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Integrity is the foundation of responsible and entrepreneurial behavior. It forms the heart and the basis of sustainable work.
Sustainability is our guiding principle, supporting us in our day-to-day work and ensuring our long-term growth. Both integrity and sustainability are closely linked to our three company values: excellent, innovative, and responsible. Through sustainable development we make our contribution to a more equitable global economy and provide energy-efficient, durable products and solutions for our customers. In this way, we aim to live and breathe our socially responsible company culture – for the good of society.
“Sustainability in the Supply Chain” is based on a holistic approach that comprises the steps “Prevent – Detect – Respond” and concentrates on minimizing risks. The Code of Conduct for Siemens Suppliers is primarily based on the principles of the UN Global Compact and the International Labor Organization, but it is also reflected in our Business Conduct Guidelines, which are binding for all employees.
The Code of Conduct defines Siemens sustainability standards and principles for Siemens Suppliers and Third Party Intermediaries, who are obliged to comply with its provisions:
As soon as a company transfers some of its reputational risk, corporate social responsibility and environmental impact elsewhere, it must tackle Supply Chain Management as one of its most pressing sustainability concerns.
Siemens conducts its business in areas which are of great importance to our society. For this reason the company takes its direction from the guiding principles of business sustainability: greater safety and security, the careful use of resources, and long-term environmental and social compatibility. An integrated approach to supplier management creates the conditions for the overall optimization of the value chain. It safeguards our global competitiveness and guarantees that our wide-ranging aspirations regarding sustainability are met. Our requirements are therefore embedded in unified, mandatory procurement processes. A key part of this for us involves ensuring that our suppliers agree with the principles of the Code of Conduct.
Detection Modules System
We check compliance with the duties and principles of the Code of Conduct with the aid of the following methods:
By involving Siemens suppliers, employees and external audit experts, we use the detection modules to perform a risk assessment of our suppliers. We carry out audits at our suppliers’ sites and cover most of our purchasing volume in higher risk countries through supplier assessments. With our regular audits and in continuous dialog with our suppliers, we work together for a sustainable and increasingly transparent supply chain.
Siemens collaborates with more than 100,000 suppliers in over 160 countries. We use an automatic risk-based system, which identifies potential risks in the supply chain and proposes improvement actions. The system comprises self-assessments by suppliers and a risk evaluation carried out by the procurement organization, as well as sustainability questions regarding supplier quality and sustainability audits carried out by external appraisers.
If our sustainability self-assessments or audits reveal infringements of our requirements, they must be remedied by the suppliers in question within a reasonable period of time. Besides follow-up audits carried out by our external audit partners, the responsible procurement units and the suppliers involved directly agree on the corrective actions defined during our audits. We reserve the right to end the supplier relationship in the event of serious infringements.
We firmly believe that our sustainability principles are at their most effective when they are applied voluntarily on the basis of personal conviction. The key elements here are broadening our suppliers’ capability and intensifying the transfer of knowledge about sustainability. We support our suppliers through individual meetings and by providing information and free-of-charge web-based training.
According to the pertinent U.S. legislation (“The Conflict Minerals Statutory Provision”), the term “conflict minerals” denotes the raw materials tin, tantalum, gold, tungsten and the ores from which they are extracted, plus all other minerals and their derivatives, as defined by the U.S. Secretary of State, which contribute to the financing of the conflict in the Democratic Republic of Congo (DRC). Tin, tantalum, tungsten and gold are important constituents of numerous products, and find their way into the international supply chains of companies around the world.
Pursuant to Section 1502 of the Dodd-Frank Act, since August 2012 companies listed on U.S. stock exchanges have been obliged to disclose the use of conflict minerals. Such disclosures are intended to prevent armed groups in the DRC region being directly or indirectly financed through the purchase of conflict minerals.
Siemens is not listed on any U.S. stock exchange, and is thus not legally obliged to comply with the requirements of the U.S. Securities and Exchange Commission or submit the conflict minerals report. Nevertheless, Siemens takes its duty of care within the supply chain very seriously, as we are aware that bought-in products and components can contain minerals originating from conflict-affected regions.
For this reason Siemens has developed a Conflict Mineral Policy and integrated this into the procurement process. The company thus guarantees a uniform and enterprise-wide duty of care within the supply chain. Our approach is aligned with the risk-based requirements of the “OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas”.
In order to determine the use, sources and origin of conflict minerals in our supply chain, we seek to identify smelters operating within our supply chain. Here we pursue the path towards a transparent supply chain working closely with the “Conflict Free Sourcing Initiative” (CFSI). When seeking information from our suppliers we make use of the CFSI’s Conflict Minerals Reporting Template (CMRT) and notify our CFSI partners of the smelters identified. The initiative then checks whether the smelters identified are certified. Siemens is an active member of the Conflict Free Smelter Program and motivates any as yet uncertified smelters to take part in the audit programs, supporting them on the path to the final audit and certification. In each case the results are communicated via the CFSI website: www.conflictfreesourcing.org.
We are confident that the concerted approach and the certification of smelters and refiners will boost the demand for conflict-free raw materials and increase transparency in the entire supply chain. You can find further information and our Conflict Minerals Policy at: www.siemens.com/conflictminerals.