Responsibility in society and supply chain
- Respect for human rights is an indispensable part of the Schaeffler Group’s corporate culture
- A critical raw materials policy was developed and communicated to relevant suppliers in the reporting year
Human rights
Part of NFB StartBuilding on the previous management approach to human rights due diligence, a Human Rights Compliance Management System (HRCMS) is currently being developed. It builds on the IDW PS 980 auditing standard for compliance management systems and applies to both internal operations as well as the supply chain.
The HRCMS will also be extended to customers and other business partners of the Schaeffler Group. To this end the company conducted a risk analysis in 2022, evaluating the most important human rights issues.
The risk analysis focused on customers and business partners in sectors that, according to independent research reports, are associated with increased human rights risks.
The current status of HRCMS implementation will be described in greater detail below.
Human rights compliance management system
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1) Culture
As a global family business with a strong foundation in its values, respect for human rights is an indispensable part of the Schaeffler Group’s corporate responsibility and corporate culture. The company therefore commits to the UN Guiding Principles for Business and Human Rights, the principles of the UN Global Compact, the general human rights declaration, the core labor standards of the International Labour Organization (ILO)
This value awareness was also incorporated into the Code of Conduct. A human rights policy and a declaration of principles for respecting human rights are currently under development, with publication planned for 2023. These documents were developed with a particular focus on human rights issues, which applies to all of the approximately 200 locations as well as all business partners. It is not only an issue of compliance with local legal provisions but also of focusing on the aforementioned global structures. Both the Code of Conduct and the human rights policy currently under development apply to all people, activities, and business relationships associated with the Schaeffler Group.
2) Targets
Human Rights Due Diligence is implemented in accordance with legal requirements and with a focus on global structures. Specific targets are currently under development.
3) Risks
The company also implemented systematic risk identification and reporting with the human rights risk assessment (HRRA) in 2022, identifying and evaluating potential or actual human rights risks internally. The HRRA identified country- and sector-specific human rights risks at Schaeffler locations and then conducted a detailed risk assessment. The following relevant issues were identified: discrimination, human trafficking, forced labor and modern slavery, living wages, maximum working hours, the right to freedom of association and to negotiate collective bargaining agreements, child labor, the use of security staff, land rights and indigenous populations, and occupational health and safety.
In accordance with the German Supply Chain Due Diligence Act (LkSG), additional human rights issues will be added to the HRRA, which is conducted annually by Human Resources, in the 2023 fiscal year. Processes and measures designed to prevent violations and mitigate human rights risks will be introduced on the basis of the risk assessment.
4) Program
The program also features a channel for complaints, allowing both employees and external persons to report potential human rights violations using the Schaeffler Group’s global whistleblowing system. In addition to the various analog reporting channels, there is also an electronic system available in 20 languages that provides whistleblowers with a confidential, encrypted, and secure form of communication. Tips can be submitted in any language. A team consisting of employees from relevant departments and Compliance staff who specialize in internal investigations will assess any incoming tips, including whistleblowers into the process if possible. If a case of violation is confirmed, corrective measures will be introduced. In three (prior year: four) cases, measures were introduced to penalize human rights violations in the 2022 reporting year.1) The cases confirmed in the reporting period were all related to discrimination or harassment. As required by the LkSG, a description of the whistleblowing system was published at the end of 2022 – with a particular focus on information about process accessibility, responsibilities, and implementation.
5) Organization
The Schaeffler Group is developing an effective program that defines process and structural organization, clear roles and responsibilities, structures, and procedures. Human rights issues are processed on an interdisciplinary basis and in close coordination with various functions in all regions. The supply chain is primarily the responsibility of Purchasing, while Human Resources is in charge of internal operations. At the end of 2022, the overarching task of coordination was transferred from Human Resources to Compliance, which reports to the Chief Executive Officer. The governance responsibility of respecting human rights was also structurally anchored in the Compliance function.
6) Communication
The Schaeffler Group routinely reports on the status of the human rights compliance management system (HRCMS) and current human rights issues. In the reporting year, comprehensive communication measures such as the development of human rights training courses were planned and implemented to teach employees about human rights and inform them about the corresponding internal regulations. The sustainability report keeps stakeholders up to date on a regular basis, while a stakeholder consultation, which was introduced in 2022 and will soon be routine, will more effectively incorporate stakeholders and interest groups into the HRCMS process and identify potential for improvement and development.
