Agreement on Responsible Business

Conduct (ABC)
Practical Guide: SCS No. 3

SCS No. 5: Agreement on Responsible Business Conduct (ABC) Page 1 of 10 Version 1.0.0
Document history:

Document Revision description Revision Revision Date

version no Responsible
0.1.0 New practical guide Cecilie Hersleth 20.1.2014
1.0.0 Final Cecilie Hersleth 14.02.2014
Ola Ree

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Contents
1. Scope .........................................................................................................................4
2. Context ......................................................................................................................4
3. Definitions .................................................................................................................5
4. ABC Agreement - Background ................................................................................5
5. Key process steps ....................................................................................................5
6. Is the supplier in scope for ABC? ...........................................................................5
7. Only active suppliers with a valid contract are in scope ......................................5
6.1 One ABC per supplier covers all underlying contracts.............................................5
6.2 Miner one-off purchases are out of scope ................................................................6
6.3 Waived categories of suppliers are out of scope ......................................................6
8. What is the correct ABC? ........................................................................................6
7.1 Critical or Non Critical supplier ............................................................................6
7.2 Master ABC ...............................................................................................................6
7.3 Global ABC ................................................................................................................6
7.4 Local ABC .................................................................................................................6
7.5 Agreement of Acknowledgement ............................................................................7
7.6 Specialized ABC for small Points of Sale ...............................................................7
7.7 Common Law or Civil Law legal system .................................................................7
9. When should an ABC be introduced and signed?.................................................7
10. What if the supplier refuses or proposes changes to the text? ...........................8
11. Changes to the wording of the ABC .......................................................................8
12. Waiving the entire ABC based on refusal ...............................................................8
13. Signature, archiving and reporting .........................................................................8
Annex 1. Waived Supplier Categories ......................................................................9
Annex 2. Reference to relevant documents ...........................................................10

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1. Scope

The scope of this practical guide is to provide guidance to the Business Units (BUs) on how to implement
Agreement on Responsible Business Conduct (ABC) towards new suppliers.

All Suppliers are obliged to sign an ABC prior to any contract. Accordingly, the supplier is committed to
uphold the same high standards as Telenor and monitor their own suppliers

This document provides guidance to the following key themes:

Suppliers in scope for ABC
Waived categories of suppliers
Identifying non-critical or critical supplier
The difference between Master ABC, global ABC and local ABC
What if the supplier refuses or proposes text changes
Waiving the entire ABC based on refusal always the last resort

This practical guide is supplementary to the SCP/ABC Implementation Guidelines BA 02-01

.
2. Context

Group Policy Supply Chain Sustainability provides the overall principles for Supply Chain Sustainability, while the
Group Manual Supply Chain Sustainability outlines the formal procedural action steps to be carried out.

Business Assurance Guidelines and Practical Guides gives a practical guidance to the execution of Telenors
group-wide Supply Chain Sustainability framework, and are meant to further support operational ways of
executing the Policy and Manual. The objective is to secure a common approach across Telenors Business
Units.

Business Assurance guidelines and Supply Chain Sustainability Practical Guides are not a part of the above
mentioned Group Policies or Manuals.

Policy areas:

Supply Chain Sustainability Policy

Governance document
Supply Chain Sustainability Manual

BA Guidelines Practical Guides Non Governance document

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3. Definitions
All definitions used in Telenor Business Assurance framework, be it relating to responsible supply chain
management or to internal HSSE management, are provided in the Practical Guide SCS No.1 Introduction to
Supply Chain Sustainability Annex 1.

4. ABC Agreement - Background

Telenor Group Board of Directors has adopted Supplier Conduct Principles (SCP) to be implemented towards all
suppliers of Telenor. The SCP is based on internationally recognized standards and contains sections on human
rights, health and safety, labour rights, environment and anti-corruption. All Suppliers to Telenor are obliged to
sign an ABC prior to any contract.
In accordance with the ABC, the supplier is obliged to uphold the same high standards as Telenor. This
agreement provides Telenor certain rights such as the right to conduct sustainability inspections.
Furthermore, it obliges the supplier to contractually mirror and secure that its own suppliers accept identical
requirements, standards and to monitor the operations of its suppliers (Telenors sub-suppliers).
Furthermore, the supplier is obliged to report and remedy non-conformities at its own costs.

5. Key process steps

The ABC implementation work is composed of the following key steps:

6. Is the supplier in scope for ABC?

The term supplier is defined widely and covers all contracting parties of the BU. Customers shall not sign ABC.
Below are a few steps that should be considered to identify whether the supplier is in scope.

7. Only active suppliers with a valid contract are in scope

All suppliers shall enter into an ABC prior to any contract. It is only active suppliers with a valid contract that are
required to enter into an ABC.

