Modern Slavery Act Transparency Statement

Introduction from the Chief Executive Officer

At Aker Solutions we oppose modern slavery in all its forms and we are committed to ensuring that there is no slavery or human trafficking in our business or our supply chain. Throughout 2018 we continued to increase our understanding of the modern slavery related risks faced by our business and further implemented the most effective responses to those risks.

In particular, our targets in 2018 were to:

  • Develop and implement a new business ethics training program and provide training to all employees
  • Continuously identify, monitor and manage business integrity risks at both the company and the delivery center level
  • Define and enhance human rights criteria for the supplier qualification process
  • Implement monitoring of human rights risk
  • Evaluate criteria on human rights as part of the accreditation program

Pursuant to Section 54 of the UK Modern Slavery Act 2015 we hereby present Aker Solutions’ third Modern Slavery Act Transparency Statement to set out the steps we have taken to ensure that there is no slavery or human trafficking in our business or our supply chain. This Statement was approved by Aker Solutions’ Board of Directors on April 29, 2019 and covers the financial year ending December 31, 2018.

Luis Araujo
Chief Executive Officer, Aker Solutions

Structure, Business and Supply Chain

Aker Solutions is a global provider of products, systems and services operating in the energy sector. We are principally engaged in the design, supply and maintenance of oil and gas production equipment, as well as the provision of subsea lifecycle services, operational services and engineering services. In 2018 we expanded our business portfolio by investing in floating wind power technology company, Principle Power, bringing our offshore oil and gas engineering expertise into a future-orientated renewable energy market. More information on what we do can be found here.

Aker Solutions is made up of several legal entities with facilities in many countries worldwide spreading from Canada to Congo. Although a number of our legal entities are not required to produce Modern Slavery Act Transparency Statements in their own right, we take the matter of slavery and human trafficking very seriously and are passionate about ensuring that modern slavery is not taking place in any part of our business which is wholly owned or otherwise controlled by Aker Solutions. This Modern Slavery Act Transparency Statement is therefore applicable to all of the Aker Solutions legal entities which are listed in Appendix 1 at the end of this Statement. Further details about each of our locations and facilities can be found here.

At the end of 2018 we employed just over 19,000 people worldwide. Of our 19,000 people approximately 15,000 were our own employees and 4,000 were hired in on external contracts.

Due to the nature of our work and the sectors we operate in, none of the work we do is seasonal and none of our suppliers are engaged seasonally, however it is typical for us to engage personnel temporarily for specific projects or work scopes.

More information on our key staff figures and our financials for 2018 can be found in our 2018 Corporate Responsibility Report and our 2018 Annual Report.

With regard to our supply chain, at the end of 2018, our supply chain management team was working with around 10,000 direct and indirect suppliers across the globe and employs 987 people. Supply chain management includes strategic sourcing, category management, supplier development and accreditation, material planning, procurement, inventory management and logistics. The majority of the products that we procure include tubes, valves, actuators, forgings, connectors and instrumentation. Sourcing IT services, travel and temporary personnel are also important parts of our indirect procurement. We source services and equipment from all over the world.

Policies and Procedures

Our governing documents are crucial for developing effective and consistent anti-slavery and anti-trafficking standards across our business and for influencing suppliers’ and employees’ decision making on a day-to-day basis. A list of the governing documents we have in place to address modern slavery can be found below along with links where appropriate. All of our key policies are endorsed and signed off by relevant members of Aker Solutions’ senior management and a number of these were updated in 2018 to take into consideration changes in legislation, industry standards and our business structure. These governing documents are applicable to all of Aker Solutions’ operations.

