Norway Transparency Act
DUE DILIGENCE COMPLIANCE REPORT IN ACCORDANCE WITH THE TRANSPARENCY ACT
DRIL-QUIP EUROPE LIMITED. NUF
1. INTRODUCTION
This document aims to elaborate on how Dril-Quip Europe Limited. (hereafter referred to as "Dril-Quip" or the "Company") fulfills its obligations arising from Act relating to enterprises' transparency and work on fundamental human rights and decent working conditions (“Transparency Act”).
The main purpose of the Transparency Act is to promote enterprises' respect for fundamental human rights and decent working conditions in connection with the production of goods and the provision of services. Further to this, the Transparency Act also ensures the general public access to information regarding how enterprises handle adverse impacts on fundamental human rights and decent working conditions.
The obligations arising from the Transparency Act are limited to the Company's activities carried out in Norway through the Norwegian-registered foreign company Dril-Quip Europe Limited. NUF (hereafter the "NUF"). Therefore, this account of the Company's due diligence relates only to the NUF's activities. However, a number of guidelines and procedures apply for all other companies that are a part of Dril-Quip group companies (hereafter referred to as "Dril-Quip Group" or "the Group"), i.e. they also apply for the NUF. These guidelines and procedures will thus be described
in the following.
The report covers the period from 1 January 2023 until 31 December 2023. Further to this, the report includes information about the Company's work conducted in 2024 according to the Transparency Act and an overview of the Company's plans for further work in 2024.
The report is structured as follows:
- Section 2: A description of the Company's structure and organization, area of operation,
guidelines and routines. - Section 3: Information about the results of the due diligence assessments.
- Section 4: Information about the measures the Company has implemented or plans to implement, and the results or expected results of the measures.
2. OVERVIEW OF THE COMPANY'S STRUCTURE AND ORGANIZATION, AREA OF OPERATION, GUIDELINES AND PROCEDURES
2.1 Structure and organization
The NUF is the Norwegian branch of the Company, and part of the European organization of DrilQuip. The NUF, having its registered office at Lagerveien 31, 4033 Stavanger, is mainly involved in the supply of subsea equipment for the exploration and production of oil and gas, along with aftermarket facilities to supply tooling for installation and experienced personnel to install offshore. Further capability includes capability to refurbish all subsea equipment.
The global annual sales of Dril-Quip Group in 2023 reached 424,059,571 USD.
The NUF in Norway has 28 employees, globally the Company has approximately 1,600 employees.
2.2 Area of operation
The Group is one of the world's leading manufacturers of onshore and offshore drilling and production equipment. The Group designs and manufactures subsea, surface and offshore rig equipment for use by oil and gas companies in offshore areas throughout the world. Dril-Quip also provides rental tools for equipment installation and aftermarket services for equipment rework and certification.
The Group has facilities worldwide, distributed as follows:
- North and South America
- Mexico
- Ecuador
- Brasil
- Europe and Middle East and Africa
- United Kingdom
- Norway
- Denmark
- Netherlands
- Egypt (both Alexandria and Cairo)
- Ghana
- Ivory Coast
- Namibia
- United Arab Emirates
- Kingdom of Saudi Arabia
- Asia/Pacific
- Australia
- Indonesia
- China (Shenzhen and Tianji)
- India
- Singapore
The Group have four headquarters distributed among the various geographical areas in which our facilities are located, including United States (Huston), Brazil (Macaé), United kingdom (Aberdeen, Scotland) and Singapore.
2.3 Policies and routines
2.3.1 Own operations
To ensure that the NUF will comply with the obligations of the Transparency Act, there has been a board approval to embed responsible business conduct and compliance with the Transparency Act, including a plan for how to perform the due diligence assessment, publishing an account for the due diligence, and plan for the enterprise’s handling of information requests according to the Transparency Act.
In Dril-Quip, Legal Department is responsible for ensuring that the Company’s plan for carrying out due diligence and the plan for establishing procedures for handling of information request are implemented and completed in accordance with the Transparency Act.
Furthermore, Dril-Quip aspire to provide a safe and healthy workplace and promote environmental excellence in its own operations.
Health and Safety
At Dril-Quip, the well-being of our employees takes top priority, and we are committed to ensuring that our operations comply with all industry standards, policies, and regulations to prevent any health and safety risks.
At Dril-Quip, our management fully supports the implementation and ongoing maintenance of Quality, Health, Safety, and Environmental (QHSE) Management Systems that define not only their roles and responsibilities but also those of all members of the workforce.
Our complete QHSE policy can be found online. All our major manufacturing facilities are compliant with ISO 45001:2018 for occupational health and safety management systems. Copies of our certifications are listed in the QHSE section of our website.
Diversity, Equity, and Inclusion
The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. The Company maintains separate policies on discrimination and harassment.
As part of Dril-Quip’s Diversity, Equity, and Inclusion (DEI) initiative, we are dedicated to improving female and minority representation across the organization and in leadership positions.
In addition to that, Dril-Quip applies and enforces the following policies/guidelines which are relevant with respect to the scope of the Transparency Act:
- Code of Business Conduct and Ethical practices policy
- Supplier Code of Conduct
- Conflict Minerals Policy
- Human Rights policy
- Insider Trading policy
- Trade Control Policy
- Anti-Corruption Policy
- Ethics Alert line
2.3.2 Supply chain and business partners
Dril-Quip engages external parties or organizations such as vendors, representatives, consultants, independent contractors, distributors and suppliers to facilitate its business operations (hereinafter collectively referred to as "Suppliers", as this term encompasses both entities within our supply chain and those considered our business partners).
