Supply Chain Management
Our Policy
As a company that operates projects in roughly 20 countries worldwide, INPEX recognizes that fair and impartial procurement as well as management of suppliers that offer materials, equipment, and services are its key issues. Our Details on Ethical Procurement Guideline expressly prohibits impediments to fair and impartial competition, abuse of dominant bargaining positions, and inappropriate granting or receipt of benefits. It also requires that we protect the confidentiality of supplier information and technologies. In addition to that fundamental policy on procurement, it requires our officers and employees to comply with our Mission, Sustainability Principles, and Code of Conduct, which defines requirements for conducting our business, for the purpose of fair and impartial procurement. In FY2022, we established the Supplier Code of Conduct, which sets out our expectations of our suppliers across seven ESG-related areas, and includes compliance with labor and environmental laws and regulations, prevention of corruption, and respect for the INPEX Group Human Rights Policy. In FY2023, we issued our Supplier Code of Conduct Guidelines to promote greater understanding of the Supplier Code of Conduct. Furthermore, as part of our supply chain management, we invited 75 major suppliers in our domestic business and conducted our first ever supplier forum. We will continue to strengthen our relationships with suppliers through this forum, engage in competitive procurement, and enhance our supply chain management, including ESG performance management, risk management, and performance assessments.
Procurement Overview
Management Structure
The Compliance Committee consists of members including the Senior Vice President of the Logistics & IMT Division responsible for supply chain management. The Committee meets regularly to ensure strict compliance with corporate ethics and behavior in accordance with the Details on Ethical Procurement Guideline and Code of Conduct. In January 2023, the Sustainability Committee discussed external assessments of our supply chain management and our initiatives in this area.
We select approximately 400 major suppliers we do business with in Japan from the perspectives of their importance to our business continuity and the versatility of the products that are procured, and conduct the analysis of their supply chain and CSR risks.
Supply Chain Risk Management
Each year, the INPEX Group procures approximately 300 billion yen in goods and services from roughly 2,000 suppliers. We take appropriate prevention, detection, and corrective actions to manage risks within our supply chain. As a preventive control, we require suppliers to comply with labor and environmental laws and regulations, respect the INPEX Group Human Rights Policy, and comply with the Supplier Code of Conduct. These requirements are built into our standard contracts.
At the supplier forum, referred to earlier, we provided an explanation of our Supplier Code of Conduct Guidelines to foster a greater understanding of our policies and the Supplier Code of Conduct among suppliers.
We strive to provide opportunities for potential new suppliers, both in Japan and overseas irrespective of the scale of their business based on fair and impartial assessments. Furthermore, in selecting suppliers for large-scale construction projects and services, we comply with the laws and regulations of each country and incorporate our ABC Policy, HSE requirements, ESG, and other perspectives in our assessments to ensure fair and impartial procurement.
As for detective controls1, since FY2018, we have administered self-assessment surveys to our major suppliers and performed monitoring through our grievance mechanisms, HSE and CSR audits.
To reinforce supply chain risk management of our business in Japan, we strive to improve HSE in supplier operations by holding HSE Liaison Meetings with our major suppliers. Activities include: 1) explanation and dissemination of our HSE objectives and activity programs; 2) explanation and sharing of information about incidents and near misses; and 3) introduction and sharing of HSE-related information from these suppliers and hearing their thoughts on HSE. In Australia, we have opportunities for engagement with our major suppliers by regularly holding liaison meetings with them to review their performance in terms of HSE, quality, and service content, as well as by exchanging views in a timely and appropriate manner on risks to our business and corresponding mitigation measures.
Through detective controls, we are taking actions against suppliers assessed as high risk as corrective controls, including 1) improvement activities through HSE and CSR audits; and 2) avoidance and mitigation of risks, including through review of contracts.
1 Detective controls: Measures to prevent processing errors or improprieties in operations
Supplier Assessment
In FY2023, several employees in our procurement division obtained SA8000 auditor qualifications and conducted the self-assessment surveys and CSR audits of major suppliers to identify and address sustainability risks in the supply chain. We have further enhanced our risk management by adding questions regarding human rights and labor, along with questions regarding discrimination, occupational health and safety, and long working hours which are highly linked to risk.
Also in FY2023, we conducted CSR audits of two major suppliers, performed more detailed assessments of their CSR management structure, and discussed improvement measures. In FY2024, we are considering performing CSR audits that combine written and on-site supplier audits based on the survey results. Through the surveys for major suppliers, CSR audits, and improvement measure discussions, we are working to reduce risks for our entire supply chain.
In our Australian business, we are identifying the human rights risks of our supply chain and finalizing our framework for conducting further risk assessments, carrying out auditing processes, and making improvements.
Supplier Code of Conduct and Supplier Code of Conduct Guidelines
In July 2022, we established our Supplier Code of Conduct, which clearly outlines our expectations of our suppliers in the following seven ESG-related areas to address ESG throughout our supply chain.
Area |
Overview |
|---|---|
Human rights and labor rights |
General principles of human rights, including elimination of child labor and discrimination, and protection of workers |
Fair business practice |
No bribery, collusion or cartels, or association with antisocial forces, etc. |
Environment |
Prevention of environmental destruction through business activities, and reduction of CO2 emissions, etc. |
Confidentiality |
Protection of personal and confidential information obtained through business operations |
Local community |
Promotion of coexistence and co-prosperity with local communities |
Whistleblower system and grievance mechanism |
Establishment of a whistleblower reporting system and training sessions conducted for employees on how to use it. |
Disclosure |
Disclosure of ESG-related information and ensuring transparency |
We require contracted suppliers to comply with the Supplier Code of Conduct by including it in our standard contracts and having it accessible via our website. Furthermore, for major transactions that meet or exceed specified contract periods or amounts, we perform ESG assessments during the bidding process. The results of these assessments are used in supplier screening and deliberations regarding risk countermeasures.
In June 2023, we issued our Supplier Code of Conduct Guidelines. These guidelines contain explanations and conduct examples, to promote greater understanding of and compliance with the code among our suppliers.