Supply Chain Management

 

Total’s activities generate hundreds of thousands of direct and indirect jobs worldwide. The Group’s purchases of goods and services (excluding oil products) represented approximately $34 billion worldwide in 2016. Approximately 25% of these expenditures were for goods (e.g., products, materials) and approximately 75% were for services (including consulting services, work with supply of materials and transport). The number of hours worked by subcontractors is monitored for large projects. This involves a range of environmental, social and societal impact concerns addressed by Total when dealing with its suppliers via its principles, purchasing commitments and sustainable procurement initiatives.

 

Total’s societal commitment is shared by the Group’s employees, partners, customers and suppliers, in particular by employing more local staff and subcontracting more work to local businesses wherever the operating constraints of its activities allow. The Group’s societal directive stipulates that purchasing processes must be adapted as required in cases where a societal action plan has been implemented.

 

Total has created a map of the CSR risks and opportunities in the Group’s main purchasing categories to identify key issues in three areas: ethics and human rights, environmental impact and the creation of value with local communities. Pilot projects were implemented in certain purchasing categories to integrate the monitoring of CSR aspects into the purchasing process through concrete measures: specific questionnaire focusing on the Fundamental Principles of Purchasing, drafting of suitable contract clauses, good practices factsheets for purchases from the disabled and sheltered employment sectors, organization of a workshop with internal experts on the climate and energy efficiency in preparation of a global request for proposals on the air transportation of passengers, and creation of a guide for buyers on how to calculate the total cost of utilization (TCU) for support boat services and thereby assess commercial solutions with greater accuracy.

 

MONITORING RESPONSIBLE PRACTICES AMONG SUPPLIERS

In its Code of Conduct, Total states that it works with its suppliers to ensure the protection of the interests of both parties on the basis of clear and fairly negotiated contractual conditions. This relationship is founded on three key principles: dialogue, professionalism and adherence to commitments.

 

Total expects its suppliers to:

  • adhere to principles equivalent to those in its own Code of Conduct, such as those set out in the Fundamental Principles of Purchasing directive;
  • and agree to be audited, be particularly attentive to the human rights related aspects of their standards and procedures, in particular their employees’ working conditions, and ensure that their own suppliers and contractors respect equivalent principles.

 

The Fundamental Principles of Purchasing, launched in 2010 and formally set out in a Group directive in 2014, specify the commitments that Total expects of its suppliers in the following areas: respect for human rights at work, health protection, assurance of safety and security, preservation of the environment, prevention of corruption, conflicts of interest and fraud, respect for competition law, as well as the promotion of economic and social development. Total’s suppliers must be made aware of these rules, which apply to all the Group’s companies, by including or transposing them into the agreements concluded with these suppliers.

 

Questionnaires focused on environmental and societal issues are used to gather more in-depth information from suppliers about their approach to these subjects, either during qualification or as part of an audit. Supplier relations are also considered from an environmental and societal perspective on occasion as part of ethical assessments of Group subsidiaries and entities undertaken by GoodCorporation in all continents in which the Group is present. In 2016, Total also signed a contract with an auditing firm specializing in working conditions with the aim of developing support for suppliers in this particular area. The first audits have been completed in 2016.

 

In 2015, Total signed an agreement with the worldwide trade union federation, IndustriALL Global Union, which marks a major step in Total’s commitment as a responsible employer. In addition, Total is committed to disclosing and promoting the principles of this agreement to its service providers and suppliers.

 

The Group also pursued a number of one-off initiatives in 2016. For example, Marketing & Services held two awareness-raising sessions to train buyers on how to evaluate suppliers in terms of CSR, sustainable development and respect for human rights at work.

 

The deployment of the anti-corruption policy in purchasing continued in 2016 with the dispatching of specific questionnaires to select suppliers and, in some cases, external controls. In 2015, Refining & Chemicals ramped up the deployment of this policy and analyzed over 3,000 suppliers. Slightly more than 300 suppliers had to complete and sign a detailed questionnaire. This process continued in 2016 with over 800 suppliers analyzed and over 80 questionnaires sent out. In parallele, an initiative was launched in 2014 in which service providers working on Group sites were asked to take a training module similar to the Group’s anti-corruption e-learning module. CDs of this e-learning course were also distributed by several entities to their suppliers.

 

In addition, pursuant to Rule 13p-1 of the Securities Exchange Act of 1934, as amended, which implemented certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Total has submitted since 2014 to the SEC an annual document relating to certain minerals (deemed “conflict minerals”1 by this Rule) sourced from the Democratic Republic of the Congo or a neighboring country. The document indicates whether Total S.A. Or one of its affiliates had, during the preceding calendar year, used any such minerals that were necessary to the functionality or production of a product manufactured or contracted to be manufactured by the Group. The document also states whether such minerals were sourced from the Democratic Republic of the Congo or a neighboring country. The main objective of the rule’s obligation to publish this information is to prevent the direct or indirect funding of armed groups in central Africa.

 

PROMOTING SUSTAINABLE PROCUREMENT

An interdisciplinary working group dedicated to the issue of sustainable procurement is tasked with strengthening Total’s policy in this area based on initiatives developed by each segment.

 

As part of the work pursued by the Association française des entreprises privées (AFEP) in 2016, Total presented an action program for 2017-2020 targeting the circular economy, which includes a circular economy-based criterion in the relevant purchasing categories.

 

In addition to the Human Rights information document that Total published in July 2016, the Group updated its “human rights” roadmap to include the commitments taken by the Purchasing function to raise awareness among buyers and suppliers.

