At a glance

• In 2023, the company published a statement on respect for human rights 
• The Schaeffler Group values the responsible procurement of raw materials

The Schaeffler Group’s Code of Conduct is available at: The Schaeffler Group’s Code of Conduct 
The statement on respect for human rights is available at: Statement on respect for human rights 

Three key objectives were defined for the HRCMS in the reporting year. In addition to complying with applicable legal requirements, such as the Supply Chain Due Diligence Act (LkSG), the HRCMS focuses on fulfilling the voluntary commitments established in the Code of Conduct and supporting the fulfillment of customer requirements.

Since 2022, the company performs a risk analysis at least once a year, during which the most important human rights issues are assessed. The 2023 risk analysis focused on customers as well as indirect and direct suppliers from sectors for which there were increased human rights risks according to independent research reports. In the reporting year, the company extended the Human Rights Risk Assessment (HRRA) in its own business area to all areas covered by the LkSG. This includes the following issues: discrimination, human trafficking, forced labor and modern slavery, living wages, maximum working hours, freedom of association and collective bargaining, child labor, use of security forces, land rights and indigenous populations, occupational health and safety, and the use of hazardous substances. This helps us identify and assess potential or actual risks to compliance with human rights in the company’s own business area. The methodology initially includes identifying country- and sector-specific human rights risks. Building on this, a detailed, site-specific risk analysis is performed. Based on the priority risks identified – discrimination, freedom of association, and the use of security forces – preventive measures were defined and introduced for the Schaeffler Group, for example, online training for employees, to prevent potential violations and reduce human rights-related risks.

The program also includes a complaint mechanism: Both employees and third parties can report potential human rights violations via the Schaeffler Group’s global whistleblowing system. In addition to various similar reporting channels, an electronic system is available in 20 languages and provides whistleblowers with a confidential, encrypted, and secure form of communication. Whistleblowing notifications can generally be provided in all languages. Notifications are reviewed by a team of responsible departments and specialists in internal investigation from the compliance function, if possible with the involvement of the whistleblower. This procedure for processing the information is defined by corresponding rules of procedure. Corrective measures to eliminate and remediate are initiated if a violation is confirmed. Relating to the Schaeffler Group’s business partners, the company reserves the right to respond appropriately, from requesting that the violation be remedied immediately to taking legal action and terminating the business relationship. A total of 2 reports of discrimination were confirmed in the 2023 reporting year. Action was taken to remedy human rights violations for a total of 8 (prior year: 3) confirmed cases, including 6 incidents reported during prior years. The individual cases confirmed in the reporting period were all related to discrimination or harassment. As required by the LkSG, a description of the whistleblowing system – with a particular focus on information about process accessibility, responsibilities, and implementation – is publicly available.Part of NFR

The Schaeffler Group’s whistleblowing system is available at: Schaeffler Group’s whistleblowing system 

Part of NFRThe Schaeffler Group strives for an effective HRCMS that defines the operational and organizational structure, clear roles and responsibilities, as well as processes and procedures. Human rights issues are dealt with on an interdisciplinary basis and in close coordination between the various functions in all regions. The Purchasing function is primarily responsible for the supply chain, while the Human Resources function is responsible for the own business area. The Compliance function, which reports to the CEO, is responsible for the comprehensive coordination and organizational anchoring of governance responsibility for compliance with human rights.

The Schaeffler Group routinely reports on the status of the HRCMS and current issues related to human rights. Additional comprehensive communication measures were planned and implemented in the reporting year, such as training courses to raise employee awareness of human rights and inform them about the relevant internal regulations. Employees and executives have access to basic human rights trainingon the learning platform since mid-2023.

External stakeholders are regularly informed through the Sustainability Report and have been involved through regular consultations since 2022. These are intended to involve interest groups more closely in the HRCMS processes and to identify potential for improvement and development. Parts of the HRCMS, such as the performance of a risk assessment, were extended to certain customers and business partners in the reporting year that are relevant in the scope of the EU Taxonomy.

