Supply chain responsibility

Optimar seeks to ensure responsible business practices by avoiding purchases that contribute to or entail adverse impacts on human rights and decent working conditions. Information regarding our company and our work can be found in the opening pages of the sustainability report. The part of this report under the headline Responsible Supply Chain is also our response to the Norwegian Transparency Act for the reporting period 1 July to 31 December 2022.

Our Global Procurement & Logistics Department is responsible for supplier-related activities under the Transparency Act, while top management has overall responsibility for compliance with applicable law and ethical standards.

So far, we have had contract requirements stating that our suppliers must abide by our code of conduct. We want to be clearer about what we expect from our suppliers and business partners, and our new Supplier Code of Conduct will be finalized in 2023. We will continue to follow up our suppliers through contract obligations. Those interested in information regarding human rights and working conditions in our supply chain are referred to the contact information on our website www.optimar.no. We will respond no more than three weeks after the request has been received.

If suppliers wish to report possible or actual breaches of our code of conduct, they are invited to use our whistleblower e-mail. This is open for both internal and external disclosures, and both are handled in accordance with the same procedure and with the same discretion.

Members of our procurement team are each responsible for following up a specific portfolio of suppliers, on which they also perform periodic risk assessments. In 2022, we had 379 unique suppliers and business partners. Our supply chain varies from project to project, but our main purchase category is steel-related products. We also purchase products from Original Equipment Manufacturers (OEMs), which makes it challenging for us to risk assess the entire supply chain.

With effect from 2022, we now conduct an annual evaluation of our suppliers. Prioritized risk areas investigated in the supplier evaluation are:

ࣽ Fundamental human and labour rights

ࣽ Health and safety

ࣽ Anti-corruption and bribery

Supplier risk management

Optimar acknowledges that we cannot handle all potential adverse impacts in our supply chain, but being aware of risks helps us prioritize our actions in pursuit of a sustainable supply chain.

We use a third-party system for supplier mapping and initial risk assessment. A complete overview of our first-hand suppliers and business partners broken down by category is included in the platform and is continuously updated. An initial risk assessment is performed based on the supplier’s geographic profile and their industry, product or service category, and the percentage of goods purchased from that specific supplier compared to total purchases.

A survey with fully defined questions based on the GRI standard is sent out to suppliers upon registration and annually thereafter. Based on the initial risk assessment and responses to our surveys, we give our suppliers a total score and risk rating with regard to their potential adverse impact on human rights and decent working conditions.

It is challenging to survey beyond the first link in the supply chain, but our first-hand suppliers are encouraged to give an assessment of their subcontractors in the same survey.

Optimar’s ESG risk rating for suppliers in 2022, shown as a map indicating the risk rating for workers’ rights.

Source used for risk rating:

Risk of workers’ rights violations: International Trade Union’s Global Rights Index

Risk of corruption: Corruption Perception Index

Action priorities have been set for the most significant risks of human and labour rights abuses. The main risks identified are described below.

Component/Activity Risks Measures

Steel

ࣽ Environmental impact. Steel industry is responsible for 7–9% of the world’s CO2 emissions.

ࣽ We buy steel from China, which scores low on international human rights evaluations.

ࣽ Mining and metal sector. Small-scale operations tend to use low-skilled manual labour and have poor health and safety standards. Small-scale mines may be connected to organized crime and corruption

OEM ࣽ Optimar’s contracting parties buy engineered components from a variety of sub-suppliers and usually undertake assembly in their own workshops. Optimar has limited transparency with respect to the lower tiers of the supply chain. We consider that the most likely adverse impacts are: poor working conditions and inequality at sub-supplier workshops (in rough machining and welding workshops), and unreasonable working hours, inadequate leave periods and low wages for workers during equipment installation on site.

Outsourcing ࣽ Human rights and working conditions controlled by another company and other statutory requirements than those applicable in Norway.

ࣽ Frequent supplier visits.

ࣽ Supplier Code of Conduct.

ࣽ Supplier survey with sub-supplier coverage.

ࣽ Onsite visits or audits.

ࣽ Visits to subcontracting factories.

ࣽ Contract requirements.

We have established an internal escalation process to deal with suppliers about which we still have unanswered questions or where our risk assessment has revealed an unacceptable level of risk. To ensure that all suppliers and business partners are treated equally, our risk response plan contains a description of the prescribed actions to be taken in relation to each identified risk.

Everything

Content: Optimar AS Design: Optimar AS various artists, Adobe Stock June 2023

Optimar AS www.optimar.no