 

The Group’s buyers take part in international working groups on sustainable procurement. Total is an active member of IPIECA’s Supply Chain Task Force. Building on the workshops held in 2015, Total participated in a special workshop on Operationalization of the UN Guiding Principles organized by the IPIECA in March 2016, aimed at both oil and gas companies and engineering, procurement, construction (EPC) contractors. Total is also represented in the French delegation involved in the international discussions considering the forthcoming ISO 20400 standard on sustainable procurement. The aim of this standard is to transpose the concept of social responsibility – as defined in ISO 26000 – to purchasing activities. Forty-one countries from every continent, as well as international organizations such as the OECD, the UN and the International Labour Organization, are involved in drafting this standard.

 

Sustainable procurement targets are integrated into the central buyers’ annual appraisals. Practical tools have been developed and are available for all employees on the intranet in the Sustainable Procurement community (country factsheets on local laws and regulations, internal feedback and methodology sheets on human rights).

 

In 2016, Total decided to dedicate the second edition of its Business Ethics Day to the supply chain. This initiative alerted employees and especially buyers to the issues of human rights and the prevention of corruption in the supply chain. Various events were held at the Group’s headquarters and subsidiaries. A brochure designed to explain the Fundamental Principles of Purchasing to employees and suppliers was handed out to the workforce and uploaded to the intranet. A video of the interview with the Chairman and Chief Executive Officer was widely disseminated over the intranet to spread the word about Total’s commitment. This video contains a discussion about the feedback from a major Total supplier.

 

As part of the Corporate Purchasing training program for new purchasing hires, an induction e-learning course entitled “Purchasing at Total” reiterates the Group’s ethical commitments and the Fundamental Principles of Purchasing. “Purchasing St@rt”, a course featuring a mix of virtual classes and e-learning modules, follows on from the Corporate Purchasing training program and once again addresses the issue of compliance and Corporate Social Responsibility in customer relationship management. The first session of “Purchasing St@rt” was held in 2016 with a dozen other sessions lined up for 2017.

 

In France, the Group’s purchases from the disabled and protected employment sectors enabled the achievement of an indirect employment rate of nearly 1% in 2016. TOTAL is a member of the Pas@Pas association and provides its buyers with an online directory that can be used to identify potential suppliers and service providers from the disabled or protected employment sectors by geographical area and by category.

ACTING AS A RESPONSIBLE PARTNER IN RELATION WITH SUPPLIERS

Total received the “Responsible supplier relationships” label in 2014 (maintained in 2015 and 2016) for its Holding and Marketing & Services activities in France. This label, awarded by the French authorities, recognizes companies that maintain sustainable and balanced relationships with their suppliers.

 

The general terms and conditions of purchase were updated in 2014 to ensure a sharper focus on balanced contractual relations. This balance is monitored in particular by an interdisciplinary working group dedicated to the issue of payment terms, set up in 2014. It involves the Purchasing and Finance departments at the French head offices of all the Group’s business segments. The aim is for monitoring payment times, reporting and improving the processing of invoices.

 

Total supports its suppliers in the different countries in which it does business. For example, Total E&P Congo (TEPC) organized five training sessions in the Republic of the Congo to help 75 local SMEs prepare more effectively in responding to a request for proposals. In addition, the subsidiary is taking part in a program to providing welding training for 20 welders from four local SMEs. A partnership has already been signed with a local center to provide training for electricity students. Finally, in order to give its major technical suppliers a clearer insight into SMEs and their expertise, a day event entitled “Discovering the skills and expertise of local industrial SMEs” was organized in November 2016. Close to 30 local SMEs, approximately 100 TEPC technicians, TEPC service providers and several large organizations took part.

 

In the United Kingdom, Total E&P UK (TEPUK) organized a HSE “Suppliers Day” event in 2016 featuring approximately 15 main suppliers. Every year, TEPUK also takes part in the “Share Fair” event staged by Oil & Gas UK (association whose members include oil and gas operators and suppliers in the UK). During the event, TEPUK presents its activities, its development and procurement program and its HSE and ethical requirements. The 2016 edition attracted 650 participants and gave TEPUK chance to carry out approximately 50 speed meetings. TEPUK received the award for excellence from both Oil & Gas UK and Oil & Gas Authority for its level of conformity to the supply chain code of practice.

 

Regarding the support given to French SMEs, Total is a member of the “Pacte PME” association and was positively rated by its Monitoring Committee in 2016. One example is the support that the Group gives to the international development of SMEs, occasionally including its own suppliers, through Total Développement Régional.

 

The identification of innovative SME suppliers takes place through the appointment of innovation correspondents within each Purchasing department of Total’s business segments, the use of the Pacte PME open innovation platform, and participation in events such as BPI France Inno Génération in May 2016.

 

In July 2016, a Suppliers Day concerning specialized IT services allowed 60 recently selected vendors to present their company and service range during a series of speed meetings at the head office in La Défense.

 

To contribute toward the development of good practices in business relations, Total launched an initiative to raise its employees’ awareness of mediation as an alternative method for resolving disputes. Each year since 2013, a training day run by professional mediators to raise awareness of mediation has been organized in French and English. In 2016, two sessions were held, with one in Abidjan and the other in Singapore. Each session brings together employees of the Group, lawyers and suppliers. This day enables employees to gain an understanding of mediation and its advantages, in particular in cementing long-term business relations, and includes practical exercises. A brochure designed to increase awareness of the mediation process is also made available to all employees. In addition, an email address is available on the Group website (under “Suppliers”). It can be used to contact the Group’s internal mediator, whose task is to facilitate relations between the Group and its French and international suppliers. Finally, the general purchase terms and conditions also mention the possibility of recourse to mediation.