We exercise meticulous diligence in selecting our Suppliers, aiming to cultivate strategic alliances that yield reciprocal advantages for sustained collaboration. Dril-Quip's dedication to sustainability and ethical conduct constitutes an integral aspect of our corporate ethos. Consequently, we align ourselves with Suppliers who resonate with our values and uphold our stringent criteria for ethical business conduct. All Suppliers of the NUF are subject to the policies and routines described above and below.
Our goal is to minimize supply chain risks while also ensuring that our entire business operation aligns with our core legal, environmental and social values. We have developed an enhanced and consolidated approved vendor list (AVL) which is based on a comprehensive screening process that addresses the following areas: a) the business case for onboarding a given supplier; b) health and safety metrics at the suppliers' facilities; and c) financial risks, including their cash flow position and leverage profile. These factors are thoroughly reviewed by Dril-Quip in the initial screening process to identify suppliers that are qualified for the AVL. For those companies listed on the AVL, an automated scorecard is updated regularly to provide statistics around on-time delivery performance and workplace health and safety, as well as other financial key performance indicators.
3. RESULTS FROM THE DUE DILIGENCE ASSESSMENTS
3.1 Main findings – own operations
The NUF consists of 28 employees. The NUF follows the Act relating to the working environment, working hours and employment protection, etc. ("Working Environment Act"), applicable regulations relating to Health, Safety and Environment ("HSE"), the Act relating to equality and prohibition against discrimination ("Equality and Anti-Discrimination Act"), and other applicable regulations.
In 2023, we did not identify any actual adverse impacts nor significant risks of adverse impacts
on fundamental human rights and decent working conditions.
3.2 Main findings – supply chain and business partners
As mentioned above in section 2.3.2, Dril-Quip has a high standard procedure for the pre-classification of suppliers. Supplier follow-up is something we continuously work on and will further develop moving forward.
In 2023, we did not identify any actual adverse impacts nor significant risks of adverse impacts on fundamental human rights and decent working conditions.
Dril-Quip is committed to fostering a culture of continuous improvement and accountability among our suppliers, and we are dedicated to ensuring that our corporate values are reflected throughout our supply chain.
4 MEASURES AND RESULTS
4.1 Dril-quips' culture
At Dril-Quip, we engineer solutions that are Green By Design™ to reduce the amount of hardware required for drilling and production, along with the time, labor and personnel associated with those operations. In turn, this saves money, improves safety and minimizes our collective carbon footprint.
Our business strategy permeates how we operate, think and treat our suppliers. We also make demands on our suppliers in line with this strategy.
4.2 Health and Safety
We consult with our employees and encourage participation in all HSE matters, including continual feedback and improvement of our standards and policies.
We create an environment where every employee embraces HSE as a core value and engages in Goal ZERO. QHSE Policy At Dril-Quip, our management fully supports the implementation and ongoing maintenance of Quality, Health, Safety, and Environmental (QHSE) Management Systems that define not only their roles and responsibilities but also those of all members of the workforce.
Our senior management teams perform HSE walk-through assessments at our facilities quarterly.
HSE performance is measured against industry standards, and annually, we set strategic goals and objectives to improve our performance each year.
4.3 Grievance mechanisms
We encourage employees to ask questions, voice concerns and report violations of policies stated in the Code of Business Conduct and Ethical Practices.
Dril-Quip has established a procedure for expressing concerns about accounting and auditing matters or violations of applicable laws, including but not limited to the above mentioned Working Environment Act, the HSE and the Equality and Anti-Discrimination Act.
Dril-Quip strictly prohibits retaliation against any individual who reports a concern in good faith or participates in Dril-Quips' investigation of such a concern.
In addition, concerns regarding ethics, accounting or any violation of applicable laws may be reported on a confidential or anonymous basis through Dril-Quip's EthicsAlertLine via the internet at https://drilquip.alertline.com or, (if within the European Union or the United Kingdom) https://drilquipEU.alertline.com. Concerns may also be reported by calling +1 877.316.2631 from within the U.S. or collect +1 704.552.8172 from within the European Union
or +1 704.552.8177 from anywhere else in the world.
4.4 Supplier audits
In light of our due diligence assessment through our supply chain, we have embarked on a comprehensive initiative to enhance our supplier engagement processes. This initiative mandates the regular evaluation of human rights compliance and the maintenance of decent working conditions within our already existing suppliers and their sub-tier suppliers. The initial phase of this enhanced oversight will prioritize our most significant suppliers, setting a precedent for our broader supplier network.
The insights gleaned from this initiative will be instrumental in informing the due diligence report for next year. A key component of our strategy involves proactive dialogue with suppliers and sub-tier suppliers who are currently unable to substantiate their commitment to responsible supply chain management. Our preliminary interactions indicate that the predominant challenges faced by these suppliers are typically related to limited operational capacity or the inherent constraints of smaller enterprise structures, rather than deliberate engagement in practices that could give rise to adverse conditions.
Concurrently, we will maintain the integrity of our supplier pre-classification process. Consistent with our established protocols, suppliers are required to complete a comprehensive questionnaire that addresses a range of topics, including but not limited to human rights and the provision of decent working conditions. Furthermore, suppliers are obliged to furnish copies of their internal policy documents for review.
To ensure impartiality and thoroughness, an independent third-party conducts a meticulous screening of potential suppliers prior to their formal onboarding. This evaluation is critical to ascertain alignment with our stringent standards. Should a supplier fall short of meeting these standards, they are expected to undertake necessary revisions to their internal practices and policy frameworks. Only upon satisfying our criteria will they be considered eligible for inclusion in our esteemed list of approved suppliers.
22 July 2024
