OKEA ASA

Environmental & Social Information • Apr 8, 2024

Appendix to: OKEA ESG report 2023

OKEA Transparency Act Report 2023

This report has been prepared in accordance with the Norwegian Transparency Act (the "Transparency Act") secƟon 5 regarding safeguarding human rights and decent working condiƟons. It provides informaƟon on the implementaƟon and results of OKEA's due diligence. Other informaƟon regarding human rights can be found in OKEA's ESG report 2023, secƟon "Social—RespecƟng human rights."

OKEA has used PwC's digital tool "Transparency Chain" to map OKEA's supply chain according to The Norwegian Transparency Act. The informaƟon gathering process uses a standardised quesƟonnaire, where OKEA has decided which suppliers and business partners that will receive the quesƟonnaire and decides the response if the suppliers have quesƟons.

The quesƟonnaire asks for company informaƟon, key personnel, ulƟmate beneficial owners, PoliƟcal Exposed Persons (PEP)/Close RelaƟve or Associate (CRA), labour and human rights, QHSE, business integrity, environment, supplier management and whistleblowing channels.

The process and mapping

OKEA Suppliers registered in Magnet JQS were not a part of this process, as OKEA considers this to be sufficiently assessed and followed up by Magnet JQS. Magnet JQS is the portal for supplier qualificaƟon used by contractors and all operators in Norway's energy industry. All suppliers complete a capability assessment related to their operaƟng management system, where risk management related to human rights is an element. Magnet JQS also supplies an audit service for supplier operaƟonal management systems. By collecƟng and sharing supplier data, operators on the Norwegian ConƟnental Shelf (NCS) can manage risk beƩer in the supply chain and streamline procurement processes effecƟvely.

OKEA has included suppliers who do not have to comply with reporƟng requirements in the Transparency Act.

In 2023, OKEA assessed a list of 396 companies, of which 251 were Ɵer 1 suppliers and 145 were business partners. Nine Ɵer 1 suppliers were forwarded to 21 Ɵer 2 suppliers—none of the Ɵer 2 suppliers forwarded to their own sub-suppliers. Tier 1 suppliers deliver parts and services that go directly into OKEA's products. Tier 2 suppliers deliver other items and services related to our business but not used directly in our products. In total, 471 companies received the quesƟonnaire. 176 companies have completed the quesƟonnaire, including 110 Ɵer 1 suppliers, 8 Ɵer 2 suppliers and 58 business partners.

The mapping contains informaƟon from third parƟes who have submiƩed quesƟonnaires in the Transparency Chain tool, which flags companies based on their quesƟonnaire responses.

Any incorrect or incomplete informaƟon submiƩed in the quesƟonnaire falls under third parƟes' responsibility.

Due diligence process/5-steps model

This mapping is only one element in the more extensive due diligence process concerning suppliers and business partners, as secƟon 4 of the Norwegian Transparency Act requires. The Act also recommends using inherent risk assessments, such as industry and country risks.

The 396 companies in the mapping have been idenƟfied against NACE-codes and accompanying industry risk, as well as country risk indices (CorrupƟons PercepƟon Index, Global Rights Index and Labour Rights Index).

OKEA has also considered our spending informaƟon related to suppliers and will use this informaƟon to evaluate OKEA's possible influence on different suppliers and business partners regarding idenƟfied flags.

OKEA's responsibility depends on its relaƟonship with the potenƟal or actual impacts, i.e., whether OKEA causes, contributes to, or is only linked to such effects through its enterprise operaƟons, products, or services through a business relaƟonship.

All our 396 companies, suppliers and business partners have been analysed. The analysed data provides informaƟon about the inherent risk regarding human rights and decent working condiƟons, categorised by product or service provided.

A mapping tool is used to categorise the different enƟƟes.

The mapping is based on OKEA's input, publicly available company informaƟon, open sources of informaƟon on inherent risk and PwC's knowledge of best pracƟces and compliance.

The Transparency Act is based on the OECD guidelines, which provide an extensive structure and guidance for due diligence processes. A due diligence process by the Transparency Act is a process of conƟnuous improvement, as illustrated in the figure to the right.

In the following, we provide a short summary of the analysis's results, showing what types of suppliers and business partners, in general, would be characterised as having an inherent high risk and the most common risk factors.

High-risk suppliers

In the summary of OKEA's suppliers and business partners, these are examples of supplier categories that could have an inherently high risk connected to human rights or decent working condiƟons. When analysing risk to align with the Transparency Act, OKEA considers the enƟre value chain from upstream to downstream, including all the raw materials, producƟon and services.

