NF10 Sustainable supplier management
Sandvik has about 53,000 suppliers located in 91 countries, from which we source raw materials, components, products and services. In 2021 we launched a third version of the Sandvik Supplier Code of Conduct (home.sandvik/suppliermanagement). Updates include aligning the Supplier Code with our Sustainability Goals. The responsible sourcing of minerals and metals section was updated to include cobalt and to align it with the EU legislation 2017/821. We also strengthened the Supplier Code with a section on human rights due diligence.
In 2021 we focused on internal training of purchasers to support them in placing and following up on supplier sustainability requirements and about 57 percent of all purchasers were trained. The trainings were conducted by internal and external experts and will be part of a training package for new purchasers.
Our sourcing activities play an important role in reaching our sustainability goals, whether it's continuous work together with suppliers towards more sustainable options, supporting projects such as switching to green energy or LED, or logistics projects aiming at lowering greenhouse gas emissions from transports.
Circularity – transition to a circular system
Circular use of raw materials, for example in our buy-back programs for cemented carbide, has been part of our business model for many years. With our sustainability goal for circularity, we strengthen our ambitions for a circular supply chain. The new Supplier Code requires suppliers to control, measure, document and plan their work to minimize the environmental impact of their business from a circularity perspective. It also guides them to transition from a linear to a circular system and work towards conserving finite resources and selecting materials and resources that can be reused and recycled.
In 2021, we continued to build baselines for selected purchasing categories, such as steel, CO2 emissions and circularity. In our metalcutting operations, we initiated a program to identify packaging solutions based on non-fossil materials.
Climate – minimized climate impact
In our new Supplier Code we encourage all our suppliers to adopt climate targets in line with the Paris Climate Agreement. We also require suppliers to control, measure, document and plan their work to minimize their business impact on the climate.
People – health and safety improvement plans
Health and safety plans are part of the requirements on our suppliers in the Supplier Code of Conduct. Suppliers are requested to provide a safe and healthy working environment and take all practicable steps to prevent incidents and injuries. Follow-up on the People target for suppliers is part of our supplier self-assessment questionnaires and Supplier Code of Conduct audits.
Fair play – compliance with the Supplier Code
The Sandvik Supplier Code of Conduct places requirements on our suppliers in the areas of health and safety, compliance with relevant laws, labor and human rights, environment and anti-corruption. As part of the Supplier Code, suppliers are requested to cascade Sandvik requirements to their own supply chain.
Sandvik suppliers are assessed for risk of violating the requirements in the Code based on country and category risks and segmented as high, medium or low risk. In 2021, approximately 3 percent of our supplier spend (1,213) was rated as high risk, with the distribution China (1.8 percent), India (0.9 percent), Mexico (0.2 percent), Brazil and Russia (0.15 percent each). High risk suppliers are prioritized for on-site audits.
By signing the Supplier Code, the supplier gives Sandvik the right to perform social compliance audits. Due to the global pandemic, it was not possible to perform on-site audits to the same extent as in previous years and a total of 15 supplier audits were performed. 13 were Supplier Code audits of which 9 were carried out on site and 4 were carried out remotely. Two audits related to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. All were conducted by independent third-party auditors. No supplier contracts were terminated due to breaches of the Supplier Code.
We updated our procedure to assess compliance with the Supplier Code and as a consequence we decided to partner with EcoVadis, an organization that conducts impartial assessments of sustainability management practices and provides supplier risk screening and rating.
Supplier spend by region
Responsible sourcing of minerals and metals
Sandvik condemns all activities in the raw material sector connected to illegal or unlawful exploitation of ores, that directly or indirectly finances or benefits armed groups in conflict areas, or that contribute to serious human rights violations, including child labor, and has adopted measures to manage and mitigate these risks. Read more in our updated Responsible Sourcing of Minerals and Metals Statement at home.sandvik/responsiblesourcing which since 2021 also covers the sourcing of cobalt.
Wolfram Bergbau und Hütten AG (WBH), a Sandvik subsidiary based in Austria, is a Conformant Tungsten Smelter since 2015. It continued to supply the majority of our total tungsten intake in 2021.
Sandvik believes that responsible engagement with small-scale miners in conflict areas and other difficult locations can create a sustainable livelihood and foster local development. WBH provides technical help and training in these mining areas, and co-funded in 2021 an independent study of a small-scale mine in Rwanda. The study showed a positive impact for miners, environment and local communities alike through engagement and collaboration.
Sandvik annually performs a reasonable country of origin enquiry to identify smelters and refiners associated with our supply chain, based on the OECD Due Diligence Guidance. Sandvik has been a member of the Responsible Minerals Initiative since 2020.