6.1 One ABC per supplier covers all underlying contracts

One ABC covers all underlying contracts between the two parties. It is only necessary to enter into one ABC per
supplier, although there are several contracts covering all the products and/or services bought from the supplier.
Therefore, if a valid ABC already exist between the BU and the supplier there is no need for a new ABC, when
the supplier is awarded a new contract. However, make sure the new contract is entered into by the same legal
entity/company as the ABC (check first paragraph of the ABC - name, registration number etc).

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6.2 Miner one-off purchases are out of scope

An ABC is not required for minor one-off purchases without framework agreement. The BU`s are entitled to
decide what is regarded as minor and one-off purchase taken into consideration the risk and supplier base.
Consumables with low value and no close link to our business and the products and services we provide to our
customers such as: office equipment, speakers and educational services, food, flowers, hotel rooms and other
consumables are intended to fall under this category.

6.3 Waived categories of suppliers are out of scope

Certain types of suppliers are waived (excepted) from entering into an ABC per se. Find the list in attachment 1. If
the supplier falls under one of the categories listed there is no need to sign up an ABC. However, if there are
risk factors indicating that a serious breach of the SCP may occur in the suppliers or sub-suppliers operation, an
ABC is still required.

8. What is the correct ABC?

7.1 Critical or Non Critical supplier

There are two versions of the ABC; one for non-critical suppliers and one for critical suppliers.

To assess whether the supplier is critical or non-critical a prior SCP risk assessment must be carried out. For
more details on the complete Supplier Conduct Principles Risk Assessment, please consult Manual Supply Chain
Sustainability chapter 2 and the practical guide: SCS No.2 Risk Assessment

Non-critical ABC is the normal and most frequently used version. However, this may vary from BU to BU in
accordance with the risk it faces. In countries with lack of adequate standards, the critical ABC may be used more
frequently.

Critical supplier is a supplier of significant importance to the BU that are assessed to have a high risk for breach of
the SCP by the way the supplier or its suppliers operates. The supplier is also considered as critical if it is of
significant importance and its suppliers have a high risk of breaching the SCP (not the first tier supplier, but further
down in the supply chain). Therefore, critical ABC shall generally be used for important suppliers, with a high
probability of finding high risk further down in the supply chain.

Chose the critical versions for critical suppliers and non-critical version in all other cases. If you are in doubt chose
the critical version.

7.2 Master ABC

Master ABC is entered into on Group level by Telenor ASA and global suppliers. Master ABC has an additional
text providing the right for the BU to enter into an ABC on identical terms as the Master version.

Always check whether there is a Master ABC in place early in the process. If there is refer to this and that the
BU has the right to sign up on the same conditions as the Master version. It should be no need for time on
discussions.

7.3 Global ABC

Global ABC is entered into on Group level by Telenor ASA and global suppliers. If a global ABC is signed refer
to this. The BU does not have the legal right to enter into an ABC on identical terms (as is the case for Master
agreement), however the same argumentation that other parts of the company have already accepted the
agreement should be pointed out early in the process and reduse the need for discussions.

7.4 Local ABC

The term local ABC is used on the agreements entered into on local level by the BU`s and suppliers. The
content of the global and local ABC is identical. A local ABC shall always be entered into, although a Master and

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global ABC already exsist. The reason for this is that an agreement is needed between the contracting parties to
make sure it is legally enforceable and applicable between the two parties.

7.5 Agreement of Acknowledgement

If the supplier refuses to enter into the ABC and it has its own framework for responsible business conduct that
establish standards equal to or better than the ABC/SCP, an agreement may be drawn up reflecting the principle
of acknowledgment.

In the evaluation of the suppliers own framework, take into account their supply chain management, supplier
code, monitoring of its own suppliers and check whether the supplier carry out its own inspections etc.

The BU shall try to cover the most important ABC requirements.

Head of Region (or respective member of Group Executive Management for ABC`s entered into at Group level)
shall approve this alternative of agreement.

7.6 Specialized ABC for small Points of Sale

Contract clauses on responsible business conduct may be inserted in the underlying agreement for small Points
of Sale (POS) in a separate chapter along with an attached SCP.

This simplified ABC/SCP requriements are intended to be used for:

Small scale POS operations with few employees and minor turnover
POS offers direct sales to end customers
POS is a direct supplier to the Business Units

More details are outlined in Group Manual Supply Chain Sustainability attachment 2.

7.7 Common Law or Civil Law legal system

Common law refers to a legal system that gives precedential weight to case law, decisions of court and
tribunals, rather than the laws as the primary source. UK and the former British colonies, the US, Malaysia,
Bangladesh, Pakistan, Myanmar and India (except Goa) and Singapore have common law systems.

Civil law refers to a legal system where the laws and regulations are the primary legal source. Any EU Country
(excluding UK), Montenegro, Serbia, Hungary, Bulgaria, Sweden, Denmark, Norway, Switzerland, Japan, China
(except Hong Kong) and Russia have civil law systems.

Chose the template in accordance with the legal system where the BU is geographically located.

