Responsible supply chain
For GF, sustainable management includes building and maintaining trusting, long-term relationships with its sourcing and logistics partners.
In addition to economic considerations, GF expects business partners to demonstrate ethical conduct and comply with all relevant laws, regulations, as well as international social and environmental standards. GF considers this behavior – along with efficient and environmentally friendly transport solutions – to be a critical aspect of both good business conduct and the progress toward our company’s goals.29
GF engages in sustainability efforts throughout the value chain and is committed to extending the same standards to its suppliers. In its Sustainability Framework 2025, GF set a goal to conduct a comprehensive sustainability assessment for 80% of its procurement spend, which covers around 1,000 suppliers. To achieve this five-year goal, GF aims to assess 16% of its procurement spend annually. In 2021, the company achieved this goal in all three divisions.
Code for Business Partners
The GF Code for Business Partners plays a crucial role in the context of procurement. In 2021, GF updated the code to include specific requirements regarding water consumption. Following the release of the amended Code for Business Partners, GF Piping Systems added the Code to its Purchase Agreement with key suppliers, and GF Casting Solutions and GF Machining Solutions added the Code to their General Purchase Conditions. In addition, 74% of the banks GF is working with accepted the Code for Business Partners.
Furthermore, GF’s supplier onboarding process and periodic evaluations contain several sustainability criteria. These include, but are not limited to, questions about human rights, environmental risk exposure, health and safety in the manufacturing process, as well as compliance with relevant legislation such as REACH, the Dodd-Frank Act and the Consumer Protection Act. For example, GF is committed to ensuring that its supply chain has no conflict minerals. Due to the complexity of tracing the minerals’ origins, the evaluation process is a step-by-step effort. Based on information obtained from suppliers, GF has no knowledge of any conflict minerals being present in the materials it purchased in 2021 to manufacture its products.
Responsible supply chain management
To conduct the sustainability assessments set out in its Sustainability Framework, GF has partnered with the external rating agency EcoVadis. The assessment provided by EcoVadis focuses on four themes: environment, labor and human rights, ethics, and sustainable procurement. Each assessment is adapted based on company size, industry and country. In addition, as some other companies provide the same service as EcoVadis, GF also accepts their ratings if the scope and detail are comparable to the EcoVadis assessment. Furthermore, GF Piping Systems developed a comprehensive sustainability risk screening that serves as a first assessment. This risk screening covers the four EcoVadis themes combined with a country-specific ESG score. If the supplier is categorized as “mid to high-risk”, it is invited to join the EcoVadis assessment.
In 2021, GF’s responsible procurement team conducted an initial pilot phase to familiarize itself with the process. Its goal was to more clearly understand how suppliers reacted to assessment invitations and how much additional support they required. In September, it started the internal evaluation process to select the suppliers based on risk assessment criteria, spend volume and the broader rollout of the program. In the first year, approximately 400 suppliers across various sectors, countries and company sizes were invited to take part in the assessment. A kick-off webinar accompanied the broader rollout to provide further details about the program and general sustainability issues within the supply chain.
The next steps of the high-level process until 2025 include:
- risk assessments of purchased commodities for GF Piping Systems and GF Casting Solutions
- supplier self-assessments conducted by EcoVadis or a similar assessment for key suppliers and those identified as higher risk in the internal risk assessment
- follow-up and engagement with the suppliers requiring improvement
While GF prefers its suppliers to use third-party assessments, it recognizes that this is not always feasible, especially for smaller partners. That is why GF also developed its own self-assessment questionnaire in 2021. It contains questions based on EcoVadis assessments and will be introduced in 2022. GF will offer its questionnaire to smaller suppliers and then evaluate the results to ensure a robust analysis of the responses.
Overall, the long-term goal is to ensure that all new key suppliers provide a third-party sustainability assessment when starting their business relationship with GF.
Supplier assessment results
At the end of 2021, GF had conducted sustainability assessments on 34% of its procurement spend, equal to approximately 300 new and existing key suppliers. Approximately 70% received a very good score, indicating that the majority of GF’s suppliers already have sustainability measures in place. The remaining 30% of the assessed suppliers received a score below 45 points (on a scale of 0–100, with 100 being the highest), indicating average or insufficient CSR performance in the four assessment categories.
In the year to come, GF will focus on developing those suppliers with a lower score by agreeing on improvement measures and, if necessary, coordinating third-party audits. In step 3 of the process listed above, GF will define improvement measures in a detailed, meaningful and pragmatic way in 2022.
New whistleblower channel
In 2021, the company implemented the GF Transparency Line, a new state-of-the-art reporting channel, through an independent external provider. This is a communication channel for its employees and any external stakeholder to report suspected or known misconduct. GF’s suppliers can also use the line to make anonymous reports 24/7 in several languages. The GF Transparency Line reflects our expectation that our employees and partners conduct business in an ethical and responsible way. The GF Transparency Line complies with the EU directive to increase the protection of whistleblowers wishing to draw attention to actual or possible wrongdoing within a company, such as fraud, theft, sexual harassment, discrimination or disregard of security regulations.
UN Global Compact Working Group
Since early 2019, GF has been an active participant in the Sustainable Supply Chains working group organized by the UN Global Compact’s Swiss network. This group serves as a forum for companies to share knowledge and best practices on a number of important topics. These include improvements to supply chain visibility and traceability, supply chain risk assessment, supplier engagement and human rights due diligence. In 2021, the group met and worked virtually due to COVID-19. The network’s discussions focused on how to assess the sustainability performance of suppliers and how companies can implement effective supplier assessment programs.