Contractors and suppliers
TotalEnergies’ activities generate hundreds of thousands of direct and indirect jobs worldwide. Present in more than 130 countries, the Group works with a network of over 100,000 suppliers of goods and services. In 2020, the Group’s purchases of goods and services (excluding petroleum products and vessel chartering by Trading & Shipping) represented approximately $23 billion worldwide. The allocation of expenditures at Group level is approximately 29% for goods (products, materials, etc.) and 71% for services (such as consulting services, materials supply operations, transportation, etc.).
Through their activities, the Group’s subcontractors and suppliers may face the same risks that the Group encounters in its own activities, including societal and environmental risks. The most prominent risks relate mainly to human rights in the workplace (forced labor, child labor, discrimination, decent working conditions), health, security and safety, corruption, conflicts of interest, fraud and the environment.
TotalEnergies’ success as a responsible company is played out all along its value chain, and the Group is convinced of the importance of working with suppliers that respect human rights and take care of their employees. The Group expects its suppliers to adhere to the Fundamental Principles of Purchasing set out in its own Code of Conduct. To that end, the Group has chosen to have management of its supplier relations coordinated by a dedicated cross-functional entity, TotalEnergies Global Procurement, which is specifically tasked with providing Purchasing services and assisting the Group’s entities and sites(1). That approach is supplemented by employee training programs and actions to raise awareness among the Group’s customers and suppliers. Its success is also based on TotalEnergies’ involvement in international initiatives and collaborative programs specific to the energy sector that promote the emergence of best practices.
(1) Excluding notably Hutchinson, Saft Groupe, Quadran, TotalEnergies, Greenflex and SunPower.
The group’s responsible procurement policy
The Group ensures that contractual conditions are negotiated in an equitable manner with its suppliers. The Code of Conduct restates that requirement and the three essential principles that guide TotalEnergies’ relations with its suppliers: dialogue, professionalism and compliance with commitments.
These principles are also set out in the Fundamental Principles of Purchasing, introduced in 2010, which outline the commitments to which TotalEnergies expects its employees and suppliers to adhere in the following areas: respect for human rights at work; the protection of health, security and safety; preservation of the environment; prevention of corruption and conflicts of interest and efforts to combat fraud; compliance with antitrust law; and the promotion of economic and social development. These principles uphold the fundamental principles defined in the United Nations Universal Declaration of Human Rights, the fundamental conventions of the International Labour Organization, the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
In early 2020, as part of its policy of continuous improvement, TotalEnergies Global Procurement finalized an update to the CSR risk mapping associated with the Group’s procurement for each category of goods and services. This risk mapping examined CSR risks relating to human rights and fundamental freedom (working conditions and the right to organize, discrimination, health and safety, child labor, forced labor and modern slavery) as well as risks relating to the environment (depletion of natural resources; loss of biodiversity; climate change and greenhouse gases; waste and end-of-life management; air, water and soil pollution). This mapping is the result of methodological work carried out with support from AFNOR (the French standards association) during the second half of 2019, involving internal CSR experts and buyers. A Responsible Procurement roadmap defines TotalEnergies’ guidelines for upholding respect for human rights in the supply chain, the environment and economic development. The Responsible Procurement Committee is tasked with monitoring the implementation of the Group’s Responsible Procurement roadmap. It meets at least once a year and includes representatives from the Management Committee of TotalEnergies Global Procurement, the Ethics Committee and the Civil Society Engagement, HSE and Legal divisions.
Actions to educate and raise awareness among employees
TotalEnergies has set up a number of channels of communication to raise awareness of risks and concerns related to its supply chain among its buyers. Training modules explaining the Group’s ethical commitments and the Fundamental Principles of Purchasing have been developed for and made available to Group procurement officers. In 2020, 40 buyers attended training and/or awareness-raising sessions on respect for human rights and working conditions at supplier sites, and 99 received training on anti-corruption rules.
The Group provides its buyers with communications materials designed to help them discuss the Fundamental Principles of Purchasing with suppliers. In June 2019, a TotalEnergies Global Procurement workshop was attended by 239 buyers and procurement support personnel and included a section on responsible purchasing. Following the update of the CSR risk mapping for the Group’s procurement, workshops were held in 2020 to raise awareness of buyers on the risks associated to human rights and environment in the supply chain.
With respect to the development of best practices in business relations, since 2013 TotalEnergies has consistently trained its employees in mediation as an alternative method of dispute resolution. In addition, an email address ([email protected]) is available on the TotalEnergies website to allow the Group’s suppliers to contact the special internal mediator, who is tasked with facilitating relations between the Group and its French and international suppliers. The general purchasing terms and conditions also mention the possibility of recourse to mediation.
Application of the group’s policy to the supply chain
TotalEnergies expects its suppliers to:
- adhere to the Fundamental Principles of Purchasing and ensure compliance with those principles in their activities;
- agree to be audited in accordance with those principles;
- remain attentive to the day-to-day working conditions of their employees and their suppliers’ employees;
- ensure that their own suppliers and subcontractors adhere to those Fundamental Principles of Purchasing;
- refer to the Group Ethics Committee in case of doubt.
The rules set out in those Principles must be included or transposed into the agreements concluded with suppliers. To that end, those Principles are available for consultation by all suppliers in both French and English on TotalEnergies’ website.
The supplier qualification process
The harmonization of the supplier qualification process led to the publication of an internal reference guide in 2018, and an IT qualification tool has been gradually deployed since 2019. In all, 12,000 pilot suppliers at subsidiaries have been integrated to this tool, and TotalEnergies Global Procurement integrated more than 3,500 of those suppliers into the qualification tool in 2020. That deployment process was delayed by the COVID-19 pandemic in 2020.