  • Aker Solutions’ Code of Conduct: This is our key governing document and the foundation of our drive to uphold the highest levels of integrity. It addresses important principles and sets clear rules and expectations for behavior and ethical standards with regard to matters such as human and labor rights, diversity and equal opportunities. At the end of 2016 our Code of Conduct was updated to vouch our commitment to observe a zero tolerance approach towards slavery and human trafficking.
  • Aker Solutions’ Business Integrity Policy: This describes our commitments and expected behaviors with regard to business integrity including for example commitments to respect and comply with international human rights principles; to ensure that we actively work to identify and understand business integrity risks in all of our activities; and to maintain effective and risk-based business integrity procedures.
  • Aker Solutions’ Business Integrity Procedure: This defines principles and provides rules, responsibilities and processes for managing integrity risks. It also describes controls to ensure compliance with the Code of Conduct with a focus on country risk, human rights and wider corporate responsibility. For example this provides that we must undertake proper checks where risk of human rights breaches is assessed as high and ensure that minimum requirements are set with regard to forced labor, child labor, working hours and employment conditions.
  • Aker Solutions’ Country Risk Procedure: This describes how we categorize country risk and outlines the procedure for assessing potential business opportunities in high risk countries where for example there are particular risks related to human rights violations. It supports our Business Integrity Policy and aims to reduce our risk exposure when we conduct business in countries associated with high corruption, reputational and/or political risks.
  • HR Global Recruitment Principles and Guidelines Document: This establishes the framework with respect to our internal and external recruitment activities. For example this provides that we shall not ask for money transfers or payment from applicants to secure a job, nor will we request payment regarding any travel expenses for interviewing or regarding visa expenses.
  • Aker Solutions’ Business Partner Qualification and Integrity Due Diligence Procedure: This defines our guidelines and responsibilities for qualification and integrity due diligence of potential, new and existing business partners and business relationships including customers, third party representatives, intermediaries and lobbyists, alliances and joint ventures, mergers and acquisitions and suppliers. This helps to identify whether there are any red flags associated with a business partner or a business relationship. It also assesses whether the risks associated with red flags are acceptable if relevant risk mitigating activities are implemented, and instigates a process for planning and assignment of those activities and for follow up of high risk business partners in general.
  • Aker Solutions’ Supplier Approval & Accreditation Procedure: This describes the processes and systems used to assess, qualify, approve, accredit, requalify and disqualify suppliers for use in our sourcing processes globally.
  • Aker Solutions’ Supplier and Subcontractor Declaration Form: All of our suppliers must sign this form in order to be approved on our Supplier Management System and to be able to deliver to us. This form includes minimum ethical requirements that our suppliers must comply with including compliance with laws and provisions on forced labor, freedom of association and minimum age of labor, working hours and wages.
  • Aker Solutions’ Terms and Conditions for Suppliers: We use these terms as a basis for agreement with Suppliers and only deviate from using this template in exceptional circumstances. These terms require that suppliers must comply with all applicable laws, rules and regulations of any governmental, judicial or regulatory body having jurisdiction over the work including applicable labor standards, anti-discrimination rights and fundamental human rights norms as described in the Universal Declaration of Human Rights. These terms and conditions also require that suppliers undertake to fulfil the requirements of the Supplier and Subcontractor Declaration Form.
  • Business Ethics Training Procedure: This describes our Business Ethics Training Program and defines the target groups, responsibilities and cost allocation to ensure that the Program is implemented in line with our requirements. Although the Business Ethics Training Program covers a range of business ethics topics, modern slavery forms an important part of this.
  • Aker Solutions’ Global Whistleblowing Procedure: This establishes a process for whistleblowing in order to detect, prevent and combat corrupt and/or unethical behavior, including modern slavery, in our business and supply chain and to ensure that there are clear and observable procedures for reporting a concern to the whistleblowing channel and for how such matters are investigated and handled. A link to the whistleblowing channel can be found here.

In addition to the above, we continue to adhere to the Voluntary Principles on Security and Human Rights and to be a member of both the UN Global Compact (the world’s largest corporate sustainability initiative) and Trace International (an international organization promoting transparency and compliance with anti-corruption rules). Our commitment to human and labor rights is also addressed in the Global Framework Agreement entered into by Aker Solutions and IndustriALL, Global Union, Fellesforbundet, NITO and Tekna. This dates back to 2008 and focuses specifically on standards such as non-discrimination and the prohibition of child labor and forced labor. This agreement demands similar standards in our supply chain.

In October 2018, we signed up to the initiative ‘Building Responsibly’ as a supporter. This is a group of leading engineering and construction companies working together to raise the bar in promoting the rights and welfare of workers across the industry. Among other things, the principles provide that workers are free from forced, trafficked and child labor and that workers shall be recruited through ethical and legal means whereby all recruitment shall be free from discrimination and all forms of involuntary labor, slavery and trafficking.

