Sustainability in the Supply Chain

Sustainability in the supply chain

We rely on trustworthy suppliers who live our values, maintain integrity, minimize risk. In 2024, we purchased goods and services worth around €23.6 billion. With such a large and geographically dispersed supplier network, we cannot maintain the same level of oversight for every supplier but must be able to rely on you. The same applies to decarbonization. Climate change affects us all. Only together we can create a turning point.

What are we expecting?

An adherence to our company-wide, binding requirements and processes that ensure the effective establishment of the specified environmental, compliance and labor standards in all countries in which we operate.

We believe that our sustainability principles are most effective when they are applied voluntarily and out of personal conviction. Key elements of this are building the capacity of our suppliers and increasing the transfer of sustainability knowledge. We support our suppliers through our Code of Conduct brochure and encourage them to spread these values and sustainability requirements throughout their own supply chain, creating a network of interactions and business relationships based on trust.

How do we define sustainability in the supply chain?��

Management responsibility is to prevent, detect & mitigate and remediate

Sustainability in the supply chain is based on a holistic approach that comprises the steps prevent, detect & mitigate, remediate and concentrates on minimizing risks. The Code of Conduct for ��˿�� 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. It’s one of the major preventive measures.

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A global procurement standard is the core of ��˿��'s procurement rules and defines the minimum requirements for procurement. Considering the procurement objectives of innovation, productivity, availability, quality and sustainability, the effective purchasing of materials and services is a key success factor for the company and represents a clear competitive advantage for ��˿��.

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:

To communicate what sustainability at ��˿�� means and what our minimum requirements are to become
a ��˿�� supplier.��
To give our suppliers a method of identifying risks and opportunities for improvement at an early stage in our cooperation.
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 ��˿�� systems, store ��˿�� data or deliver software and firmware, they need to complete the cyber security module.��

We prioritize developing our suppliers’ long-term skills to meet future sustainable development challenges. It’s essential that our supply chains adhere to the same sustainability principles as ��˿��. All suppliers must know, accept, and comply with these principles. ��˿�� also offers specific training for third-party intermediaries.

Please use the password to enter the training:��Sustainability

Web Based Training – Sustainability in the Supply Chain

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 ��˿��’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 ��˿�� 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

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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 ��˿��.��
During the inspection, the relevant topics will be reviewed, and corrective actions will be defined jointly with the supplier to meet the ��˿�� requirements. The agreed corrective actions are binding.

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, ��˿�� 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.

��˿�� acknowledges its responsibility within the supply chain. Like many other companies, ��˿�� 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). When seeking information from our suppliers we make use of the RMI’s “Conflict Minerals Reporting Template”��()��and notify our RMI partners of the smelters identified. The initiative then checks whether the smelters identified are certified. ��˿�� is an active member of the “Responsible Minerals Assurance Process” 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:��.

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.��

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. ��˿�� 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, ��˿�� 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 ��˿�� 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

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 ��˿�� 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 ��˿��(excluding ��˿�� Gamesa) and the . To inform ��˿�� employees and suppliers, a global training campaign has been initiated.

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. As described before, we remain committed to��the partnership with our suppliers and to helping them improve throughout the supplier assessment processes.

However, if the problems persist or the suppliers show no willingness to take the necessary corrective action, we will remove them from our list of approved suppliers. All local cases of blocked suppliers are reported to the central procurement department, which discusses and decides on the need for a global block.��

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