Sustainability in the Supply Chain
Integrity is the foundation of responsible and entrepreneurial behavior. It forms the heart and the basis of sustainable work.
Seize opportunities, minimize risks, live our values
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.
Our program: Sustainability in the Supply Chain
“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.
Principles of the Code of Conduct for Siemens Suppliers and Business Partners
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:
- Legal compliance
- Prohibition of corruption and bribery
- Fair competition, anti-trust laws and intellectual property rights
- Conflicts of interest
- Respect for the basic human rights of employees
- Prohibition of child labor
- Health and safety of employees
- Environmental protection
- Transparency in the supply chain
- Conflict minerals
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.
Sustainability in Supplier Management
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.
We evaluate and review adherence to the Code of Conduct at regular intervals as part of our overall Supplier Management Process, which comprises the following three levels:
- Supplier Selection and Qualification
- Supplier Evaluation
- Supplier Development
Detection Modules System
Monitoring adherence to the principles of the Code of Conduct, and consequences of non-adherence
We check compliance with the duties and principles of the Code of Conduct with the aid of the following methods:
- Risk-based Approach
- Sustainability Self-Assessments
- Incident-Driven Inspection
- Supplier Quality Audits
- External Sustainability Audits
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.
Identifying, understanding and minimizing risks
Siemens collaborates with some 90,000 suppliers in about 150 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.
Consequences of non-adherence
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.
Know-how transfer and capability building
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.
Responsible Minerals Sourcing
Responsible Minerals Sourcing is a process aimed at preventing the incidence of conflict minerals in our supply chain. The process is not limited only to 1st tier suppliers, but takes account of the entire supply chain, right down to the relevant raw materials (minerals).
For this reason Siemens has developed a “Responsible Minerals Sourcing Policy” and integrated it 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,” which also sets the standard for national and international regulations, for example in the USA and the European Union.
Siemens acknowledges its responsibility within the supply chain. Like many other companies, Siemens too is aware of the problem that products and components purchased from suppliers may contain minerals from conflict regions.
In order to determine the use, sources and origin of certain 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 “Responsible Minerals Initiative” (RMI, formerly known as the Conflict Free Sourcing Initiative). When seeking information from our suppliers we make use of the RMI’s “Conflict Minerals Reporting Template” (CMRT) and notify our RMI partners of the smelters identified. The initiative then checks whether the smelters identified are certified. Siemens is an active member of the “Responsible Minerals Assurance Process” (formerly the Conflict Free Smelter Program), and encourages any as yet uncertified smelters to take part in audit programs, supporting them on the path toward the final audit and certification. In each case the results are communicated via the RMI website: www.responsiblemineralsinitiative.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 Responsible Minerals Sourcing Policy at: www.siemens.com/responsibleminerals.