The principles of all of these agreements, initiatives and memberships underpin Aker Solutions’ respect and support for international standards and are reflected in our visions and values and through our policies and procedures. We use our influence with suppliers and encourage them to work in compliance with our Code of Conduct and our visions and values to ensure that they are also committed to avoid modern slavery in their own business and supply chains.

Business Integrity Programme

Aker Solutions established a dedicated business integrity department in 2009. The responsibility for the design and continuous improvement of our business integrity work lies with the Corporate Business Integrity and Compliance (BIC) team. BIC is staffed by well-qualified personnel (lawyers and political scientists) who are responsible for ensuring that Aker Solutions maintains a risk-based and effective compliance program and supports the business in implementation of the program. BIC develops and maintains relevant policies, procedures, guidelines and tools, designs and provides training and recommends training requirements, conducts project risk assessments, assists in business partner integrity due diligence, prepares and participates in audits and reviews, and manages the ethics helpline and the whistleblowing channel. BIC is also responsible for ensuring that learning from incidents contributes to continuous improvement of the compliance program.

In order to integrate compliance considerations as a part of daily operations and decision-making the operational units of the business are supported by dedicated Compliance Officers. These roles ensure a single point of contact and ability to provide specialized support and advice based on the units’ core activities and risk exposure. To further ensure local capacity and knowledge of local risk, BIC is supported by a network of local compliance officers in Malaysia, Brazil, India and Africa, as well as a looser network of resources wherever we operate.

The BIC function reports to the Senior Vice President for Legal and Compliance, who in turn reports to the Chief Financial Officer. BIC also reports to the Board Audit Committee on a quarterly basis, with more frequent meetings or updates when relevant or necessary.

Risk Assessment and Integrity Due Diligence Processes

Our presence in many countries worldwide combined with global tender activities and complex on-going projects requires a proactive approach and thorough due diligence assessments of prospects in markets associated with high integrity risks.

Before entering into new activities in countries associated with having high corruption, reputational and/or political risks, BIC will carry out a due diligence assessment in accordance with our policies and procedures, part of which includes an analysis of the risk for human or labor rights infringements. If the risks from this assessment are deemed too high we may either decide not to bid for the prospect, conduct further evaluation through our Corporate Risk Committee, and/or implement mitigating actions in order to reduce the risk. The aim of these assessments is to ensure that we avoid participation in activities that are considered unethical or illegal. We carried out 146 such assessments on potential opportunities in 2018.

As well as carrying out due diligence assessments on new prospects, BIC also carry out in-depth assessments on potential, new and existing business partners and business relationships including customers, third party representatives, intermediaries and lobbyists, alliances and joint ventures, mergers and acquisitions and suppliers in accordance with Aker Solutions’ Business Partner Qualification and Integrity Due Diligence Procedure. Certain relationships are also subject to approval by the Chief Executive Officer after assessment and recommendation before any commitment is made.

Encouraging Employee Representation
Good industrial relationships are an important part of Aker Solutions’ history and culture. We encourage employee representation in our business units worldwide as part of our commitment to human and labor rights. Employees worldwide have the right to be heard and represented, and to form and join trade unions of their own choice. Employee representatives provide employees with influence and lines of communication through their participation in working committees, on the board of directors, and in operational improvement and organizational change projects. In 2018 union representations in Norway had regular meetings with management on a local and regional level, in addition to more regulatory discussions in accordance with union agreements entered into by Aker Solutions. Once a year, the unions hold a conference with a formal election process for all union representatives in Norway. Twice a year employee representatives from Norway, the UK, Brazil, Malaysia and India meet with management from the Aker ASA companies as part of the Global Works Council (GWC). The council aims to develop communication and consultation between management and employees on issues such as operations and strategy.

Responsible Supply Chain Management
We use Aker Solutions’ Terms and Conditions for Suppliers and our Supplier Management System (SMS) to ensure that there is no modern slavery in our supply chain.

