Shell Supplier Requirements Explained
On this page an overview and explanation of the Shell supplier requirements.
1. Ethics and Compliance Due Diligence
All suppliers engaged by Shell must comply with the Shell General Business Principles, Shell Code of Conduct and Shell Supplier Principles. Failing to comply with these requirements or any laws or regulations could result in Shell facing fines, operational delays and reputational damage, negatively impacting our Societal License to Operate.
Ethics and Compliance due diligence is the process to ensure that there is an understanding of who Shell is doing business with. When dealing with third parties, the correct level of due diligence must be understood and conducted to make sure Shell's standard of ethical behaviour is maintained. Timing of the screening remains at the discretion of our CP professionals. Nonetheless, the due diligence must be performed prior to awarding the contract to a supplier.
The supplier's role in this process is to review and confirm acceptance of the Shell General Business Principles, Shell Code of Conduct and Shell Supplier Principles. This is necessary during the completion of the Shell Supplier Profile Questionnaire or indeed when responding to any invitation to an event, which was issued as part of one of our sourcing activities. You may also be contacted by a Shell representative to provide independently verified Ultimate Beneficial Ownership documentation and control documentation (up to 10% shareholding). Timely response to the request for this documentation is important, otherwise the supplier may not be considered as one of the participants in the sourcing event. Where these are readily available publicly, we will endeavour to obtain them ourselves.
2. Financial Risk Assessment
An important part of an effective sourcing activity is having a full understanding of the financial standing of our suppliers/sub-contractors, to ensure that they can fulfil their contractual obligations towards Shell. This is achieved by performing Supplier Financial Risk Assessments and developing financial risk mitigation plans where necessary. The Supplier Financial Risk Assessment is a snapshot of a supplier’s financial and industry situation, management and relative position in the industry using historical data. The Supplier Financial Risk Assessment is typically undertaken for higher risk and higher value contracts, but our CP Professionals have the option to initiate these for any contract, where necessary.
The supplier’s role in this process is to provide their most recent financial statements when completing the Shell Supplier Profile Questionnaire or when requested to do so by a Shell representative. Where these are readily available publicly for the contracting legal entity, we will endeavour to obtain them ourselves.
3. Health, Safety, Security and Environmental & Social Performance (HSSE&SP)
To achieve compliance with the key elements of the Shell HSSE&SP Control Framework, where the risks in any of these areas are elevated, we must assess our supplier’s capability to deliver safely each individual scope of work they undertake on our behalf.
A risk-based and industry aligned approach has been adopted, where contracts designated with an overall low HSSE&SP risk, are not required to undertake a supplier capability assessment. Where the overall contract risk is elevated, a supplier capability assessment will be required.
Where requested by a Shell representative, the supplier’s role in this process is to respond to our Industry Standard HSSE&SP questionnaire and provide the identified supporting documentation. The questionnaire is designed to capture the supplier’s management system information and historic performance data. Timely response to the questionnaire is important, otherwise the supplier may not be considered as one of the participants in the sourcing event.
A Shell Contract Management Team will review the documentation provided and will assess the robustness of the supplier’s management systems. This will allow for decisions to be made on which suppliers to shortlist for invitation to tender.
For contracts with certain high-risk activities included in the scope of work, it may be necessary for the Shell HSSE&SP Specialist and contract holder to conduct a more in-depth verification of the supplier’s management systems and/or conduct a scope specific capability assessment. On occasion, this may require on-site audits. Your Shell C&P professional or contract holder will advise if this is the case. The outcomes of these assessments/audits will influence the decision on awarding the contract and also how the contract HSSE&SP risks will be managed by the supplier and Shell during the execution of the contract. Please click on this link to find out more about Shell’s commitment to HSSE&SP.
4. Worker Welfare/Labour Rights Assessment
Undertaking assessments of our suppliers capability to manage labour rights/worker welfare risks within their operations and respective supply chains, ensures compliancy with the requirements set out in the Shell General Business Principles, and share our expectations with our suppliers through the Shell Supplier Principles.
A clause requiring adherence by all contractors and suppliers to the Shell Supplier Principle, is included in all Shell contracts. Ensuring our suppliers comply with the Shell Supplier Principles is the right thing to do and forms an integral part of the required regulatory reporting (i.e. the UK Modern Slavery Act) that Shell must complete.
A risk-based approach has been adopted, based on a combination of the supplier’s trading address, country of service execution/goods manufacture and what services the supplier will be providing. If the supplier is identified as having an elevated risk from a labour rights/worker welfare perspective, a detailed assessment of the supplier’s management systems and processes will be undertaken. This is to ensure that the suppliers are capable of effectively managing the risks within their own operations and respective supply chains.
During this process a supplier may be requested by a Shell representative to respond to our Industry Standard Labour Rights questionnaire and provide the identified supporting documentation. Timely response to the questionnaire is important, otherwise the supplier may not be considered as one of the participants in the sourcing event.
A Shell Labour Rights Specialist will review the information and documentation provided, and will assess the robustness of the supplier’s management systems. Feedback will then be provided to the Shell C&P professional and the contract holder to allow for decisions to be made on which suppliers to shortlist for invitation to a sourcing event, or will be factored into the evaluation of any bids received from the respective supplier.
The supplier will be given feedback on any gaps identified, and where a decision to award a contract is made, the supplier will be expected to work with the Shell contract holder to close the identified gaps, within a limited timeframe and undergo a re-assessment.
Where permission has been granted by the supplier, the supplier's responses and supporting documentation will be shared with industry peers who have signed up to the Joint Industry Initiative for Human Rights (HuRi), driving industry standardisation and efficiencies for both the supplier and operators.