Supply Chain Management

Our Policy

As a company that operates projects in roughly 10 countries worldwide, INPEX recognizes that fair and impartial procurement as well as management of suppliers that offer materials, equipment, and services are its key issues. Our Details on Ethical Procurement Guideline expressly prohibits impediments to fair and impartial competition, abuse of dominant bargaining positions, and inappropriate granting or receipt of benefits. It also requires that we protect the confidentiality of supplier information and technologies. In addition to that fundamental policy on procurement, it requires our officers and employees to comply with our Mission, Sustainability Principles, and Code of Conduct, which defines requirements for conducting our business, for the purpose of fair and impartial procurement. In FY2022, we established the Supplier Code of Conduct, which sets out our expectations of our suppliers across seven areas related to the environment, society, and governance (ESG), and includes compliance with labor and environmental laws and regulations, prevention of corruption, and respect for the INPEX Group Human Rights Policy. In FY2023, we issued our Supplier Code of Conduct Guidelines to promote greater understanding of the Supplier Code of Conduct. At our supplier forum in FY2024, where we invited approximately 70 significant suppliers in our domestic business, we explained our efforts regarding respect for human rights. We will continue to strengthen our relationships with suppliers through this forum, engage in competitive procurement, and enhance our supply chain management, such as risk management that includes CSR, and performance assessments.

Procurement Overview

Management Structure

The Compliance Committee consists of members including the Senior Vice President of the Logistics & IMT Division responsible for supply chain management. The Committee meets regularly to ensure strict compliance with corporate ethics and behavior in accordance with the Details on Ethical Procurement Guideline and Code of Conduct. In December 2024, the Sustainability Committee discussed external assessments of our supply chain management and our initiatives in this area.

Supply Chain Risk Management

Each year, the INPEX Group procures approximately 380 billion yen in goods and services from roughly 2,000 suppliers. Procurement from our significant suppliers accounts for roughly 300 billion yen of this figure. We take the following actions to manage risks within our supply chain.

We encourage the employees in our procurement division to undergo company lectures and such about the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, procurement compliance, information security, and Anti-Bribery and Anti-Corruption (ABC) policy. As part of risk management in our supply chain, we also conduct regular identification and assessment of risks in our supply chain, and consider and implement measures to prevent and mitigate these risks. In 2024, we started organizing our global supply chain forum by the procurement divisions across the INPEX Group, including overseas sites, conducting discussions to strengthen supply chain functions – including Group-wide standardization of CSR-related operations – and formulating activity plans for subsequent fiscal years.

As a supplier-related initiative, we require suppliers to comply with labor and environmental laws and regulations, comply with our Supplier Code of Conduct, and respect the INPEX Group Human Rights Policy. These requirements are built into our standard contracts. When selecting suppliers, we strive to provide opportunities for potential new suppliers, both in Japan and overseas irrespective of the scale of their business based on fair and impartial assessments. In selecting suppliers, besides price, quality, delivery time, technological capabilities, and financial state, we also look at environmental, social, and governance (ESG) aspects, such as compliance with the laws and regulations of each country, our ABC policy, HSE requirements, and CSR risk management. In our Australian business, during bidding, we also conduct human rights-related self-assessment surveys and surveys regarding GHG emissions. These assessments are included in supplier assessments during bidding. We are also identifying the human rights risks in our supply chain and finalizing our framework for conducting further risk assessments, carrying out auditing processes, and making improvements. As part of strengthening risk management in our supply chain, we create opportunities for raising HSE awareness and improving supplier engagement by regularly holding HSE liaison meetings with significant suppliers to share information about HSE, quality, and other topics and exchange opinions about risk mitigation measures.

For significant suppliers as well as suppliers assessed as high risk through the above efforts, we encourage improvement through dialogue and work on avoidance and mitigation of risks, including through review of contracts.

Supplier Screening and Assessment

We conduct CSR self-assessment surveys of suppliers as part of our screening process for CSR risks in our supply chain. In FY2024, we received responses from 336 suppliers. Over the past three years, 46.8% of suppliers have completed CSR self-assessments. Our CSR self-assessment surveys comprise sections on the environment, society (human rights and labor, health and safety, and contribution to local communities), and governance (fair corporate activities and approach to business partners). In addition, taking into consideration the results of responses to our CSR self-assessment surveys, size of orders, sector/commodity risks (industry/sector), and country risks, we also conduct CSR audits to assess risks in greater detail and improve CSR-related efforts. In FY2024, we conducted second-party audits led by us on two suppliers, and third-party audits using external consultants on two suppliers. We conducted second-party audits using our CSR self-assessment surveys. Third-party audits were conducted using the external consultants’ standards (developed based on international standards such as the ILO conventions and SA8000) as on-site audits at plants, construction sites, and such from the perspectives of the environment, society (labor, wages and working hours, and health and safety), and management systems. The CSR self-assessment surveys and audits did not discover any significant findings.

Through the above CSR self-assessment surveys for suppliers, CSR audits, and improvement measure discussions, we will work to reduce risks for our entire supply chain. We assign employees with SA8000 auditor qualifications to our procurement division to continuously identify and address sustainability risks in the supply chain.

Supplier Code of Conduct and Supplier Code of Conduct Guidelines

In July 2022, we established our Supplier Code of Conduct, which clearly outlines our expectations of our suppliers in the following seven ESG-related areas to address ESG throughout our supply chain.

We require suppliers to comply with the Supplier Code of Conduct by including it in our standard contracts and having it accessible via our website. Furthermore, for significant transactions that meet or exceed specified contract periods or amounts, we conduct ESG assessments during the bidding process. The results of these assessments are used in supplier screening and deliberations regarding risk countermeasures.

In June 2023, we issued our Supplier Code of Conduct Guidelines. These guidelines contain explanations and conduct examples, to promote greater understanding of and compliance with the code among our suppliers.