Report Jan. 8, 2024
Working with our global supply chain
Report Jan. 8, 2024
We work to promote inclusive sourcing open to all, respecting human rights, and working to reduce impacts to the environment in our supply chain, and we seek to work with suppliers that share our commitment.
Our Supplier, Vendor and Contractor Expectations call for the operations and business practices of our suppliers to be conducted in a manner consistent with the International Labor Organization 1998 Declaration on Fundamental Principles and Rights at Work (ILO Declaration) and the goals of the United Nations Guiding Principles on Business and Human Rights (UNGPs). They also communicate our expectation that our suppliers comply with all local laws and regulations. To remain in good standing, our suppliers, vendors, and contractors are expected to meet our stringent compliance, anti-corruption, conflict of interest, safety, and other guidelines.
Managing our supply chain
We integrate sustainability-related elements into our supply chain stewardship, purchasing processes, and systems. For example, we seek opportunities to support responsible sourcing including identification of potential human rights impacts within procurement category families. Updated on a regular basis, our procurement platform includes environmental questions for our category managers to consider and enhancements to increase awareness of local, diverse, and small suppliers.
Not only do we review a potential supplier’s operational, technical, and financial performance, but we also perform compliance due diligence. We use third-party information to screen potential suppliers across compliance areas such as sanctions, anti-corruption, and human trafficking.
Our due diligence process for identifying and assessing human rights risks focuses on three factors: the supplier, the commodity being procured, and location.
Additional due diligence is applied when procuring goods and services involving a significant amount of low-skilled, physical labor in countries ranked in the tiers below Tier 1 of the Trafficking in Persons (TIP) Report published by the U.S. Department of State. If a potential higher risk is identified, the potential suppliers complete a questionnaire prior to contract award to assess whether they have the policies or practices in place to address such risks and we review and assess the responses prior to continuing with the contracting process. Training on human rights risks in the supply chain is available to procurement professionals who conduct supply chain due diligence. In addition, requests for quotations highlight ExxonMobil’s expectation that the supplier shall:
- Comply with all applicable laws prohibiting the utilization of forced or compulsory labor.
- Provide its employees with working conditions, including payment of wages and benefits, which comply with all applicable laws.
- Ensure that its employees meet the legal employment age requirements in the country of employment.
Our standard terms and conditions used by the Procurement function oblige suppliers to:
- Comply with all applicable laws and regulations, which include those related to employment, safety, security, health, and the environment.
- Impose similar terms and conditions on their subcontractors.
- Permit audits and allow access to office and work locations, documentation, and personnel.
On an annual basis, we remind suppliers of our expectations on human rights and other topics in our year-end letter, available in more than a dozen languages and customized for specific regions. This letter reinforces our expectations that suppliers conduct business in compliance with standards similar to our Standards of Business Conduct and that they further comply with all applicable laws, rules, and regulations. To provide a channel of communication to help our suppliers meet our expectations, this year-end letter also includes ExxonMobil contact information if the supplier has any questions or concerns as to the application of ExxonMobil’s business standards.
We audit a select number of suppliers each year for contract compliance on aspects including pricing, safety, drug and alcohol policy compliance, invoicing, and travel expenses. Contracts may be subject to termination if the supplier is not meeting our expectations.
Supplier diversity and inclusive sourcing
We promote awareness of inclusive sourcing options with local, diverse, and small suppliers in order to increase competition and innovation while striving to make positive impacts on communities. Where there is a lack of diverse, small, or local suppliers, we work to build capabilities within our supply chain.
We purchase goods and services from local suppliers and build their capabilities through local programs. This approach creates a competitive advantage for ExxonMobil, providing us access to qualified and reliable local suppliers. It also helps to build long-term, local economic capacity, to strengthen our relationships in the community and to support the objectives of the related U.N. SDGs.
Inclusive sourcing supports the creation of new perspectives, ideas, and practices that help our business grow. We strive to cultivate mutually beneficial relationships that contribute to the growth of our diverse supplier base via outreach, business development, and training programs.
To increase the number of women-owned businesses in our global supply chain, we work with WEConnect International, an organization that identifies, educates, registers, and certifies businesses outside the U.S. that are at least 51% owned, managed, and controlled by one or more women.
We encourage U.S. businesses owned by traditionally underrepresented groups to express their interest in becoming an ExxonMobil supplier by registering on U.S. supplier diversity database. ExxonMobil works with organizations such as the National Minority Supplier Development Council, the Women’s Business Enterprise National Council, the National Lesbian, Gay, Bisexual and Transgender Chamber of Commerce, and the National Veteran-Owned Business Association to help identify and develop relationships with certified diverse suppliers in the U.S. These diverse databases may be considered in identifying potential suppliers in addition to other options.
This has been an important issue to us for decades, and we continue to increase awareness of local, diverse, and small suppliers and provide opportunities for them to be considered for procurement contracts with ExxonMobil.
Growth in Guyana
In Guyana, our affiliate is using a multi-tiered approach to build workforce and supplier capabilities in conjunction with strategic investments in the community. We’re collaborating with stakeholders to develop opportunities for the region’s people and businesses, working with the local workforce and markets to develop a competitive industrial base.
In 2022 alone, more than 1,500 Guyanese vendors benefited from opportunities within our supply chain, and more than 5,000 Guyanese workers supported our activities there.
Through the Centre for Local Business Development, in 2021 we launched a women entrepreneurship program called “Accelerate-Her” and continued this program in 2022. It offered Guyanese women the opportunity to enable the growth of small businesses through tailored workshops, access to one-on-one business advisory services, mentoring, pitch development, and a strong and supportive peer-learning environment for professional women. In addition, the ExxonMobil Foundation’s Women Economic Opportunity Initiative collaborated with the Cherie Blair Foundation for Women’s Road to Growth program and Counterpart International’s Global Women in Management training course to bolster the business skills of women entrepreneurs.
These efforts support the goals of the Greater Guyana Initiative, a collaboration with ExxonMobil, Hess, and CNOOC to invest $100 million over a 10-year period to support capacity development, sustainable economic diversification, and healthy prosperous communities with Guyana, and for Guyana.
Human rights in our supply chain
We are committed to respecting human rights and expect the same of our suppliers. Through our procurement processes and systems, we assess our direct suppliers for potential human rights risks in the supply chain, with a focus on workers’ rights, including safe and healthy working conditions, as well as the elimination of forced labor, child labor, and discrimination.
Our Statement on Labor and the Workplace articulates our support of the principles of the International Labor Organization (ILO) 1998 Declaration on Fundamental Principles on Rights at Work, including the elimination of child labor, forced labor, and workplace discrimination, the recognition of the right to freedom of association and collective bargaining, and a safe and healthy workplace.
The standard terms and conditions used in our global procurement organization include contract language that requires adherence to all applicable laws and regulations. Furthermore, requests for quotes issued by our procurement staff typically include clauses relating to the prohibition of forced or compulsory labor and the payment of wages and benefits in accordance with local laws. Participants in such bidding activities are required to adhere to those requirements.
Audits further support supply chain transparency and compliance with our expectations. Our standard contracts typically require suppliers and all their subcontractors to allow ExxonMobil to access all offices and work locations, and to interview supplier and subcontractor personnel. We select a certain percentage of suppliers annually for such audits, which include a compliance review on contract provisions.
Human trafficking issues have received worldwide attention in recent years, and we proactively communicate expectations and manage supply chain risks related to human trafficking through our Standards of Business Conduct, our Statement on Labor and the Workplace, and our due diligence processes. We also seek to reduce the underlying conditions that lead to human trafficking by working to engender economic growth and personal prosperity.
Environmental performance in our supply chain
We seek and aspire to work with innovative suppliers to reduce environmental impacts in our supply chain and to engage with our suppliers to share our expectations and identify opportunities. Our cost models and sourcing strategies incorporate environmental considerations, such as reducing energy use and incorporating recycled content into packaging materials. Environmental performance is a consideration in our commercial decisions. Sustainability questions are embedded in our sourcing platform and considered in bid evaluation and supplier selection.
Whether through collaboration with our transportation and logistics suppliers or through our focus on efficiently running our warehousing operations, these actions continue to result in innovative ways to tackle everyday challenges in a cost-effective way.