The tool is used to automate and document the supplier qualification process, which has four steps:
- confirmation by the technical expert of the value of launching the qualification process;
- a preliminary risk analysis to determine whether an in-depth analysis is needed for each criterion (HSE; anti-corruption; societal, financial and technical responsibility);
- determination of the qualification status;
- monitoring and renewal of qualification.
Qualifications are valid for three years.
The supplier assessment process
At the same time, the Group has set up a supplier assessment process to identify and prevent the risk of severe violations of human rights and fundamental freedom, human health and safety. Since 2016, the Group has conducted audits of working conditions at supplier sites. A targeted audit plan is defined each year and includes suppliers suggested by subsidiaries in countries with an identified risk of human rights violations.
0%of strategic suppliers and suppliers considered as being at risk audited by 2024
Those audits measure respect for human rights in the workplace, including child labor, forced labor, discrimination, freedom of association and the right to collective bargaining, working conditions (overtime, days off) and workplace health and safety. Approximately 100 audits of at-risk suppliers are conducted each year. In 2020, 79 audits were conducted in the context of the COVID-19 pandemic. The Group plans to audit, by 2024, 100% of its strategic suppliers and 100% of its suppliers identified as being at risk as per the risk mapping identification process.
Moreover, TotalEnergies, BP, Equinor and Shell are continuing their efforts to develop a common collaborative platform to assess respect for human rights by their suppliers. The platform went live in September 2020, and the initial test audits have been conducted. Together, the partner companies are pursuing the goal of promoting improvement in working conditions across the supply chain of the companies involved. That initiative is designed to address the aim of United Nations SDG 8: “Decent work and economic growth”.
Finally, pursuant to Rule 13p-1 of the U.S. Securities Exchange Act of 1934, as amended, which implemented certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, since 2014, TotalEnergies has filed to the US Stock Exchange Commission (SEC) an annual document relating to “conflict minerals”(2) sourced from the Democratic Republic of the Congo or an adjoining country. The document indicates whether, during the preceding calendar year, any such minerals were necessary to the functionality or production of a product manufactured by TotalEnergies SE or one of its consolidated entities (or contracted to be manufactured). The objective of this regulation is to prevent the direct or indirect funding of armed groups in central Africa. For more information, refer to TotalEnergies’ most recent publication, available or sec.gov.
(2) Rule 13p-1 defines “conflict minerals” (irrespective of their geographical origin) as columbite-tantalite (coltan), cassiterite, gold and wolframite as well as their derivatives, which are limited to tantalum, tin and tungsten.
Actions to raise awareness among suppliers
TotalEnergies’ supplier qualification process includes a section on routine anticorruption compliance that is carefully administered by TGP and the Group’s other purchasing entities. In addition, actions are taken during meetings with suppliers to raise awareness of corruption prevention and human rights, particularly during the Suppliers Day event that brings the Group’s strategic suppliers together every two years. During Suppliers Day in 2019, the Fundamental Principles of Purchasing and the Group’s new Code of Conduct were distributed to all participants. Particular emphasis was given to responsible procurement and the Group’s principle of zero tolerance of corruption.
Each year (except in 2020 as a result of the COVID 19 pandemic), the International Procurement Office (TotalEnergies ITO in Shanghai, China) holds a compliance day. During that event, one of TotalEnergies’ qualified suppliers is invited to share the actions that it has taken regarding anti-corruption compliance, the concrete problems it has encountered and how it deals with them. Special attention has been given to the issue of respect for human rights, which was also on the agenda of the Suppliers Day event organized by the IPO in Shanghai in December 2019.
Actions taken by the group to promote responsible purchasing
Since 2010 TotalEnergies has been a signatory to the Responsible Supplier Relations Charter from France’s Ministry of the Economy and Finance, which is designed to create a more sustainable and balanced relationship between customers and suppliers.
Since 2018 TotalEnergies has been a member of the Action Platform on Decent Work in Global Supply Chains organized by the United Nations Global Compact, and in that capacity it takes part in various workshops that aim to help the Global Compact member companies make progress in that area. In December 2018, the Group pledged to pursue its efforts with regard to decent work and respect for human rights in its supply chain by signing six commitments contained in the United Nations Global Compact. In October 2019, TotalEnergies welcomed participants at its offices for the Action Platform’s fourth and final roundtable meeting. The first phase of the Action Platform yielded a Decent Work Toolkit for Sustainable Procurement. In 2020, the platform focused its efforts on helping lift workers out of poverty.
TotalEnergies is a member of the IPIECA Supply Chain Working Group. Building on the workshops held since 2015, TotalEnergies has continued to participate in the Operationalization of the UN Guiding Principles programs organized by IPIECA, aimed at both oil and gas companies and engineering, procurement and construction (EPC) contractors.
Lastly, the Group focuses special attention on the sheltered employment sector for disabled workers. In France, the Group’s purchases from that sector represent about €3 billion in 2020. TotalEnergies is a member of the [email protected] organization and provides its buyers with an online directory that can be used to identify potential suppliers and service providers in the sheltered employment sector by region and category. A number of meetings have been organized in liaison with Mission Handicap, the Group’s disabilities office, to familiarize the relevant buyers in TotalEnergies Global Procurement with the Group’s commitments and teach them how to use the online directory.
The payment terms for invoices from suppliers and customers of TotalEnergies SE as of December 31, 2020, pursuant to the provisions of Article D. 441-4 of the French Commercial Code, are as follows: