Shell aims to work with contractors and suppliers that behave in an economically, environmentally and socially-responsible manner.
Our approach to suppliers and contractors is clearly set out in our Shell General Business Principles and Shell Supplier Principles. These principles cover requirements such as business integrity, health and safety, and human rights. Working with suppliers and contractors in this way is central to maintaining a strong societal licence to operate.
In 2018, Shell spent $42.7 billion on goods and services from around 32,000 suppliers globally.
Our suppliers and contractors are critical to our ability to run our business. They are involved in almost every step of our operations – and are often key to achieving successful outcomes and having a positive impact on the community.
Ensuring we have robust and healthy supply chains is essential to our financial strength and resilience. Our supply chains also represent important commercial and employment opportunities for the countries and communities in which we operate. At the same time, suppliers and contractors have a key contribution to make to Shell’s response to the energy transition. Their skills and innovation are part of what can make it possible for us to adapt for a lower-carbon future.
We strive to simplify and clarify what we expect from our suppliers and contractors. We work hard to help them comply with our requirements, improve their practices and together raise industry standards.
We closely monitor risks and are clear in our expectations of suppliers when it comes to managing them. We use technology and digital tools to help us monitor compliance and improve our joint and own processes.
Certain areas of our supply chain may pose a higher risk to labour rights due to their location and the nature of the goods and services we procure. We use a defined set of criteria to identify potential supply chain risks and, where we see risk, we ask suppliers and contractors to respond to our due diligence assessments before awarding a contract.
This assessment requires our suppliers and contractors to declare whether they have a process in place to assess and manage social risks with their own suppliers. If gaps are identified, we may work with suppliers and contractors to help them understand how to close these gaps, implement corrective action – which may include on-site audits from Shell – or we may consider terminating the contract.
We have made several external regulatory declarations that describe how we manage human rights risks in our supply chains, including our response to the UK Modern Slavery Act 2015. Shell companies expect contractors and suppliers to obey the national laws and international standards that require them to treat workers fairly, and to provide a safe and healthy work environment. Read more at www.shell.com/humanrights.
In 2018, we joined forces with our industry peers to create a Common Framework for Supplier Labour Rights Assessment. This means that all the industry participants will use one common assessment for all suppliers. The outcomes of the assessments will then be shared with the other initiative participants, who will use this information to take their own procurement decisions.
A major cause of forced labour in global supply chains is the charging of recruitment fees and related costs from migrant workers. In 2018, we reviewed our supplier principles statements and found there was an opportunity to include the explicit prohibition of such fees, sending an unequivocal message about our expectation to suppliers.
Recognising the impact suppliers can have on local communities where we operate, we have also expanded our social performance requirements. The updated supplier principles include the requirements for contractors to respect their neighbours, to manage the social impacts of their activities, to enhance local benefits, and to listen and respond honestly and responsibly to local communities – including responding to community feedback as a means of providing access to remedy.
Good working and living conditions help to bring about a safer and more productive working environment. Our approach to worker welfare means supporting the needs of the individual worker, many of whom are contractors, their relationship with their family and connections with colleagues. We aim to provide a home away from home for people by delivering a standard of accommodation and facilities that supports their quality of life and well-being.
Our Contractor Safety Leadership programme pairs senior executives from 19 of our major contractors with a Shell leader. In 2018, Shell and all 19 signed up to a set of worker welfare principles developed by Building Responsibly, a Business for Social Responsibility collaboration with a group of leading engineering and construction companies promoting the rights and welfare of workers. The principles aim to establish a global baseline in areas such as labour practices, living and working conditions and grievances. We plan to assess the principles against our practices and integrate them into our engagement with contractors.
We are also aiming to work with our contractors in many areas to help transition to a lower-carbon future. We can support the energy transition through the procurement choices we make and by helping to facilitate technology solutions in partnership with others. We work with our logistics suppliers and contractors to improve how we track and measure our Net Carbon Footprint. We also partner with suppliers and contractors to reduce our environmental impact and to help us to change how we do things – reducing waste, for example, from the packaging of our products.