectiveness in promoting decent labour standards and working conditions as outlined in the core conventions of the International Labour Organisation (ILO). Topics addressing labour standards have also been included in company-wide risk assessment processes. Awareness sessions have been conducted at business area management level, and they will be further implemented in relation to exposed groups in the company in 2010.
We recognise that managing and monitoring compliance with our standards in our supply chain is a challenging and complex task. Our starting point is to follow-up and monitor those suppliers with whom we have direct contracts. Additional follow-up and monitoring in the supply chain is then considered, where possible, based on our assessment of risks.
We recognise the diversity of local conditions and practical limits on our sphere of influence throughout our supply chain, and we are working towards the goal of continuous improvement in partnership with our suppliers.