Supply Chain Sustainability
Sustainability is integral to our procurement process. Through supplier engagement, supplier recognition and sustainable procurement, we continue to improve our business practices and operations to manage risk while increasing productivity and efficiency within the supply chain. We are committed to upholding our business ethics by supporting business opportunities and capacity building for local and diverse suppliers in our own operations through our supply chain.
Supplier Engagement
As we integrate sustainable development into our key business activities, suppliers play a significant role. From constructing our facilities to managing our work camps, providing well services and supplying equipment, how they manage their impact on the environment and community is important to us and affects our performance.
We regularly engage our suppliers through business reviews and supplier audits to:
- Identify sustainable development opportunities and risks in the supply chains of critical categories.
- Standardize Key Performance Indicators (KPIs) to ensure alignment with our Environmental, Social and Governance (ESG) performance objectives.
- Track metrics, review performance, and identify continuous improvement opportunities.
- Share best practices for building supplier capacity throughout the supply chain.
Another important element of our ongoing engagement with key suppliers is our annual Supplier Sustainability Forum. In 2021, we hosted a virtual forum with 120 participants including suppliers from more than 50 companies and ConocoPhillips representatives from across the globe. The agenda was designed to communicate our strategic sustainability objectives and collaborate with suppliers to manage and mitigate the environmental and social impacts from activities and operations throughout the supply chain. Topics discussed included our net-zero ambition and Triple Mandate, an introduction to our Low Carbon Technologies organization, and an overview of technologies deployed to help reduce environmental impacts and improve sustainability.
Mitigating supplier risk is critical to support our operations through sustainable procurement. Driven by supplier stability concerns, we began monitoring the financial health of suppliers in 2016 through quarterly assessments. Additionally, supply chain leaders meet quarterly to proactively assess risk for over 150 business-critical suppliers. This supports continuity of global operations through the development of risk mitigation plans to cover supply or service interruptions. In 2021, we interacted with suppliers regularly to avert bottlenecks, strengthen ties, seek out emission reduction opportunities, and address risk mitigations due to global supply chain disruptions and the lingering effects of the COVID-19 pandemic. As the oil services sector went through further consolidation and more suppliers showed ongoing signs of financial distress, we further utilized products and services from local suppliers to support our operations. This approach continues to help maintain continuity of our operations and improve our local community engagement. In Canada, as the markets tightened and vaccine mandates were implemented, we broadened our supplier base for both materials and services but consistently started with local and First Nation companies. During sourcing events, we also conducted comprehensive contract risk classification assessments to quantify inherent risks and establish mitigation strategies prior to contract award. This process has been used across our Supply Chain organization globally for over 15 years. Engaging our suppliers to identify and manage risks allows us to mutually improve our sustainability performance.
Supplier Recognition
Suppliers who positively impact our business are honored by our annual Supplier Recognition Awards. Sustainability is an integral consideration for these supplier awards. In 2021, awards ranged from gas capture solutions to environmental planning. The 2021 Supplier Recognition Award Winners are:
- Alamo Pressure Pumping, LLC
- ASRC Energy Services — Houston Contracting Company, Inc.
- Baker Hughes Services Australia Pty Ltd.
- Berkat OSH Services Sdn Bhd
- Beyond Energy Services & Technology USA Inc.
- Contract Resources Pty Ltd.
- Couvillion Group
- Delta Constructors, LLC
- ESS Support Services AS
- H&S Constructors Inc.
- Halliburton AS
- Homeground Gladstone Pty Limited
- N&R Construction, LLC
- ND Energy Services
- Offshore Oil Engineering Co., Ltd. (COOEC)
- Precision Drilling Corporation
- RK Supply
- Valence Natural Gas Solutions Inc.
- Visco AS
- Xodus Group Pty Ltd.
Sustainable Procurement and Business Ethics
The supply chain function contributes to the company’s sustainable development commitments by integrating sustainability into our source-to-settle processes and procedures, which include:
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Supplier Expectations
- Integrity, Labor and Human Rights
- Safety
- Environmental Sustainability
- Supplier Inclusion
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Supplier Qualifications
- Prequalification Questionnaires
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Sourcing and Category Management
- Requests for Information or Quotes
- Bid Events
- Category Risk Assessments
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Contract Delivery
- Key Performance Indicators (KPIs)
- Supplier Audits
Integrating engagement on labor and human rights into our procurement processes and procedures includes recommended questions and contract language for supplier prequalifications, bids, and audits. The questions and contracts directly address these issues and are based on our commitment to conduct our business consistent with the human rights philosophy expressed in our Code of Business Ethics and Conduct and our Supplier Expectations . We are committed to the California Transparency in Supply Chains Act of 2010 and the United Kingdom Modern Slavery Act 2015 .
We endeavor to conduct all contracting and procurement activities in an ethical manner in accordance with our Supply Chain Standard and applicable laws. We require suppliers to comply with certain requirements as a condition of business and to be guided by the principles and standards set forth in the ConocoPhillips Code of Business Ethics and Conduct and their own ethics and conduct policies. Our Code of Business Ethics and Conduct: Expectations of Suppliers provides additional clarity to our suppliers regarding our expectations in these areas:
Additionally, our contract templates incorporate requirements for export compliance and the U.S. Foreign Corrupt Practices Act (FCPA) among other requirements. ConocoPhillips prohibits any form of money laundering and follows all domestic and international laws governing money laundering. ConocoPhillips strives to prevent money laundering through procurement policies, vetting, due diligence and payment processes.
Local Content and Employment
We emphasize promoting supplier capacity building in our procurement and we expect our suppliers to do the same. We also place a high priority on purchasing goods and services locally and are committed to giving local contractors and suppliers the opportunity to participate in projects and operating requirements, generally through a competitive bidding process. We also seek opportunities to develop local suppliers and promote local hiring as appropriate to meet business needs. Read more about how we are creating shared value in communities on our website.
Supplier Diversity
We expect to do business with qualified suppliers that share our values, whether minority, woman, disabled, LGBTQ+, or veteran-owned, small business enterprises, or global, local and Indigenous suppliers around the world. In the U.S., we do business with diverse companies and continue to provide access to business opportunities through our Supplier Diversity Program. This approach attracts qualified suppliers, stimulates local economic development, and creates long-lasting social and economic benefits in our stakeholder communities. In the U.S., our 2021 Supplier Diversity Program totaled $533 million spent with businesses owned by veterans, minorities, women, members of the LGBTQ+ community, service-disabled people and historically underutilized businesses (HUBs). Additionally, ConocoPhillips recorded $905 million in expenditures with small businesses. Through our Supplier Diversity program, we actively participate in certifying and developing diverse, small and local businesses in the United States.
In 2021, we conducted one in-person and 16 virtual supplier diversity events aimed at local supplier capacity-building efforts. This helped to increase our spending with local suppliers in 2021.