SMS is used by our supply chain management team to qualify, monitor and evaluate performance of suppliers. In order to be able to deliver to us, any new or potential suppliers, direct or indirect, must pass the pre-qualification stage and become an approved vendor. Part of this process includes validation of supplier compliance as per the Country Watch List. In case of a high risk, a further due diligence questionnaire can be added in the pre-qualification process. New suppliers must also fill out a Supplier Qualification Questionnaire (SQQ) and confirm compliance with our Supplier and Subcontractor Declaration Form. The SQQ includes an evaluation of the supplier on various topics such as business integrity, human and labor rights and corporate responsibility. This was updated in 2018 to better reflect the UN Global compact and the risks of potential slavery and forced labor.

The responses given in the SQQ will be reviewed and scrutinized and may be subject to further investigation if red flags are identified. External integrity due diligence or an interview with the compliance department and/or key personnel may also be undertaken if required.

There may be exceptional cases where the full pre-qualification stage is not completed by a new supplier, for example due to time restraints. Instead the supplier may be approved by a designated member of the supply chain management team; however in any event, the supplier must confirm compliance with the Supplier and Subcontractor Declaration Form. If the supplier is located in a high risk country as per the Country Watch List, or provides a high risk service then additional compliance or due diligence may be required before the approval in this case can be granted.

Only after formal approval of a supplier as above will the supplier be eligible to receive purchase orders from us. The supplier qualification summary is available to all our global procurement departments, along with operational performance evaluations, which provides the procurement departments with a solid risk picture of our suppliers, enabling an informed selection. In 2018, 242 new suppliers were pre-qualified.

In addition to qualification, SMS enables us to continuously monitor the performance and status of our qualified suppliers, with daily screening of financial and compliance information, and can be integrated with our internal audit management tool. This tool tracks audit reports and findings, lost-time incidents, near-misses, health, safety and environmental management and operational performance. It can also issue alerts when certifications are expiring. Our supplier audit program is risk-based and determines where we should focus our audits. For example, if a supplier makes any changes to approved processes, sub-suppliers, materials and/or key resources, an evaluation will be performed on whether one or more of the activities will need to be revisited. Our supplier audit process was updated in 2018 to include further auditing criteria against the Supplier Declaration Form to demonstrate overall supplier performance. In 2018, we carried out 67 external audits of suppliers.

We have the ability to remove a supplier from an approved vendor list if the supplier is not fulfilling requirements on risk or performance including compliance with the Supplier and Subcontractor Declaration Form or due to findings from audits. If the supplier is removed from the approved vendor list, the supplier will be deactivated for sourcing. If suppliers are disqualified from the system completely, this will be formalized and recorded in the SMS for future reference.

Whistleblowing
We also have in place a whistleblowing system which is governed by Aker Solutions’ Global Procedure on Whistleblowing. This encourages all of our employees, customers and other business partners to report any concerns or breaches of our Code of Conduct, other internal policies, or laws and regulations related to the direct activities of our business or supply chain. This includes any circumstances that may increase the risk of slavery or human trafficking. BIC is responsible for operating the whistleblowing channel and investigating alleged corporate compliance violations.

Effectiveness

We understand that as a global business Aker Solutions is at risk of being drawn into human or labor rights violations. We have assessed the risk of direct involvement in such infringements to be low however indirect involvement in violations remains a risk due to the size of our supply chain.

During an internal audit of our indirect suppliers’ operations onsite in 2018, our Asia Pacific region found potential breaches of the human rights expectations set out in Aker Solutions’ Supplier and Subcontractor Declaration Form which provides that suppliers shall not require their employees to lodge identity documents (original passports) upon commencement of employment. The results of the audit ascertained that certain service providers operating onsite who engaged foreign migrant workers as part of their workforce, withheld the original passports of their foreign migrant workers, ostensibly for safekeeping. All workers held employment passes issued by the National Immigration. The actions taken required that suppliers return the passports to their workers and all foreign migrant workers must now record their entry/exit at the security gate confirming their passports were in their possession. Suppliers were also encouraged to employ local workers.

With respect to our whistleblowing channel, the number of reported cases did not increase significantly in 2018 but in general the annual figures have increased year on year since the channel opened in 2010. We see this as a healthy sign that the channel is working, while the number of cases are in line with the benchmark for companies which are the same size as Aker Solutions. No material human rights grievances against Aker Solutions were substantiated through formal channels in 2018.

