Procurement and logistics

Beyond the economic considerations, GF has specific expectations regarding ethical conduct and compliance with relevant laws, regulations, and international standards in respect to social and environmentally friendly conduct. GF considers this, as well as environmentally friendly and efficient transport solutions, as not only forming part of good business conduct but also a contribution to achieving business goals.

The Code for Business Partners plays a crucial role in this context. By the end of 2019, the vast majority of GF’s key suppliers had signed the Code for Business Partners (GF Piping Systems 90%, GF Casting Solutions 90%, GF Machining Solutions over 95%). All key business partners are expected to sign the document by the end of 2020. Thus, GF is on track to meet the target set for procurement.

A number of sustainability criteria, including questions about human rights, environmental risk exposure, health and safety in the manufacturing process, and conformity with relevant industry regulations (e.g. REACH, the Dodd-Frank Act, and the Consumer Protection Act) form a standard part of the onboarding and periodic evaluation process of GF´s suppliers. As an example, GF is committed to ensuring that no conflict minerals are present in its supply chain. Due to the complexity of tracing the origins of these materials, the process is a step-by-step effort. Based on the information obtained from suppliers, GF is unaware of any conflict minerals present in the materials purchased during 2019 for the manufacture of its products.

To develop a deeper insight into the quality of GF’s supply chain from a sustainability perspective, in 2019, an approach to the systematic assessment of the commodity groups and respective suppliers of the three divisions was defined. The high level process includes

The rollout is planned for 2020, starting with high-risk segments, and will be progressively extended in subsequent years.

Since early 2019, GF has been an active participant of the “Sustainable Supply Chains” working group organized by the UN Global Compact’s Swiss network. This group serves as a platform for inter-company exchange and best practice sharing on topics such as improving supply chain visibility and traceability, supply chain risk assessment, supplier engagement, and human rights due diligence.

Each year, GF purchases a variety of raw materials and goods as part of its supply chain and then delivers the finished products to sales companies and customers around the globe. To ensure that this process is conducted in an environmentally friendly manner, GF has set itself the target of reducing the energy consumption, carbon emissions, and packaging material.

During 2019, the divisions therefore took steps towards gaining better transparency on the environmental footprint of the logistics network in areas where GF has a possibility for influence. GF Machining Solutions, for example, started collection of CO₂ emission data from all of its airfreight deliveries to use as a baseline for future optimization. The division also plans to introduce a CO₂ emission metric for express couriers, starting with a pilot project with one of its providers. In parallel, GF Piping Systems achieved a reduction of 20% in airfreight shipments as compared to 2018, with 90% of its stock items sent by sea transport. To facilitate broader impacts for the mid-term, the division has initiated discussions with its various transportation partners to reduce CO₂ emissions from their fleet and to train the drivers on methods to optimize fuel use.