Our suppliers and contractors are critical to our success and play a significant role in Hess’ day-to-day business operations. They collaborate with us to promote efficient operations, maintain high standards of environment, health and safety (EHS) performance, mitigate risks and create shared value. As such, supply chain and contractor management is one of our key sustainability issues.
In 2023, we purchased approximately $3.8 billion in commercial goods and services from 2,121 suppliers, whose workhours constituted approximately 71% of our total workforce hours. See our Key Sustainability Metrics where we disclose our five year supply chain metrics.
Management Approach
Effective supply chain management underpins our business and operational strategies. We continue to enhance our capabilities to understand the market and strategically manage our suppliers with cross functional, collaborative teams. Hess follows a standardized approach to evaluate key prospective suppliers’ qualifications and assess current suppliers’ performance related to safety, quality, delivery, cost and people management.
Our Procurement Policy specifies expectations and governance for the evaluation of proposals, management of contracts and ongoing procurement of goods and services. It also includes code of ethics and conflict of interest guidelines that establish clear expectations for our employees when engaging with suppliers.
For more information on our overall management approach to supply chain, see the Hess Supplier Network.
Prequalifications
We employ a systematic prequalification and selection process to help ensure we are working with suppliers who meet our expectations and requirements for sustainability and other areas.
Through our use of a central global electronic sourcing system, we conduct risk assessments for all prospective suppliers, which can include screening based on antibribery, anticorruption, legal compliance, EHS performance and programs and workforce qualifications. When applicable, we review prospective suppliers’ insurance, tax and quality information. We perform expanded EHS risk assessments for prospective suppliers as relevant based on contracts that involve higher risk due to factors such as the number of workhours or the scope of work.
Monitoring and Compliance
Our central global electronic sourcing system houses standard contracting documents and other key materials.
As part of our contracting requirements, companies that supply Hess with goods and services must, at a minimum, comply with all applicable laws and regulations, maintain any applicable licensing or permitting requirements for their activities and meet expectations set forth in our Code of Conduct and our voluntary commitments. Standard contract clauses also include requirements for ethical business practices, labor and human rights, SR, business integrity, search and seizure, EHS and quality of materials and services.
Our suppliers are expected to take reasonable measures to ensure they communicate and uphold our requirements across the value chain of their business, and suppliers remain accountable to Hess for compliant performance of work by all their personnel and subcontractors.
At our operated assets, we follow a risk based approach when conducting audits and other assurance activities of suppliers. We help suppliers develop improvement plans if we find any gaps in their compliance with laws and regulations or Hess requirements, including those related to EHS.
Engagement
We tailor our approach to ongoing supplier engagement using a range of criteria, including contract value and risk level, so that we focus on deeper engagement with our most strategic suppliers. For example, we have implemented an ongoing engagement cadence between Hess senior executives and our strategic suppliers’ senior leaders focused on increasing transparency, delivering mutual value and prioritizing supplier diversity.