The British “Modern Slavery Act” also requires companies to demonstrate their commitment to protecting human rights along their value chain on an annual basis. A corresponding statement has been published for Schaeffler (UK) Ltd.
7) Monitoring and improvement
For the purpose of monitoring and improvement, the appropriateness and effectiveness of the HRCMS need to be assessed and documented on a continuous basis, which is why the Schaeffler Group is currently developing a process for reporting identified HRCMS weaknesses or violations to the management, correcting weaknesses, and continuously improving the system.
Schaeffler human rights dialog
In the “Schaeffler human rights dialog”, Schaeffler Group managers and experts discussed current developments in human rights, their impacts on the company, and future measures and strategies with a variety of external stakeholders.
Sustainability in the supply chain
Part of NFB StartIn addition to legal requirements such as the German Supply Chain Due Diligence Act (LkSG), the purchasing strategy also observes the minimum social and environmental requirements of nongovernmental organizations (NGOs) as well as the evaluation criteria of investors. These guidelines are based on the principles of the United Nations Global Compact (UNGC) and the core labor standards of the International Labour Organization (ILO). All relevant suppliers of production and nonproduction materials need to accept the Schaeffler Group Supplier Code of Conduct or provide proof in the form of an equivalent document or equivalent goals.Part of NFB Ende
Part of NFBThe Schaeffler Group takes a risk-oriented approach in order to fulfill due diligence obligations in the supply chain and further develop suppliers. In addition to the human rights risk analysis, the company also uses the results of the sustainability risk assessment, a standardized questionnaire, and additional internal processes, including social audits, which the Schaeffler Group, as a founding member of the Responsible Supply Chain Initiative (RSCI),2) conducts in justified cases on the basis of this standard. This initiative allows suppliers to share the results with other business partners and thus avoid redundant auditing.
90.7 %
coverage of the purchasing volume of production materials with sustainability SAQs
The Schaeffler Group uses the Drive Sustainability initiative’s standardized survey (self-assessment questionnaire – SAQ) via the service provider NQC to verify the sustainability performance of its suppliers. The company’s aim to purchase at least 90% of its production materials from suppliers with an SAQ by the end of 2022 was achieved in the reporting year with a compliance rate of 90.7% (prior year: 68.6%), thanks in large part to individual supplier conversations and intensive follow-up. The next goal is currently under development.
The Schaeffler Group’s sustainability-based risk analysis examines around 35,000 suppliers, taking into account all of those who have contributed to sales in the past 24 months. External service providers identify potential risks based on analyses of account statistics. In addition to assessing risk, the sustainability risk analysis also classifies measures and deadlines for implementation, with the processes between suppliers and the Schaeffler Group adapted accordingly. This methodology was optimized in 2022 on the basis of the results of the 2021 pilot application. Annual validation takes a variety of factors into account – most notably, the findings of the established channel for complaints.
A sustainability team at the Shared Service Center in Wroclaw (Poland) consistently and expertly oversees the measures derived from risk assessments – up through implementation. The agreed sustainability targets represent an important tool and outline the way in which targets are achieved with regard to environmental-related key figures.
A dashboard introduced in the reporting year not only standardizes evaluation of the sustainability performance of all suppliers, but also provides access to the status at any time and thus simplifies procurement decisions in the Sourcing Council and beyond.
A partnership with a provider of training platforms should allow suppliers to implement the German Supply Chain Due Diligence Act. The Schaeffler Group’s Tier 1 suppliers can complete around 250 courses in different languages and around 70 courses in English free of charge. The page is accessible to all of the suppliers’ employees on the Schaeffler landing page.Part of NFB Ende
Critical raw materials
Part of NFB StartThe responsible procurement of raw materials such as tin, tungsten, tantalum, and gold is an important issue for the Schaeffler Group, as their distribution can finance armed conflicts or contribute to human rights violations in some countries.
The company 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. Certified smelting plants are surveyed annually with Responsible Minerals Initiative (RMI) templates. Compared to the previous year (87.5%3)), the response rate4) of the suppliers5) surveyed fell to 84.56)% in the reporting year, due in part to the fact that Russian RMI auditors were withdrawn from certification as a result of the war in Ukraine. Because Russia was classified a war zone, it falls under the definition of a risk area as defined in the RCOI. In 2022, 96.3%5) of the smelting plants reported in the pre-supply chain were certified by the RMI or are not located in the risk areas defined in the RCOI. The Schaeffler Group’s conflict minerals report provides a summary of the findings and is available to customers upon request. After incorporating cobalt into the report, the company examined its supply chains with a focus on the conflict mineral mica.
