Supply Chain Management | PETRONAS Chemicals Group Berhad (PCG)

Why It Matters

Adopting sustainable practices in supply chain management is a crucial part of our business as it generates positive impact across the economy, environment and the communities in which we operate.

It also serves as a critical ecosystem that integrates our suppliers, vendors, investors and customers.

Our Approach

We implement high standards of integrity in procurement and activities to ensure good governance within our supply chain management. For this, we refer to the PETRONAS Procurement Standard — which adheres to the PETRONAS Anti-Bribery and Corruption Policy & Guidelines (ABC Manual), as well as the PETRONAS Code of Conduct and Business Ethics (CoBE) regulations — as our guide.
During the licensing, bidding, contracting and execution phases, we require all contractors to comply with safety, technical, environmental and CoBE regulations. We also require suppliers to complete a “Know Your Counterparty” (KYC) questionnaire during assessment to facilitate the due diligence process aimed at minimising third party risk.
We have zero tolerance for non-compliance or malpractices within our supply chain. Failure to comply with social and environmental regulations will result in serious action, including contract termination. We have established a formal grievance system for our stakeholders to safely report any misconduct or malpractice. All grievances are investigated and resolved based on specific site arrangements.
We work closely with our supply chain partners to establish a sustainable chain ecosystem across environmental, social and governance (ESG) dimensions. Where possible, we drive the adoption of sustainability frameworks and best practices within the supply chain and industry through multi-stakeholder efforts and collaborations with industry and trade associations.

How We Provide Value

Corporate Liability

We carry out a “Third Party Risk Assessment” to ensure all contractors, vendors and joint venture partners meet our standards of integrity.

Health and Safety

We provide our Road Transport Operational Guideline (RTOG) to our logistical providers.
We continuously strengthen our contractors’ capabilities in HSE Management via our Contractors HSE Mentorship Programme.
We continuously enhance our suppliers’ HSE knowledge through ongoing and effective training programmes.
We conduct Felt Leadership sessions involving representatives from PCG and our transporters to enforce PCG’s mindset on safety policies and procedures such as our RTOG.

Human Rights

We enforce the PETRONAS Contractors Code of Conduct on Human Rights (CoCHR) and HSE requirements during the selection and hiring of vendors. This is aligned with eight International Labour Organization (ILO) core conventions as set out in the Declaration on Fundamental Principles and Rights at Work.
We conduct awareness sessions among our contractors to ensure they fully understand and adhere to our requirements and expectations as outlined in the PETRONAS Human Rights Commitment and CoCHR.
We regularly hold CoCHR assessments to identify any gaps and enhance compliance towards achieving our goal of zero violations.
We ensure our supply chain’s human righs (which include vendors) adheres to regulatory requirements and recognised industry

Supporting Malaysian-Based Vendors

We have efforts in place to enhance local participation in performing procurement services to our organisation.
We empower local contractors through structured programmes to help them thrive in a competitive digital world.
We continuously groom local vendors through the PETRONAS Vendor Development Programme (VDP), which aims to shape them to be commercially attractive, technically competent and capable of expanding globally.

Digitalisation

From time to time, we review and enhance our end-to-end procurement functions with new digital tools and technologies.

Sustainable Supply Chain

We established Raw Material Information Request (RAWMIR) to enhance the safety and sustainability of our product portfolio by minimising Substances of Concern (SoC) through systematic identification of raw material used to manufacture our products.
We carefully consider our carbon footprint generated through the process technology we employ for the design and production of new products.
We continue sourcing for Roundtable on Sustainable Palm Oil (RSPO) – certified palm oil feedstock to grow the sales of our RSPO-certified Fatty Alcohol Ethoxylate (FAE) product range.
We embed environmental and social considerations into our supplier selection, in adherence to PETRONAS CoBE.
We incorporate environmental requirements into contracts and other arrangements with our contractors, suppliers, and other supply chain partners involved in areas such as hazardous waste and spill management.
We regularly conduct risk assessments during tendering for various categories, including health and safety, environment, governance, legal/regulatory, integrity, socio-economic, suppliers, and human rights.
We regularly conduct Health, Safety & Environment (HSE) assessments as part of contract requirements.
We regularly conduct supplier audits on areas of environmental management such as spills and hazardous waste.
We participate in industry association-led workshops with authorities to deliberate environmental concerns such as our country’s hazardous waste recycling capabilities.
We were the first company in Malaysia to join Operation Clean Sweep® (OCS), in collaboration with the Malaysian Plastics Manufacturers Association (MPMA) in 2022, as part of a global plastic industry signature programme aimed at reducing accidental loss of plastic material such as pellets and flakes to the environment.
Our subsidiaries, Perstorp Group and BRB Group, subscribe to EcoVadis, one of the world’s most comprehensive sustainability rating tools used to drive transparency on social, ethical and environmental impacts across the supply chain.