9. When should an ABC be introduced and signed?

The ABC should be introduced and signed as soon as possible pre-contract.
Contract owner is responsible that no contract is entered into without a signed ABC.

The ABC shall be signed before or at the latest together with the underlying contract. It is advisable to put the
ABC on the table as soon as possible in order to sort out any discussion related to the content at an early stage.
In this way, you have time to evaluate any objections and consider whether you want to continue discussion with
this supplier or choose another supplier.

In RFQ processes, the ABC (along with the SCP and other attachments) shall be issued as part of the RFQ
documentation. However, only one ABC template shall be issued with each RFQ, e.g. the critical or non-critical,
which means that a prior SCP risk assessment of the supplier must be carried out at forehand. For more details
see the practical guide: SCS No.2 Risk Assessment

If there is indication that the potential supplier will not sign up and fully comply with the SCP and ABC, the
company should be aware of that we have equal requirements for all suppliers and the consequence of refusal is

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that the supplier will not be short listed. The ABC should be signed up or an explicitly commitment received ahead
of the short-listing process.

10. What if the supplier refuses or proposes changes to the text?

It is always important to provide information on the content and practice of the agreement. If faced with often
objections to parts of the agreement such as: the right to carry out inspections and the supplier`s obligation to
mirror the agreement further down in the supply chain. The first step is to provide more information and try to
select a few good arguments to convince the supplier to accept the standard text. It is always a good starting
point to enter into a dialogue and explain more to try to get the counterparty to withdraw their objections.

11. Changes to the wording of the ABC

If the supplier proposes changes to the text that are necessary in order to sign up, the BU may accept changes in
accordance with the procedures for approval outlined in Group Manual Supply Chain Sustainability chapter 3.7.
Try to make the changes as negligible as possible and dont take out our main rights or the suppliers main
obligations.

o Minor changes needs approval from Local CEO

o Material changes to Non-Critical ABC - Local CEO consults and receives approval from Head of Region
o Material changes to Critical ABC needs approval from Head of Region, conditional to prior consultation
with Head of Group Business Assurance and Group General Counsel.

12. Waiving the entire ABC based on refusal

If the supplier continues to refuse signing up the ABC, there is a possibility to waive the entire ABC on the
conditions set out in Group Manual Supply Chain Sustainability chapter 3.8.

Waiving the ABC based on refusal should always be the last resort and it is better to make changes to the
agreement and agree on an agreement on acknowledgement, rather than waiving the entire ABC.

Head of Region can approve to waive the ABC Agreement if at least one of the following conditions is fulfilled:

o The supplier is of considerable importance to the Business Unit and no other viable alternative exists in
the short term or
o It is held by the Business Unit that the actual risk for the supplier of being non-compliant to the
requirements set out in the SCP is negligible or
o The supplier has a remote relationship to the core business operations of the Business Unit.

13. Signature, archiving and reporting

It is adviseable to ask the supplier to sign first in order to go through and check the document before signature
from Telenor side. As soon as an ABC is signed, the BUs normal procedures shall apply concerning signature by
a person with the authority.The BU shall formally clarify internal authorisations for such signatures. Such
authorisations shall as a minimum include the Local CEO and the Head of Local Business Assurance. However,
it is also recommended that contract owner and the Local Head of Procurement have this authority.

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Annex 1. Waived Supplier Categories
1. Roaming partners.

2. Interconnect partners/purchase of carrier to carrier services without custom works and international
lease of capacity, involving telehousing, power, O&M etc. in connection to these contracts.

3. Pure rental of individual small spaces (including network equipment, racks, etc.) and lease of land for
technical sites (one site - one lease) including servitudes, triple net lease agreement or similar, without
services, branding or Civil Works.

4. Airlines.

5. Insurance providers, banks and standard financial services, credit management services and rating
firms.

6. Urgent legal services (e.g. assistance in case of injunctions or similar).

7. Health care services/medical support partners (typically frame contracts with Hospitals).

8. Governmental institutions (directorates, regulators etc. - excluding commercial transactions).

9. Membership in local or international organizations.

10. Standard off-the-shelves software licenses (with standard support arrangement).

11. Lease of existing telecommunication infrastructure and capacity swap without services or civil work on
site.

12. Public utilities services (electricity, water etc.).

It should finally be noted that the waivers do not relieve the Business Units from common sense and proper
judgment, should there be indications that individual Suppliers of the above categories have obvious SCP
compliance issues and / or have a clear potential negative impact on Telenors reputation in case of serious
SCP compliance issues become public knowledge. In such cases, ABC implementation is still required.

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Annex 2. Reference to relevant documents

o Group Policy Supply Chain Sustainability

o Group Manual Supply Chain Sustainability
o SCP/ABC implementation guidelines BA 02-01
o The practical guide: SCS No. 2 SCP Risk Assessment and Categorisation
o UN Article by Bianca Wilson: Human Rights in the Supply Chain: The Telenor Groups approach to
supply chain sustainability

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