• Advisory: Advisory services do not have HSE risks in themselves, though there are some risks related to overƟme work and healthy work-life balance. Advisory services on-site in the oil and gas industry would also include a high HSE risk.
• ConstrucƟon: There is a risk of breaching labour rights and HSE risks for construcƟon workers. Local communiƟes and workers in the supply chain are at risk due to the sourcing and processing of raw materials (such as stone, wood, and metal) used in construcƟon equipment and building materials.
• SoŌware & IT services: SoŌware and hardware risks include labour rights breaches and HSE risks. Local communiƟes are at risk due to the sourcing and processing of raw materials. Producers: This depends on the labour condiƟons of the programmers, i.e., the country risk of the country in which they are based.
• Machinery & Equipment: HSE risk (heavy liŌing and transportaƟon). Machines may consist of metals and electronics with a high risk of violaƟng human rights and decent working condiƟons in the value chain. This includes the risk of low wages, child labour, forced labour, illegal use of land, financing of armed conflicts, as well as a lack of right to organise.
• Store purchase of off-the-shelf products: The actual sales acƟviƟes do not have any significant risks. The risk here will depend on the product being sold and where these products are being produced.
• Transport services (goods and passenger transport): Risk of breaching labour rights and HSE risk for drivers. The use of sub-suppliers for drivers heightens the risk further. Local communiƟes and workers in the supply chain are at risk due to the sourcing and processing of raw materials (such as stone, wood, and metal) used in the producƟon of transport vehicles and fuel.

High-risk business partners

In the summary of OKEA's suppliers and business partners, these are examples of business partner categories that could have an inherently high risk connected to human rights or decent working condiƟons. When analysing third parƟes categorised as business partners, the Transparency Act limits the obligaƟons to perform due diligence to the Ɵer-1 and direct contract party. Sub-suppliers to the business partners are not within the scope of the required due diligence.

• Transport Services (goods and passenger transport): PotenƟal supervisory duty (Norway), risk of breaching labour rights and HSE risk for drivers.
• Restaurant/canteen/catering: PotenƟal supervisory duty (Norway), risk of breaching labour rights and HSE risk.
• Hotel and accommodaƟon: Depending on the place, establishment, and country, employees in the hotel and service industry may be exposed to non-decent working condiƟons such as poor wages and abnormal working hours.
• Cleaning: OKEA has not categorised any of the business partners in the cleaning category. However, cleaning is oŌen part of the office rent or maybe part of another supplier's service. It is essenƟal to be aware of the risk sectors: potenƟal supervisory duty (Norway), risk of breaching labour rights, and HSE risk.

OKEA has informaƟon and supervisory duty ("Påseplikt" in Norwegian) for certain services related to cleaning, canteen, transport, etc., in connecƟon with our operaƟons.

Overview of the responses

Summary and conclusion

OKEA has categorised the risks into categories, and the main reasons for flagged companies are summarised as follows:

Risk category	Main reasons for flags
Business Integrity	Lacking compliance procedures
	Lacking dedicated personnel
Labour and Human Rights	Lacking compliance procedures
	Lacking dedicated personnel
Supplier Management	Lacking compliances procedures
Environmental Management	Lacking dedicated personnel
	Lacking compliance procedures
Health and Safety	Lacking compliance procedures
	Lacking dedicated personnel

Results in detail:

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Focus on 2023 and plans for 2024

The trend OKEA can see from the responses and flags is that the mapped companies primarily lack formal procedures for compliance within the relevant risk categories. The lack of formal procedures is not a significant concern; however, OKEA would need to assess the actual risk of compliance breaches.

In 2023, OKEA iniƟated 12 supplier audits through Magnet JQS, and audit results are followed according to OKEA's business processes and systems.

Further, OKEA has also 2023 iniƟated training and awareness in the supply chain organisaƟon related to human rights and decent working condiƟons.

Going forward, based on the mapping results and Magnet JQS audits, OKEA will decide which companies to follow up and how, including any need to revise OKEA's internal governance structure and procedures.

OKEA will prioriƟse companies categorised with acƟviƟes in the "high-risk suppliers"/ "business partners" in combinaƟon with OKEA's actual impact based on spending, relaƟonship, and number of transacƟons.

OKEA will consider joining the cross-industry collaboraƟon iniƟaƟve on human rights in 2024. Offshore Norge, the professional body and employer's associaƟon for oil and supplier companies manages the iniƟaƟve. Offshore Qualific coordinates the Human Rights Audit Service.

This iniƟaƟve aims to assist parƟcipaƟng companies in improving worker welfare in line with the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for MulƟnaƟonal Enterprises and the fundamental convenƟons of the InternaƟonal Labour OrganisaƟon (ILO).