BP 2011 Annual Report Download - page 71

Business review: BP in more depth
BP Annual Report and Form 20-F 2011 69
Business review
Working with partners and contractors
BP, like our industry peers, rarely works in isolation – we need to work with
suppliers, contractors and partners to carry out our operations. In 2011,
more than 55% of the 374 million hours worked by BP were carried out by
contractors.
Our ability to fulfil our corporate responsibility depends in part
on the conduct of our suppliers, contractors and partners. We address
this in a variety of ways, from training and dialogue to confirming
operational standards through legally binding agreements. When we select
contractors, our due diligence is designed to identify safety, bribery and
corruption, money laundering and trade sanctions risks. We expect our
suppliers, contractors and partners to comply with legal requirements and
operate consistently with the principles of our code of conduct when they
work on our behalf.
Within our operating management system we have group-wide and
business-specific requirements and practices for working with contractors.
The objective is to provide assurance that goods, equipment and services
provided by third parties meet contractual and BP requirements and
that there is a consistent, shared understanding of responsibilities. For
example, in our drilling operations, where we have evaluated differences
between our own standards and those of contractors, we require bridging
documents to be put in place. These define how two or more safety
management systems co-exist to allow co-operation and co-ordination
between BP and the contractor.
Contractor management review
Following the Deepwater Horizon oil spill, we began an in-depth review
of contractor management practices, with the aim of documenting and
learning from best practice throughout BP and across a number of sectors
and industries that use contractors in potentially dangerous activities. We
studied 21 major organizations in six different sectors – airlines, mining,
construction, pharmaceuticals and chemicals, nuclear and space.
We found that these organizations working in potentially high-
risk arenas tended to have fewer and longer-lasting relationships with
contractors, supported by shared structures and practices. Clearly
defined responsibilities and decision rights at every stage of each process
are needed to make contractor relationships work – including training,
monitoring and auditing. Rigorous qualification of suppliers, including
competency assessments for critical roles, is also important.
The findings of this review are informing our contractor
management approach, with initial work focusing on contracts in our
upstream supply chain that involve potentially high-consequence activities.
Our partners in joint ventures
We seek to work in partnership with companies that share our
commitment to ethical and sustainable working practices. However, in
some of our joint ventures, we do not directly control how our partners and
their employees approach these issues.
Typically, our level of influence or control over a project or operation
is linked to the size of our financial stake compared to other participants.
In some joint ventures we act as the operator. Where we are the operator,
and where legal and contractual arrangements allow, our policies,
standards and operating systems apply.
In other cases, for example where one of our partners is the
designated operator or where the operator is a joint venture company
owned by BP and other partners, we are not the day-to-day operator. In
those cases our OMS provides for our businesses to consider whether
the management system used by the operator provides similar levels of
risk and performance management to our own. We seek to influence our
partners through dialogue and constructive engagement.
In 2011, BP initiated a review into our approach to the management
of our relationships with non-operated joint venture operators and partners.
This work includes safety and operational risk as well as bribery and
corruption risk.
Environmental and social
responsibility
The world’s demand for energy is increasing and our business of finding
and producing some of that energy means we operate in increasingly
diverse locations globally. Many of these locations have environmental and
social sensitivities.
To BP, working responsibly means managing our impacts on the
areas where we operate, and making this a core principle in all of our
activities. From the initial planning stages of a new project through to
its eventual decommissioning and any remediation work that follows,
our operating management system (OMS) lays out the standards and
processes required for environmentally and socially responsible operations.
Wherever we work, we strive to minimize our impact on the
environment – whether to land, air, water or wildlife – and to ensure that
local people are engaged, human rights are respected and cultural heritage
is conserved.
Our environmental and social practices
We are taking an increasingly systematic approach to the management of
the environmental and social impacts of our projects. Our environmental
and social practices, which form part of our OMS, set out how the major
projects to which they apply should identify and manage environmental
and social impacts. The practices also apply to projects that involve new
access, projects that could affect an international protected area and some
BP acquisition negotiations.
The practices help us deliver on the intent of the relevant sections
of the OMS, the BP code of conduct and on our external commitments.
They include several key requirements on impact assessment, security
and human rights, indigenous people, international protected areas,
greenhouse gas emissions, energy management, water management,
ozone depleting substances, drilling wastes, and moving communities.
Early in the planning stage, applicable projects complete a screening
process to identify environmental and social impacts that could arise from
their activities. Between implementation in April 2010 and the end of 2011,
nearly 60 projects had completed the screening process with the support
of a trained and independent screening facilitator.
More information about our approach to environmental and
social issues may be found in the BP Sustainability Review and on
bp.com/sustainability.
Working in internationally protected areas
Our environmental and social practices require the projects to which they
apply to understand the potential to affect international protected areas.
The UNEP World Conservation Monitoring Centre’s World Database on
Protected Areas is used to inform this screening process. Our international
protected areas classification includes areas designated as protected by the
International Union for the Conservation of Nature (categories I-IV), Ramsar
and World Heritage sites, as well as areas proposed for protected status.
Where screening indicates that a proposed BP project may
potentially affect an international protected area a high-level risk
assessment is carried out. Our safety and operational risk function provides
an independent review to inform the risk assessment, and before any
physical activity begins permission is sought from senior management,
together with appropriate mitigation measures. The Great Australian Bight
Project completed this process in 2011.
Oil spill contingency planning and response
Applicable laws generally include requirements for dealing with the
environmental and socio-economic impacts of oil spills or leaks. In some
countries, regulators require as part of our licences to operate that plans
are in place for responding to accidents and unplanned events such as
oil spills.