Responsibility in the supply chain and human rights due diligence
As an international automotive and industrial supplier, the Schaeffler Group maintains a globally branched supply chain. For Schaeffler, it is a part of Sustainable Corporate Leadership to make this supply chain responsible in terms of human rights and environmental and social aspects.
Sustainability standards in supplier relationships
Ensuring supply chains are responsible for social and environmental issues such as working conditions, fair wages, freedom of association, occupational safety, and environmental protection is a part of many national laws and internationally recognized policies. For example, the “Modern Slavery Act” requires that companies document concepts and measures to prevent modern slave labor in their supply chain. As a global family business, the Schaeffler Group supports these efforts. In its Supplier Code of Conduct (SCoC) adopted by the Executive Board in 2017, the company has formulated minimum requirements for suppliers based on the principles of the United Nations Global Compact and the core labor standards of the International Labour Organization.
Since 2012, new suppliers of production materials have been asked to accept the Schaeffler Code of Conduct (CoC) – and the SCoC since 2017 – as part of their approval. In 2018, the company began to apply this approach to existing suppliers and obtain written acceptance of the Supplier Code. A newly designed supplier evaluation supplemented by a sustainability element has provided the necessary emphasis since 2018. Suppliers who have neither implemented a certified environmental or occupational safety management system nor accept the SCoC/CoC are rated down by one level by Purchasing in the supplier evaluation. This procedure worsens their chances in the selection process for new projects or procurement volumes so that orders become less likely. The supplier information refers to the direct (Tier 1) suppliers of the Schaeffler Group.
In 2018, 1111) new suppliers in the area of production material were checked for Schaeffler’s supplier portfolio by way of an initial assessment. Applicants previously had to accept the SCoC and thereby commit to their social responsibility. On-site assessments were then carried out. An integral part of this assessment is production tours during which questions are asked not only about the original quality issues but also about production-related aspects of occupational safety and environmental protection.
If the company does not accept the SCoC or is not ready to cooperate to address critical issues directly by taking immediate action, the approval process is stopped. Applicants who fail to adequately meet the requirements of the questionnaire during on-site assessments will need to identify appropriate remedies after a root cause analysis.
Future activities aimed at systematically developing sustainability in the supply chain include the use of questionnaires provided in cooperation with a platform service provider, conducting audits and assessments, and implementing improvements arising from industry-specific standards of the German Association of the Automotive Industry (VDA).
The Schaeffler Group also works closely with its production material suppliers regarding the materials and substances used (“Material Compliance”). The Material Compliance department supports the Purchasing department by continuously evaluating the requirements that are relevant for Schaeffler and determining criteria to be taken into account when choosing suppliers. Among other things, the department deals with responsibly procuring raw materials such as tin, tungsten, tantalum or gold, whose extraction in some countries contributes to financing armed conflicts and human rights violations. Schaeffler uses the “Reasonable Country of Origin Inquiries” (RCOI) procedure to ascertain from which regions sub-tier suppliers source components with critical materials, and, where appropriate, initiate targeted supply chain actions. From 2013 to 2018, the response rate2) of the suppliers surveyed increased from 57.0%3) to 94.3%3) (prior year: 91.2%)3). 100%3) of the smelting plants reported in Schaeffler’s pre-supply chain that are located in affected countries under the RCOI are certified by the “Responsible Minerals Initiative”.4)
Customers are able to request and receive Schaeffler’s Conflict Minerals Report. With further improvements to the material compliance process that Schaeffler is continuously working on, the company will meet the OECD guidelines for the responsible use of minerals from conflict and high-risk areas by 2021, and thus also the EU requirements in a timely manner.
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2018 |
2017 |
2016 |
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Number of new suppliers reviewed in initial assessments1) |
111 |
157 |
114 |
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Response rate of surveyed suppliers on the use of conflict minerals2) 3) |
94.3 |
91.2 |
88.0 |
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Coverage rate of certified smelting plants in the supply chain3) 4) |
100 |
100 |
100 |
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Initiatives and industry solutions for responsible supply chains
In national and international initiatives and associations, Schaeffler participates in standardizing content, processes, and measures to improve sustainability in supply chains. Schaeffler is a member of the “Sustainability in the Supply Chain” working group, an initiative of the German Association of the Automotive Industry (VDA). In this context, Schaeffler significantly contributed to standardizing the industry-wide sustainability questionnaire and sustainability protocol for sustainability-related supplier inspections.
Across industries, Schaeffler is also active in the “econsense” corporate network, which also works intensively on corporate standards and solutions to integrate social and environmental aspects in supply chains.
Human rights
As a global family business with a strong foundation in its values, respect for human rights is an indispensable part of corporate responsibility for the Schaeffler Group.
The company rejects any form of human rights violations such as child and forced labor or discrimination based on race, color or gender. This claim applies to all approximately 170 of our own locations as well as to all business partners and does not end with compliance with the respective local legal provisions, but goes beyond that. The company management commits to the “UN Guiding Principles for Business and Human Rights”, the ten principles of the “UN Global Compact”, the National Action Plan “Economy and Human Rights” from the German Federal Government (NAP), the “Dodd-Frank Act” and the “Modern Slavery Act”.
Accordingly, the requirement to respect and uphold human rights is a part of the current groupwide Code of Conduct and the Schaeffler Group’s Supplier Code. They are aimed at every employee at the company and selected business partners. The HR management is responsible for human rights issues. If necessary, any human rights issues will also be reported on as part of Schaeffler AG’s internal risk reporting. Any violations can be reported through the Schaeffler Group’s global compliance whistleblower system. No violations of human rights5) were reported through the system in the 2018 reporting year.
The employees and managers at the Schaeffler Group are trained on the Code of Conduct, which demands respect for human rights. To implement the NAP, the Schaeffler Group is in contact with the German Federal Foreign Office and the German Federal Ministry of Labour and Social Affairs. This ensures that the company is up to speed on new developments. Schaeffler’s goal is to meet the thus-far voluntary EU requirements of the NAP by 2020 by continuing to develop the human rights due diligence process on time.
Compliance with international disclosure requirements
The “Modern Slavery Act”, which was passed in the U.K. in 2015, calls for companies to demonstrate their commitment to protecting human rights along their value chain. Since the Schaeffler Group maintains business relations in the U.K., it is impacted by this disclosure requirement. The subsidiary companies The Barden Corporation (UK) Ltd. and Schaeffler (UK) Ltd. have published declarations to this effect on their websites. The resulting requirements are met by the Schaeffler Group through structured and long-term activities.
The “Modern Slavery Statements” of the Schaeffler Group can be found at:
1) Requested in 2018.
2) Response rate of relevant suppliers surveyed on the use of conflict minerals as defined under the Responsible Minerals Initiative.
3) Survey period from March to February of the following year.
4) Risk areas as defined in the RCOI.
5) Contraventions of the prohibition on forced labor and child labor and cases of discrimination by origin, skin color, or gender.