In 2018 we also experienced increased focus from customers on compliance with human rights principles. We underwent three human and labor rights audits, none of which surfaced any issues of concern for our customers.

Training

Continuous focus on and awareness of compliance and business integrity is important to ensure that our employees know what to do if they find themselves facing a dilemma. Although our anti-corruption compliance program, policies and procedures are applicable globally, we place importance on interacting with employees on the ground to ensure that the local context is considered in our communication and training material. This is to ensure that expectations of business conduct are understood in the context where the training is conducted.

Our Business Ethics Training Program is a key preventative activity in our Anti-corruption Compliance Program which has been designed to prevent unethical or illegal business conduct by our employees. Our Business Ethics Training Program consists of four modules which are delivered to our employees through a combination of digital platforms (E-learning) and classroom based training. Training courses and materials are available in various languages.

  • Module 1: is a 15 minute E-learning course covering an introduction to business integrity. Our employees are required to confirm at the end of the course that they have read and understood Aker Solutions Code of Conduct which makes specific mention of modern slavery. This course is mandatory for all of our employees and must be completed during the first week of employment at Aker Solutions.
  • Module 2: is a two-to-three hour instructor-led classroom training course which focuses on the general framework for making ethical decisions and what to do in case of breaches or suspected breaches of our internal policies or laws and regulations. This course must be completed by all employees who are based in an office and/or working in or travelling to a high risk country. Other targeted groups may be required to complete this course if identified through a risk-based evaluation. This course must be completed within the first 6 months of employment at Aker Solutions. This course was updated in 2018 to include more in-depth material specifically on modern slavery.
  • Module 3: is a 10 minute E-learning course focusing on various topics of Aker Solutions’ Code of Conduct. This serves as a refresher and is updated annually. It is to be completed by all of our employees on an annual basis. Other targeted groups may be required to complete this course if identified through a risk-based evaluation. In 2018, this course included a specific focus on modern slavery. Employees were asked to consider a scenario with warning signs for modern slavery (e.g. unacceptable working hours and confiscation of passports). The E-learning material was also vetted by Aker Solutions union representatives before release.
  • Module 4: is a targeted training course provided to those in high risk roles which are identified by operational management in cooperation with Corporate BIC. Identification of a high risk role is based on various factors such as risk profile and operations of the relevant function, however on a general basis, employees that have frequent contact with customers, suppliers and/or public officials or local authorities or travel to or are present in high risk countries may be defined as high risk roles. Due to the risk-based target groups for this training, the format and duration of Module 4 may vary depending on the identified risk.

Completion of the various modules by employees is recorded and registered in the applicable learning portal systems. Reports on training completion are extracted and distributed regularly to enable targeted follow-up of employees who have not yet completed the relevant modules.

With respect to training of other individuals or groups (including suppliers’ personnel and representatives of our business Partners), BIC will recommend and facilitate such training in cooperation with the relevant country function. A recent example is the onboarding of suppliers for two construction projects in Nigeria and Angola. These construction projects were considered high risk, and the construction suppliers’ management teams were therefore provided with targeted training on Aker Solutions’ Code of Conduct and expectations to ethical conduct. The training was developed by BIC and included specific focus on human rights and labor standards, such as zero tolerance for forced labor. A condensed version is also provided as part of the site induction package which is delivered to all workers on the construction site.

Further Actions

We continuously work to ensure that human and labor rights violations, including slavery and human trafficking, do not take place in our supply chain or in any other part of our business.

Our 2019 targets are to:

  • Digitalize key business integrity work processes aided by implementation of governance, risk and compliance software
  • Refine risk based framework for integrity due diligence with particular focus on mergers and acquisitions processes
  • Provide annual code of conduct training to all employees
  • Integrate business integrity and compliance as a new function within supply chain management
  • Strengthen compliance with supplier qualification through introduction of SAP Ariba
  • Integrate a dedication clause related to Business Integrity and Compliance in all supplier audits

Appendix 1

Signature Øyvind Eriksen
Mr. Øyvind Eriksen
Chairman, Aker Solutions ASA
Date: April 29, 2019