The UK Modern Slavery Act also requires companies to report annually on their commitment to protecting human rights along their value chain. Schaeffler (UK) Ltd. published a corresponding statement.Part of NFR

The Modern Slavery Statement of Schaeffler (UK) Ltd. is available at: Modern Slavery Statement 

Part of NFRThe effectiveness of the measures and processes taken, including the whistleblowing system, is reviewed regularly and on an ad hoc basis using predefined effectiveness criteria for individual cases. When designing measures and processes to address prioritized human rights issues or confirmed incidents, it is regularly defined in advance which objectives are to be achieved by the measures or processes.Part of NFR

Purchasing & Supplier Management of the Schaeffler Group at: Purchasing & Supplier Management 

Part of NFRIn the 2023 reporting year, the Schaeffler Group focused on the requirements of the German Supply Chain Due Diligence Act (LkSG). As a key element of these requirements, the Schaeffler Group conducted a risk analysis of all direct suppliers. This is used to determine the individual risk potential of the direct supplier. This includes all suppliers that have had revenue with the Schaeffler Group in the past 24 months. Risks are identified for each procurement or service category and measures on human rights processes already implemented by the supplier are considered. In addition, the Schaeffler Group conducted corresponding ad hoc risk analyses in cases where substantiated knowledge of a potential incident at indirect business partners was obtained. This made it possible to assess and minimize potential risks for those affected. Potential risks were identified by external service providers using statistical analyses.

In 2023, a process for addressing and tracking measures for high-risk suppliers was rolled out. The process followed a defined escalation path to eliminate potential supplier risks in a targeted and consistent manner. A sustainability team at the Shared Service Center in Wrocław (Poland) follows the tracking of measures according to the risk analysis to implementation.

The activities include the use of standardized surveys (self-assessment questionnaires, SAQs) from the Drive Sustainability Initiative, which can be shared with other customers free of charge by the supplier. In the reporting year, additional relevant suppliers received questionnaires as a result of the risk analysis. The Schaeffler Group Supplier Code of Conduct remains an important element in communication and transfer of requirements, in addition to other contractual components. 

Stakeholders and affected groups are involved in the annual stakeholder dialog, to which supplier representatives are invited. 

In the 2023 reporting year, the company’s commitment as a founding member of the Responsible Supply Chain Initiative (RSCI)¹ increased by planning social audits at relevant high-risk suppliers with some already performed. Suppliers also have the opportunity to share the results with other customers to avoid duplicate audits.

Further measures and development of internal systems and analyses consider the requirements of the LkSG, among other things, in the annual review of the risk analysis or ad hoc analyses if there are relevant changes in business activities.

The human rights due diligence of indirect suppliers was also conducted in selected regions under consideration of the corresponding sanction requirements.Part of NFR

Critical raw materials

Part of NFRResponsible sourcing of raw materials such as tin, tungsten, tantalum, and gold is an important issue for the Schaeffler Group, as the sale of these can be used to finance armed conflicts and 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. The company’s approach corresponds to the OECD Due Diligence Five Steps Framework. As a final step, the company reserves the right to issue “New business on hold” to suspicious suppliers. 

The annual survey of certified smelting plants is performed using templates from the Responsible Minerals Initiative (RMI). Compared to the prior year, the response rate ² of the direct suppliers surveyed, including information regarding their suppliers, on the use of conflict minerals increased to 88.6 % ³ (prior year: 87.4 %) ⁴ in the reporting year. In 2023, 92.5 % ³ (prior year: 96.3 %) of the smelting plants reported from the upstream supply chain are certified by the RMI or are not located in the risk areas defined by the RCOI. Though it continues to be high, the coverage rate of certified smelting plants is falling again due in part to an increase in military and economic conflicts. The Schaeffler Group’s Conflict Minerals Report summarizes the findings and is provided to customers on request. A report on the materials cobalt and mica is also available.

Furthermore, the Schaeffler Group has been a member of the Initiative for Responsible Mining Assurance (IRMA) since 2021, which focuses on threats to indigenous communities in addition to general priorities such as avoiding negative environmental impacts and human rights violations in connection with mining processes, transportation and trade of critical raw materials, and direct or indirect support for armed groups or private security forces.

Based on the Material Change Report ⁵, the Schaeffler Group defined a list of materials with high priority. All relevant suppliers were contacted in accordance with the OECD guidelines. Following efforts for raising awareness in the supply chain in 2022, the aim in the reporting year was to increase the feedback rate, supported by more in-depth education of suppliers in the area of critical raw materials. Results were provided to customers on request. The company also developed and published a guideline for critical raw materials in 2022.Part of NFR

The Schaeffler Group’s Conflict Minerals Policy is available at: Conflict Minerals Policy