Continuously increasing demands
Responsible sourcing 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 2012, more than 36,000 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 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.
of the purchased direct material, measured in cost, came from suppliers that have undergone CSR evaluation during 2010 to 2012.
Results from the assessments in 2012
In 2012, 66% (60) of Volvo Group purchasing spend for direct material derived from suppliers of that during 2010 to 2012 had completed a self-assessment based on the Volvo Group's CSR requirements (CSR - Corporate Social Responsibility).
Of the 66% of the suppliers that completed the self-assessment 80% 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, which is one of the requirements. The rest failed beacuse of a lack of other processes to comply with the requirements. Suppliers that do not pass are asked to draw up an action plan.
Of the suppliers in high-risk countries from a CSR perspecitve 64% completed the test. In terms of volume the share was 84%. Of the suppliers in high-risk countries that completed the assessment 74% passed.
In 2013, 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.
Read more in the Volvo Sustainability Report 2012.