Responsible supply chain
Suppliers are strategic partners in the GF mission to become a sustainability and innovation leader providing superior customer value.
Maintaining a transparent and ethical supply chain is critical to sustainable business growth. GF therefore regards its suppliers as strategic partners in its mission to become a sustainability and innovation leader providing superior customer value. Through onboarding, reviews and assessments, the company works closely with its suppliers and partners to identify and measure their sustainability impacts. These actions promote sustainability throughout its operations, ensuring its products and solutions comply with all relevant laws, regulations and standards.
Implementing sustainable procurement principles
GF sets very high standards of ethical business conduct for itself and expects the same from its business partners. The Code for Business Partners, of which all suppliers receive a copy for acknowledgment and compliance, outlines the core principles that business partners must adhere to. In particular, as part of this code, the company expects its business partners to:
- firmly adhere to ethical principles and business practices for labor, environment, health and safety, and management systems;
- effectively integrate, communicate and apply these principles to improve performance over time; and
- operate in full compliance with all applicable laws, rules and regulations.
Progress in 2022
Conducted sustainability assessments of key suppliers
in % of procurement spend
Supplier assessment results in 2022
At the end of 2022, GF completed sustainability assessments for 64% of its procurement spend, accounting for around 600 key suppliers. Approximately 70% received a very good score (above 45 on a scale of 0–100, with 100 being the highest), indicating that the majority of GF’s suppliers already have effective sustainability measures in place. The remaining 30% of the assessed suppliers scored below 45 points, indicating average or insufficient corporate social responsibility (CSR) performance in the four assessment categories: environment; labor and human rights; ethics; and sustainable procurement.
Supporting suppliers for improved performance
In order to improve suppliers' sustainability performance, GF conducted several initiatives. They included:
- supplier webinars focusing on sustainable sourcing activities and promoting ethical behavior that identified improvements relevant to all three divisions;
- sharing existing training resources from the online EcoVadis academy; and
- communication on the importance of external sustainability assessments for future collaboration.
Supplier assessments focusing on sustainability performance
Sustainability assessments are an essential part of the company's responsible sourcing activities. In light of new legislations concerning sustainability-related due diligence, such as the German Supply Chain Act, GF has put in place comprehensive processes to ensure that sustainability aspects in its supply chains are transparent and considered in the supply chain management of all three divisions.
To monitor progress towards a responsible supply chain, the company has made supplier assessments one of the targets of its Sustainability Framework 2025. The company's long-term goal is to maintain a transparent overview of its entire supply chain’s sustainability status and developments. The ratings and associated guidance of the external rating agency EcoVadis are vital to achieving this goal and ensuring that directly contracted suppliers consistently improve their sustainability performance.
EcoVadis customizes each evaluation based on the supplier's size, industry and country. In addition, as some other agencies provide the same sustainability assessments, GF also accepts their ratings if their scope is comparable to those of EcoVadis, such as the self-assessment questionnaire (SAQ) of Drive Sustainability – an association of automotive companies working on a circular and sustainable automotive value chain.
To ensure objectivity, GF prefers its suppliers to use third-party assessments. However, recognizing that this is not always possible, particularly for smaller suppliers, the company launched its own self-assessment questionnaire in 2022 with questions based on EcoVadis assessments. This questionnaire is offered to smaller suppliers and a detailed analysis of their responses is conducted.
The next steps in GF’s high-level process until 2025 include:
- performing risk assessments on suppliers of purchased commodities for all three divisions;
- engaging with suppliers to highlight relevant risk categories and support sustainability improvements; and
- maintaining ongoing EcoVadis assessments to ensure suppliers continuously improve their sustainability efforts.
Ensuring compliance with laws and regulations
The German Supply Chain Act, which will come into force in January 2023, aims to ensure companies comply with human rights and observe environmental standards in their supply chains. To comply with the requirements of this act, GF has carried out an initial assessment, using the Transparency International Corruption Perceptions Index 2021 country indices to assess its exposure to human rights and environmental risks per country.
Furthermore, using internal and external expertise, the company evaluated each sourcing group’s incremental human rights and environmental risks. The assessment results in a "heat map" – a color-coded data visualization of the significance of one or more criteria — indicating the level of risks of the suppliers based on country and commodity risk. This approach enables GF to have a clearer focus to work on mitigating human rights and environmental risks in its supply chain.
UN Global Compact — Sustainable Supply Chain Management working group
Since early 2019, GF has been an active participant in the Sustainable Supply Chain Management working group organized by the UN Global Compact’s Swiss network. The group is a forum for companies to share knowledge and best practices about important topics, including improvements to supply chain visibility and traceability, supply chain risk assessments, supplier engagement and human rights due diligence.
In 2022, the group met at in-person and virtual events on three occasions. The network's discussions focused on assessing scope 3 emissions, the risks of child labor in the supply chain and the German Supply Chain Act.
At its third meeting, the working group invited GF to share its initial assessment of the German Supply Chain Act. Participants welcomed the company's approach, especially in terms of the composition of its project team and its risk assessment method. This invaluable peer feedback has positively contributed to GF's cross-divisional team's decisions on future steps, underlining the importance of the peer-to-peer exchange of expertise in such international forums.