Responsible supply chain management is about managing risk, promoting responsible behaviour and building long-term relationships with suppliers to improve social, environmental and business ethics in the supply chain. Ensuring good standards in the supply chain is important to the Volvo Group and its stakeholders. The Group wants to ensure that unethical values are not built into the Group's products and services.
Since 1996 the Volvo Group has gradually increased requirements for suppliers regarding environmental, business ethics and social responsibility aspects.
The requirements placed on suppliers are based on the principles contained in the Volvo Group's Code of Conduct and international norms of behaviour.
Sourcing and risk assessments
In 2011, more than 39,000 suppliers delivered products and services to the Volvo Group. Approximately 6,000 are suppliers of direct material used in automotive products. 8% of these suppliers are located in countries assessed as ‘high risk’ identified in the Volvo Group's CSR country risk model. The risk assessments are based on analyses conducted by internationally recognized institutions and include factors such as human rights, labour standards and incidence of corruption. The Volvo Group has chosen to apply the same requirements and the same process on all suppliers.
Results from the assessments in 2011
In 2011, 63% of Volvo Group purchasing spend derived from suppliers of direct materials that had completed the CSR assessment during 2010 and 2011. 73% of the suppliers that completed the assessment passed. Almost exclusively, the main reason for failing to comply with the assessment is a lack of adequate systems to pass on the requirements to their suppliers. Suppliers that do not pass are asked to draw up an action plan.
The assessment was completed by 83% of suppliers from countries considered to be high risk from a CSR-perspective.
In 2012, the Group will continue to focus on assessing suppliers in identified high- and medium risk countries from a CSR perspective and to work with the non-approved suppliers to ensure that the Group's requirements are met.