Responsible supply chain
Statkraft seeks to ensure responsible business practice by avoiding purchases that have adverse impacts on people, society and the environment. Our Supplier Code of Conduct sets out the requirements for our business partners, and we follow up our suppliers through contract obligations.
Our approach to sustainable procurement
Statkraft is committed to sustainable and responsible business practices, and this commitment extends to our suppliers. Our work is guided by the eighth UN Sustainable Development Goal (Decent work and economic growth), the UNs Guiding Principles for Business and Human Rights, and the OECD’s Guidelines for Multinational Enterprises. We believe that cooperation with suppliers is necessary to achieve a sustainable supply chain. We organise our procurement activities so that we can obtain the best possible value, terms and conditions, and avoid adverse impacts to people, society, and the environment in our supply chains.
Our ambition is to procure from suppliers that demonstrate respect for people, society, and the environment.
Each year, Statkraft purchases from approximately 11 000 suppliers world-wide. Procurement is handled by more than 100 procurement professionals, in different purchasing streams, located in twelve countries. Their day-to-day work is supported by the Sustainable Supply Chain unit in Group Procurement.
Our Supplier Code of Conduct is part of all contracts; it prohibits unethical and illegal business practices, and requires our suppliers to respect fundamental human rights and labour rights, health and safety standards, the environment, and privacy.
Statkraft’s procurement policy requires that procurement activities be organised to “avoid adverse impacts to people, society and the environment”. The policy is supported by requirements that ensure that potential impacts are assessed in the same manner as financial and operational risks. Our standard contract models include sustainability obligations. We integrate obligations in tender documents, and potential suppliers are assessed (as part of the qualification criteria) on how they respect human and labour rights.
When we discover an adverse impact linked to our purchases, we engage in dialogue with the supplier to stop and rectify the situation. Where impacts cannot be rectified, we cooperate with the supplier to enable remediation that is proportionate to the significance and scale of the adverse impact.
A risk of adverse impact exists when there is potential for behaviour inconsistent with the recommendations in OECD’s Guidelines for Multinational Enterprises. Statkraft acknowledges that we cannot handle all potential adverse impacts in our supply chain. Action priorities have been set for the most significant risks of human and labour rights impacts, based on severity and likelihood.
Most of Statkraft’s procurement activities are directly linked to the purchase of equipment necessary to produce electricity and construction of powerplants. We have identified risks in the supply chains for electromechanical equipment (used for hydropower), wind turbines and solar panels, and specific risks related to components/activities linked to sector, products, input material and geographies. The main risks identified are described below.
We handle risks by addressing issues in the tender phase and by including mitigation measures in contract obligations. We work continuously to develop, implement, and track measures.
Potential risks of breach of human and labour rights in the supply chain for hydropower equipment
Electromechanical equipment for hydropower generation is usually tailormade to the production capacity of a power plant. The supply chain is long and varies from project to project. The main component of all electromechanical equipment is steel, followed by copper and aluminium. There is very limited use of conflict minerals and critical minerals in electromechanical equipment.
Statkraft’s contracting parties buy engineered components from a variety of sub-suppliers and usually undertake assembly in their own workshops. Statkraft has limited transparency into the lower tiers of the supply chain. We consider that the highest potential for adverse impacts are poor working conditions and inequality at sub-supplier workshops (in rough machining and welding workshops), and unreasonable working time, inadequate leave periods and wages for workers during equipment installation at site.
Potential risks of breach of human and labour rights in the supply chain for wind power equipment
The main components in wind turbines are rotor blades, the rotor hub, nacelle, and tower. The supply chain is long and Statkraft’s suppliers buy standard and manufactured components from a variety of sub-suppliers. Glass fibre reinforced plastic (GRP) is the main component in the rotor blades, and also a large part of the rotor and hub. Statkraft has assessed that there is a risk of forced labour, and discrimination against women related to production of GRP parts. In addition, there is a potential risk of unreasonable working time, inadequate leave periods and wages for workers during installation of wind turbines on-site.
Potential risks of breach of human and labour rights in the supply chain for solar power equipment and equipment in Battery Energy Storage Systems (BESS)
The main components for solar are photovoltaic (PV) panels, with polysilicon as the key input material, and inverters. Forced labour in the production of polysilicon for solar panels sourced from China received international attention towards the end of 2020 and Statkraft has addressed these issues during 2021, supported by a dedicated taskforce. Statkraft strongly opposes the use of forced labour and seeks to avoid contributing to or being directly linked to adverse human rights impacts, which we address through necessary traceability and audit rights. Future contracts will be awarded to suppliers that deliver solar module materials from factories where there is a limited risk of forced labour, who can act transparently and allow sufficient insight into their supply chain.
Statkraft also works with industry associations and peers to raise awareness, increase transparency, and improve industry standards for supply of PV panels.
Other potential risks of breach of human and labour rights in our supply chains
Business consulting and engineering work is usually performed by suppliers in countries where Statkraft is located, and the supply chain is short. Statkraft considers the risk of human rights breaches to be low.
Statkraft acknowledges that there are potential risks related to labour conditions in connection with transportation of goods to Statkraft’s sites and between each supplier tier, and also linked to certain indirect materials and services, but our focus until now has been on procurement of equipment where Statkraft has the highest risk and most leverage.
Risks related to business ethics (e.g. risk of fraud and corruption) are still under pressure, and we are working to mitigate them through awareness.
Supplier Code of Conduct
The basis for our supply chain management is our Supplier Code of Conduct, which covers health and safety, environment and climate, human rights, labour rights, and business ethics. Statkraft’s suppliers must meet the requirements set out in this document, which are designed to reflect our commitment to a responsible business conduct.
Companies that tender for contracts are informed about the requirements in the Supplier Code of Conduct as part of the procurement process. The Supplier Code of Conduct and contract clauses that give Statkraft the right to monitor supplier performance forms part of all contracts.
Inspections and reviews
In order to drive improvement in supplier performance, we undertake reviews and inspections of our suppliers.
Strategic supplier due diligence
To operationalise expectations and upcoming legislative requirements, Statkraft has developed a framework and methodology for supply chain due diligence, named Know Your Supplier (“KYS”). This is a practical and operative approach to assess and manage supply chain risk. The framework is developed to assess risk at key suppliers specifically. However, the output of several targeted KYS assessments will inform supply chain risk more generally. The framework includes risk assessment and management at suppliers’ own operations and their respective supply chains.
Sustainability rating for global supply chains
Statkraft has partnered up with EcoVadis to help us in our focus to measure and improve sustainability impacts to people, society and the environment in our supply chains.
"We organise our procurement activities so that we can obtain best possible value, terms and conditions and avoid adverse impacts to people, society and the environment in our supply chains."