Case study: How ConocoPhillips promotes sustainability across its supply chain
ConocoPhillips is the world’s largest independent E&P (exploration & production) company based on production and proved reserves. Across 15 countries of operations, 10,300 people work in a truly integrated way to find and produce oil and natural gas. Sustainability is integral to ConocoPhillips’ procurement processes and supplier engagement Tweet This!, and ConocoPhillips engages, accordingly, with its suppliers on the environmental and social aspects of their operations and supply chains through each step of the procurement process, from supplier prequalification through supplier performance evaluation.
This case study is based on the 2019 Sustainability Report by ConocoPhillips published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
As ConocoPhillips integrates sustainable development into its key business activities, suppliers play a significant role. From constructing its facilities to providing well services and supplying equipment, how they manage their impacts on the environment and community is important to ConocoPhillips and can affect its performance. In order to promote sustainability across its supply chain ConocoPhillips took action to:
- engage with suppliers
- promote sustainable procurement
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With this case study you will see:
- Which are the most important impacts (material issues) ConocoPhillips has identified;
- How ConocoPhillips proceeded with stakeholder engagement, and
- What actions were taken by ConocoPhillips to promote sustainability across its supply chain
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What are the material issues the company has identified?
In its 2019 Sustainability Report ConocoPhillips identified a range of material issues, such as business ethics, energy efficiency, community impacts, safety and health, water sourcing. Among these, promoting sustainability across its supply chain stands out as a key material issue for ConocoPhillips.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups ConocoPhillips engages with:
| Stakeholder Group | Method of engagement |
| Financial Sector
| · Investor presentations and conferences · Analyst calls · Annual Shareholder Meeting · SEC filings · Socially Responsible Investor meetings and conferences · Tours |
| Governments
| · Advocacy · Policy development · Industry and trade association representation · Regulatory compliance · Permit reviews · Regulatory audits · Regional development · Tours · Collaboration on community investment projects · Town halls · Multi-stakeholder initiatives |
| Communities
| · Websites, media and social media · Community investment programmes · Royalty relations · Community consultations · Local procurement · Employment · Landowner meetings · Town halls · Volunteering |
| Employees
| · Performance management · Training and development · Internal communications · Code of Conduct · Employee surveys · Participation on trade and industry association committees · Safety meetings · Ethics Helpline · Volunteering · Leadership town halls · Employee network groups · Talent Management Teams · Global wellness programmes · 360-feedback tool |
| Suppliers
| · Bid process · Contract negotiations · Project management · Supplier forums · Annual performance reviews |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics ConocoPhillips engaged with key stakeholders through meetings and discussions.
What actions were taken by ConocoPhillips to promote sustainability across its supply chain?
In its 2019 Sustainability Report ConocoPhillips reports that it took the following actions for promoting sustainability across its supply chain:
- Engaging with suppliers
- ConocoPhillips regularly engages its suppliers through Business Reviews, Supplier Relationship Management, Supplier Sustainability Forum and supplier audits to:
- Review the ConocoPhillips sustainability governance system and asses how it can work with suppliers.
- Identify sustainable development opportunities and risks in the extended supply chains of critical categories.
- Share best practices for building supplier capacity throughout the supply chain.
- ConocoPhillips conducts all contracting and procurement activities in an ethical manner in accordance with its Supply Chain Standard and applicable laws and requires 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. ConocoPhillips’ Code of Business Ethics and Conduct: Expectations of Suppliers provides additional clarity to suppliers regarding its expectations in these areas:
- Health, Safety and Environment (HSE): Suppliers must comply with applicable environmental laws and regulations and conduct business with respect and care for the environment, including utilising energy and natural resources efficiently and managing waste, emissions and discharges responsibly.
- Labour and Human Rights: ConocoPhillips conducts its business consistently with the human rights philosophy expressed in the Universal Declaration of Human Rights and the International Labour Organization Declaration on Fundamental Principles and Rights at Work and expects suppliers and contractors working on its behalf to be guided by these principles.
- Integrity: Contracts require that suppliers be guided in their performance for ConocoPhillips by the principles and standards set forth in the ConocoPhillips Code of Business Ethics and Conduct and their own ethics and conduct policies.
- Social Performance: ConocoPhillips engages with suppliers and contractors on sustainable development issues through its Quarterly Business Reviews, Supplier Relationship Management, Supplier Sustainability Forum and supplier audits.
- In 2019, ConocoPhillips focused on continued engagement with key suppliers. One key element was hosting a supplier sustainability forum with over 65 suppliers from more than 35 different companies, as well as ConocoPhillips representatives from across the globe. The agenda included short presentations and panel discussions and was designed to facilitate sharing of sustainability best practices that are transferable throughout ConocoPhillips’ diverse supply chains. Topics discussed included innovation and efficiency, specifically in water management and air emissions. Companies also shared emerging technologies in their respective sectors. Additionally, ConocoPhillips engaged with major suppliers on standardised environmental key performance indicators (KPIs) to ensure alignment with its environmental, social and governance (ESG) performance objectives. Annual review meetings also clarify performance expectations, track results and identify continuous improvement opportunities.
- Promoting sustainable procurement
- Integrating oversight on labour and human rights into ConocoPhillips’ procurement processes and procedures includes recommended questions for supplier prequalification, bids and audits, as well as contract language. The questions and contracts directly address these issues and are based on ConocoPhillips’ commitment to conduct its business in accordance with the human rights philosophy expressed in the Universal Declaration of Human Rights and the International Labor Organization Declaration on Fundamental Principles and Rights at Work as described in its Code of Business Ethics and Conduct and its Supplier Expectations.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
3) Disclosure 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
78% of the world’s 250 largest companies report in accordance with the GRI Standards
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References:
1) This case study is based on published information by ConocoPhillips, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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