Sustainability report 2021/22

Value-based supplier management

Code of conduct for the supply chain

We are convinced that integrating sustainability into the strategic and operative processes and procedures of our company yields high quality and product reliability – as are our customers, who are increasingly requesting proof of this. We can only satisfy our own demand for quality and our clients’ requirements if our business partners and suppliers share our convictions.

One important prerequisite for a trusting partnership with the above is thus a common understanding of principle standards that form the basis for sustainable business practices.

To this end, we have developed a code of conduct for suppliers that is binding for all of the national and international suppliers we work with. It has been drawn up based on the measures and regulations of the Salzgitter Group and applies to all areas of the company that maintain business contacts with suppliers and service providers.

The basic principles and requirements defined in our supplier code of conduct cover the following fields:

Legality and integrity

This includes compliance with applicable laws, combating corruption and money laundering, antitrust law, export controls and maintaining secrecy and data privacy.

Human rights and working conditions

This encompasses freedom of association, working hours, wages and the rejection of child and forced labor and of discrimination.

Occupational health and safety

Providing our employees with a safe and healthy place of work has the utmost priority for us. This is why we go way beyond statutory requirements in the measures we have introduced to prevent accidents at work.

Environmental protection

Our sustainability claim is substantiated in our environmental regulations and rules on the sustainable use of energy and resources and climate protection.

The upstream processes and stages in value creation at our company are many and diverse: they range from the processing of raw materials such as steel plate and profiles through the use of complex assemblies, electromechanical equipment, drive technology and installation services to entire machines. Accordingly, we have an extensive pool of direct suppliers with their own subcontractors. This is a huge responsibility for us – and also means that we have a considerable sphere of influence that we wish to make positive use of.

Sustainability criteria for supplier assessment

Compliance with our supplier code of conduct is mandatory not just for our business partners but also for their own subsuppliers and subcontractors. We also audit our contractors with the help of questionnaires and documents of proof that include certain management systems governing quality, occupational health and safety, environmental protection and energy, for instance. Our system audits determine whether our suppliers are fundamentally suitable or not. We also carry out process and product audits designed to ensure product quality.

The information submitted for a system audit is verified by supporting documents and during tours of the supplier’s site.

As part of our due diligence obligations with respect to social and ecological requirements throughout the supply chain, we continue to develop our risk analyses and test procedures. Our benchmark here are the UN’s guiding principles for business and human rights and their translation into the German Federal Government’s national action plan.

With countries such as France, Great Britain and the Netherlands having passed suitable supply chain legislation in the past few years, on January 1, 2023, the Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) came into force in Germany that aims to improve the protection of the environment and of human and children’s rights throughout global supply chains.

We treat the associated new legal requirements as a regular incentive to subject the approach adopted by our value-based supplier management system to scrutiny and further develop it accordingly. During the reporting period the KHS Group was involved in Group-wide measures aimed at integrating LkSG into our existing compliance management system to meet our corporate due diligence obligations.