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 and vessel chartering by Trading & Shipping) represented approximately $31 billion worldwide in 2017. Approximately 32% of these expenditures were for goods (e.g., products, materials) and approximately 68% 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.
As part of the “One Total” company project, the Procurement functions of the business segments have been combined since January 1, 2017 into an transversal subsidiary, Total Global Procurement. This new entity has a global approach to managing supplier relations and aims to improve the integration of supply chains into the Group’s processes.
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 the Group entities’ 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. The rules set out in the directive must be included or transposed into the agreements concluded with suppliers. These principles are available for consultation by all suppliers in both French and English on Total’s website (under “Suppliers”).
In 2015, Total signed a global agreement with the worldwide trade union federation, IndustriALL Global Union, which contains two clauses specifying suppliers’ environmental and social requirements. The Group entities have therefore disclosed the principles of this agreement to their main suppliers and service providers.
The deployment of the anti-corruption policy in purchasing also continued in 2017 with awareness-raising sessions held for over 100 strategic suppliers at the Supplier Day. In addition to numerous initiatives in previous years, in 2017 around 250 suppliers underwent a supplier analysis through the issuing and examination of specific questionnaires, and in some cases, external inspections. At the same time, in-house awareness-raising sessions were held for procurement community staff.
Finally, 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 minerals1” 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.
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.
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 and 2016, Total continued to participate in the Operationalization of the UN Guiding Principles work organized by the IPIECA, aimed at both oil and gas companies and engineering, procurement and construction (EPC) contractors.
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 2017. Total is a member of the 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. In 2017, themed workshops were organized for internal customers and buyers, providing an opportunity to reiterate the Group’s commitments and meet suppliers in the segment during speed meetings.
ACTING AS A RESPONSIBLE PARTNER IN RELATION WITH SUPPLIERS
Total received the “Responsible supplier relationships” label in 2014 (maintained in 2015, 2016 and 2017) 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.
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 2017, an open day for employees of the Group, lawyers and suppliers, enabled participants to learn about the benefits of mediation. A brochure designed to increase awareness of the mediation process is 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.
The payment terms for invoices from suppliers and customers of Total S.A. as of December 31, 2017 are available in application of the provisions of Article D. 441-4 of the French Commercial Code.
Total supports its suppliers in the different countries in which it does business.
For example, in Uganda, Total E&P Uganda organized a one-day forum for suppliers (290 participants). The suppliers invited heard presentations on the contracting process, and in particular the HSE and ethics aspects, to help them take these subjects into account.
Every year, one of the departments of the IPO (Total’s International Procurement Office in Shanghai, China) organizes a compliance day and invites one of its approved suppliers. It can explain the actions it takes regarding anti-corruption compliance, the concrete problems encountered and how it deals with them. The discussions, based on case studies and topical issues, are enlightening for all. In 2017, this event was held in December, on the same day as the Business Ethics Day.
In addition, in October 2017 the Marketing & Services segment organized a two-day conference that brought together almost 75 suppliers of one of its subsidiaries in China. The topics covered included HSE and anti-corruption.
Regarding the support given to French SMEs, Total is a member of the “Pacte PME” association and took part in its supplier survey in 2017. The Group supports the international development of SMEs, occasionally including its own suppliers, through Total Développement Régional.
In October 2017, the first transversal Suppliers Day brought together 110 strategic suppliers to the various business segments.
1Rule 13p-1 defines “conflict minerals” as follows (irrespective of their geographical origin): columbite-tantalite (coltan), cassiterite, gold, wolframite and their derivatives, which are limited to tantalum, tin and tungsten.