Risk-based Approach

To proactively identify sustainability-related risks in our supply chain we apply a risk-based approach. This framework makes use of both internal and external information sources that enable us to focus our risk mitigation activities where they are most needed. Within this framework a customized action plan for the future is drawn up for any supplier identified as high-risk. Possible actions include the initiation of a development plan, a sustainability audit or the phasing-out of the supplier.

Internal Risk Based Approach

The internal approach is based on our supplier qualification process and on regular supplier quality audits; these processes are designed to systematically identify potential risks in our supply chain that relate to sustainability. Suppliers that perform below a certain predefined threshold are evaluated individually to determine the next steps.

External Risk Based Approach

To identify potential risk in our supply chain we also make use of external sources. Examples of such sources are non-governmental organization (NGO) databases, media reports or information channeled through our compliance ombudsman or 'Tell Us' hotline. Any report of a suspected breach of the requirements of the Code of Conduct for Siemens Suppliers passes through a clearing process to determine the next steps to be taken, e.g. an external sustainability audit or a so-called incident-driven inspection focusing on the identified breach.To achieve complete risk screening of our procurement portfolio, a risk mapping framework has been developed which includes country risk mapping and commodity risk mapping.

Country risk mapping

The country risk mapping framework comprises of so-called country scorecards that mirror risks in the supply chain through 15 sustainability risk indicators relating to areas such as water security, human rights or corruption.

Commodity risk ratings

Our efforts to incorporate sustainability into our supply chain focus not only on countries, but also on commodities. Our commodity categories have therefore been rated in terms of risks in terms of environmental, labor practice & occupational health and safety matters in assessing the risks involved in sourcing different materials.