Performance and initiatives
In 2022, we surpassed $6.5 billion in annual spend with local suppliers in select countries, and with diverse suppliers and small businesses globally. Of that, over $4 billion was spent with U.S. businesses owned by minorities, women, members of the LGBTQ community, veterans, service-disabled veterans, people with disabilities, and small businesses. Our supplier diversity efforts also continue to expand globally, in accordance with applicable laws, and has resulted in over $600 million spent annually with businesses owned by Indigenous Peoples in Canada and women in countries outside of the United States.1
- Includes direct ExxonMobil spending on Tier 1 suppliers and a select group of Tier 2 suppliers.
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Actual future results, including the achievement of ambitions to reach Scope 1 and 2 net zero from operated assets by 2050, to reach Scope 1 and 2 net zero in Upstream Permian Basin unconventional operated assets by 2030, to eliminate routine flaring in-line with World Bank Zero Routine Flaring, to reach near zero methane emissions from operated assets and other methane initiatives, to meet greenhouse gas emission reduction plans or goals, divestment and start-up plans, and associated project plans; technology advances including in the timing and outcome of projects to capture and store CO2 supply lower-emission fuels, produce hydrogen, produce lithium, obtain data on detection, measurement and quantification of emissions including reporting of that data or updates to previous estimates, and use plastic waste as feedstock for advanced recycling; progress in sustainability focus areas; and reserve or resource changes could vary depending on changes in supply and demand and other market factors affecting future prices of oil, gas, petrochemical or new market products and services; future cash flows; our ability to execute operational objectives on a timely and successful basis; policy and consumer support for emission-reduction and other advanced products and technology; changes in international treaties, laws, regulations and incentives, including those greenhouse gas emissions, plastics, carbon storage and carbon costs; evolving reporting standards for these topics and evolving measurement standards for reported data; trade patterns and the development and enforcement of local, national and regional mandates; unforeseen technical or operational difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies such as electrification of operations, advanced recycling, CCS, hydrogen production, or direct lithium extraction on a commercially competitive basis; availability of feedstocks for lower-emission fuels, hydrogen, or advanced recycling; changes in the relative energy mix across activities and geographies; the actions of competitors; changes in regional and global economic growth rates and consumer preferences; actions taken by governments and consumers resulting from a pandemic; changes in population growth, economic development or migration patterns; military build-ups, armed conflicts, or terrorism; and other factors discussed in this release and in Item 1A. “Risk Factors” in ExxonMobil’s Annual Report on Form 10-K for 2022 and subsequent Quarterly Reports on Forms 10-Q, as well as under the heading “Factors Affecting Future Results” on the Investors page of ExxonMobil’s website at www.exxonmobil.com. The Advancing Climate Solutions Report includes 2022 greenhouse gas emissions performance data and Scope 3 Category 11 estimates for full-year 2022 as of March 1, 2023. The greenhouse gas intensity and greenhouse gas emission estimates include Scope 2 market-based emissions. The Sustainability Report, the Advancing Climate Solutions Report, and corresponding Executive Summaries were issued on Jan. 8, 2024. The content and data referenced in these publications focus primarily on our operations from Jan. 1, 2022 – Dec. 31, 2022, unless otherwise indicated. Information regarding some known events or activities in 2023 are also included. No party should place undue reliance on these forward-looking statements, which speak only as of the dates of these publications. All forward-looking statements are based on management’s knowledge and reasonable expectations at the time of publication. We do not undertake to provide any further updates or changes to any data or forward-looking statements in these publications. Neither future distribution of this material nor the continued availability of this material in archive form on our website should be deemed to constitute an update or re-affirmation of these figures or statements as of any future date. Any future update will be provided only through a public disclosure indicating that fact.
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SUPPLEMENTAL INFORMATION FOR NON-GAAP AND OTHER MEASURES
The Resiliency section of the Advancing Climate Solutions Report mentions modeled operating cash flow in comparing different businesses over time in a future scenario. Historic operating cash flow is defined as net income, plus depreciation, depletion and amortization for consolidated and equity companies, plus noncash adjustments related to asset retirement obligations plus proceeds from asset sales. The Company’s long-term portfolio modeling estimates operating cash flow as revenue or margins less cash expenses, taxes and abandonment expenditures plus proceeds from asset sales before portfolio capital expenditures. The Company believes this measure can be helpful in assessing the resiliency of the business to generate cash from different potential future markets. The performance data presented in the Advancing Climate Solutions Report and Sustainability Report, including on emissions, is not financial data and is not GAAP data.