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 valuesSustainability 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
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 and Business Partners 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 our partners, 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
- Responsible Minerals Sourcing (Conflict Minerals)
Siemens Energy has implemented a system of interconnected processes and tools to ensure full transparency and awareness for our spend, within our supplier base and for our supply chain risks and opportunities. Risk awareness within Siemens Energy Supply Chain Management follows three steps: Definition of sustainability risks and categories, Identification of the relevant suppliers, Development and implementation of necessary procurement processes to cover these risks for example by conducting on-site audits.
Risk categories can include particular suppliers
- based in higher-risk countries
- providing products subject to “Responsible Minerals Sourcing (RMS)”
- relevant for CO2 reduction engagement
- providing products falling under the REACH / RoHS legislation
- falling under general supplier quality management aspects (including sustainability topics)
- working in construction business (“contractors”) or Technical Safety - Dangerous Goods
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.Christian Holzer, Siemens Energy, Head of Supply Chain Management
Risk Exposure in our Supply ChainOur company works with some 30,000 suppliers in about 129 countries. In fiscal 2019, the company purchased approximately €16 billion worth of goods and services. That figure is slightly more than half of our total revenue. With such a large and geographically dispersed supplier network, Siemens Energy cannot maintain the same level of oversight for every supplier. For example, it would be impossible to perform site audits everywhere. Instead we have established risk analysis procedures for each of our defined risk groups to systematically identify potential hazards in our supply chain. By using these risk identification processes, we identify the specific suppliers which we want to detect by one of our detection modules.
Detection Modules - Monitoring adherence to the principles of the Code of Conduct, and consequences of non-adherence
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.
Supplier communications and extending our values further into supply chainsWe 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 our “Sustainability in the Supply Chain” and “Code of Conduct” brochures, and we explicitly encourage them to extend these values and sustainability requirements further into their own supply chain in order to create a network of interactions and business relations that are built on trust.
Responsible Minerals SourcingResponsible 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 Energy 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 Energy acknowledges its responsibility within the supply chain. Like many other companies, Siemens Energy 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.