Based on the material change report,7) the Schaeffler Group defined a list of materials with high priority. As prescribed in the OECD policy, all relevant suppliers were contacted with the aim of better acquainting them with the topic and providing them with an initial look at the status quo in the supply chain with a focus on critical raw materials. The company also developed and published a critical raw materials policy.Part of NFB Ende
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2022 |
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2021 |
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2020 |
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Response rate of surveyed suppliers on the use of conflict minerals1) |
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84.5 |
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87.5 |
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87.5 |
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Coverage rate of certified smelting plants in the supply chain2) |
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96.3 |
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99.7 |
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100 |
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Corporate Responsibility
At € 2.2 m (prior year: € 2.1 m), the amount donated in 2022 was marginally larger than in the previous year.
The company donates to those organizations and initiatives in particular that work towards the common good, are non-profit, and operate in compliance with the Schaeffler Group’s Code of Conduct (CoC). Humanitarian donations connected to the war in Ukraine totaled € 0.3 m.
326
CSR projects implemented worldwide
The Schaeffler Group implemented a total of 326 (previous year: 398) CSR projects worldwide in 2022. The Compliance department monitors donations and sponsorships. Sponsorship funds are used systematically in accordance with a group-wide policy, and measures are controlled by an associated global management system. With its CSR activities, the Schaeffler Group primarily supports strategic partnerships, collaborations, and employee initiatives.
With a “Matching Fund” to benefit the “Emergency Aid for Ukraine” initiative organized by the German Red Cross (DRK), Schaeffler AG and IHO Holding supported Ukrainians in need and refugees in the reporting year. Over the past weeks, this central platform has allowed Schaeffler employees to donate directly to “Emergency Aid for Ukraine” and thus support the local work of aid organizations. Schaeffler AG and IHO Holding doubled the employees’ individual donations.
Employees donated more than € 29,000 to the “Matching Fund”, which Schaeffler AG and IHO Holding doubled for a combined € 60,000. The company and IHO Holding had already donated a combined € 500,000 shortly after the war broke out.
In June 2022, all of the Schaeffler Group’s approximately 82,800 employees had the opportunity to learn about the climate in workshops. The “climate ride” concept with a point system encouraged employees of all Schaeffler locations to make their commute as climate-neutral as possible on the day of the initiative. The Schaeffler Group transformed the points earned in this way into donations to nonprofit organizations with a clear focus on sustainability in a certain region. By switching to alternative, climate-friendlier mobility, Schaeffler Group employees were able to raise around € 30,000, which was donated in equal parts to the following nonprofit organizations in the Schaeffler Group regions: Rainforest Trust for the Americas region, the Planet Water Foundation for the Asia/Pacific region, the China Environmental Protection Foundation for the Greater China region, and Viva con Agua for the Europe region.
As of this reporting year, Schaeffler Austria is a new partner of Österreichischer Behindertensportverband (ÖBSV – Austrian Disabled Sports Association). To kick off the partnership, Schaeffler Austria donated € 5,000 to an active sports week for kids between the ages of 4 and 14 who are in wheelchairs. As an event sponsor, Schaeffler Austria not only offered young people the opportunity to enjoy an extensive, week-long recreational program, but also provided comprehensive support, giving their parents and relatives a welcome break.
Following its success the two years prior, the Schaeffler Group continued the “Score a point – plant a tree” initiative in 2022 and thus demonstrated that even motorsport can contribute to sustainability. The company planted a tree for each point that brand ambassadors and race car drivers Carrie Schreiner and Marco Wittmann earned in races such as the German Touring Car Masters (DTM) series in 2022. In this way, the company ultimately transformed 237 points into trees.
1) Violations of the prohibition on forced labor, child labor, and cases of discrimination by origin, color, or gender.
2) The RSCI is a group of companies and associations in the automotive sector dedicated to exchanging proven processes and knowledge and promoting a shared understanding of sustainability topics throughout the sector. The suppliers’ performance data are also centralized, with data shared confidentially inside the system.
3) Survey period from March to February of the following year.
4) Response rate of relevant suppliers surveyed on the use of conflict minerals as defined under the Responsible Minerals Initiative.
5) Tier 1 suppliers (including information about their suppliers).
6) 2022 value checked in interim status in December 2022.
7) Published as part of the Drive Sustainability initiative of the original equipment manufacturers.