Sustainability in the supply chain

Substance commitment

All new suppliers must confirm that they are obliged to declare products containing REACH and RoHs substances. For suppliers with an expected annual PVO of €10k or more, additional modules may be relevant to achieve R4B status.

Sustainability self assessment (SSA)

All suppliers with an expected annual PVO of €10k and more must complete the SSA, which is valid for three years. This questionnaire contains mandatory questions based on the Code of Conduct requirements:

• Legal compliance and fair operating practices
• Health and safety of employees
• Responsible minerals sourcing
• Human rights and labor practices
• Environmental protection
• Supply chain

In case the supplier’s answers deviate from our requirements, the supplier must undertake measures to meet these requirements.

As an essential module in our basic supplier qualification process the SSA serves three important purposes:

1. To communicate what sustainability at Siemens Energy means and what our minimum requirements are to become
   a Siemens Energy supplier. 
2. To give our suppliers a method of identifying risks and opportunities for improvement at an early stage in our cooperation.
3. To take corrective actions for mitigation, based on the identified risks.

Contractor safety

If suppliers provide us with (on-site) services, they must complete the contractor safety module which contains environment, health & safety (EHS) related questions.

Cyber security

If suppliers require access to Siemens Energy systems, store Siemens Energy data or deliver software and firmware, they need to complete the cyber security module. 

Using our sustainability risk analysis system, we systematically identify potential risks in our supply chain every year.

The cornerstones of this system are:

• Identification of risks and categorization by commodities related to certain industries 
• Establishment of risk levels for individual countries (e.g. determined using sustainability indicators for key areas such as collective bargaining, worker safety, or human rights in the workplace), making use of information supplied by internationally recognized organizations 
• Suppliers with large procurement volumes

To strengthen Siemens Energy’s supplier sustainability risk management system, we calculate the risks of our suppliers and their scope of supply by considering all risk categories that are addressed by the German Supply Chain Due Diligence Act. This risk indication is not limited to country risks, but also includes commodity-specific risks. It also supports purchasers in prioritizing and nominating high-risk suppliers for external sustainability audits.

• We see External Sustainability Audits (ESAs) as the most effective means of reviewing our suppliers’ sustainability performance. 
• We have appointed internationally recognized auditing companies which conduct on-site audits based on the universally valid principles of the Code of Conduct for Siemens Energy suppliers and third-party intermediaries. 
• The suppliers in focus for these audits are selected in accordance with a risk-based approach. This evaluation identifies the parts of our supplier base that present potential sustainability risks, and which merit the more detailed inspection provided by this review. 
• In addition, such an external sustainability audit can also be triggered if a potential sustainability risk has been indicated in a sustainability self-assessment

• Incident driven inspections are carried out when a strong suspicion of a  non-conformance with the Code of Conduct exists, for example, based on well-known media reports or results from regular quality audits. Incident driven inspections are carried out with prior notification. The scope of an incident driven inspection focuses on a section of the Code of Conduct to ensure a detailed assessment of the suspected non-conformance. They are carried out by a third-party auditor authorized by Siemens Energy. 
• During the inspection, the relevant topics will be reviewed, and corrective actions will be defined jointly with the supplier to meet the Siemens Energy requirements. The agreed corrective actions are binding.

The effects of climate change are obvious. The frequency of extreme weather events is increasing and long-lasting climate extremes with devastating consequential damage are a reality. Climate change affects us all and only together can we create a turning point. Siemens Energy has therefore set itself the target of being climate-neutral in its own operations by 2030 as well as reducing the absolute GHG emissions of the sold products by 28%. Furthermore, Siemens Energy intends to increase its focus on energy-efficient and low-CO2 suppliers throughout the supply chain. With our Decarbonization Due Diligence Assessment (DDA) Program we decarbonize the supply chain together with our suppliers to reduce the GHG emissions by 30% in the supply chain till 2030.

The circular economy is based on a restorative industrial system. A circular economy is a closed loop system that ensures that a product is not discarded after use, making it more efficient and sustainable in the long term and helps to reduce greenhouse gas emissions.

At Siemens Energy we quantify the resource inflow and the respective raw materials and their recycled content for major resources such as steel, copper, aluminium and plastics as well as various critical raw materials such as Li, Co and Au. The determination and tracking of these values enable us to foster continuous improvements in environmental protection, the protection of natural resources and the reduction of waste and pollution in line with the three principles of circular economy:

• Slow: increase the usage time of a product
• Narrow: use less raw material
• Regenerate: use renewable materials and energy and regenerate natural systems

If the results of an in-depth assessment reveal potential sustainability violations, we commission repeat or follow-up audits. Throughout the supplier assessment process, we remain committed to partnering with our suppliers and helping them to improve. 

In addition to the corrective action processes described before, we have a central warning message system in place. This facilitates a fast, efficient response to violations of the Code of Conduct requirements. The responsible procurement departments at Siemens Energy are authorized to agree on a series of remedial steps with the supplier.

Potential misconduct can be reported via the whistleblower hotlines “Speak Up” at Siemens Energy (excluding Siemens Gamesa) and the “Integrity Hotline” at Siemens Gamesa. To inform Siemens Energy employees and suppliers, a global training campaign has been initiated.