As an international industrial service provider, we sourced materials and services from nearly 19,000 suppliers in 2022 alone, of whom approximately 50% are also service providers. Supply chain sustainability offers KAEFER opportunities to push for positive change. We are currently engaged in dialogue with suppliers to improve sustainability and provide our clients, investors, and regulators with relevant information from the entire supply chain. There are important social elements connected to supply chain sustainability. At KAEFER, our Supplier Code of Conduct (SCoC) goes hand in hand with our Human Rights Policy.

KAEFER‘s SCoC is an essential part of our contractual relationship with our suppliers. The SCoC formulates the standards on human rights, working conditions, environmental protection, quality and health and safety, that we expect from suppliers. KAEFER is integrating ESG risk management into its procurement procedures and follows the legal requirements for the protection of human rights and environmental protection in all the countries where we operate. In our industry, a reputation for quality is vital; manufacturers of the materials we use in the performance of our services are screened and often audited. We also go to great lengths to procure (and/or require) high-quality, appropriate personal protective equipment for our workforce and our subcontractors.

As a service provider, KAEFER’s first responsibility is to keep our people safe and ensure we have the right materials and safety equipment on site to fulfil the terms of our contracts. As a global company, we recognise that we have an opportunity – and a responsibility – to do everything we can to drive positive change via our business relationships.

This is both a moral imperative and a commercial necessity, as regulatory frameworks in many parts of the world are being updated to place greater emphasis on supply chain sustainability, including the UN’s Guiding Principles on Business and Human Rights, the German Supply Chain Act, and the upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD).

Following KAEFER’s decision to set up global ESG supplier risk management for human rights and environmental standards, a SCoC was published in 2022 to supplement the company’s Code of Business Conduct.

KAEFER’s SCoC follows UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. It sets out explicit requirements for all our suppliers in terms of human rights and environmental standards. All relevant suppliers were informed of the new obligation during the year.

To help deliver a smooth transition – and take account of cultural and legislative differences in countries where we operate – the workstream team created an internal Supply Chain Sustainability Network in 2022, including representatives from all our business units around the world. The Supply Chain Sustainability Network is responsible for:

• Analysis of KAEFER’s supplier portfolio, as well as existing initiatives in our various business units
• Annual abstract risk assessment of our Supplier Portfolio based on ESG criteria
• Setting up of ESG supplier risk management framework: Implementation of grievance mechanism and processing of occurrences

Moving forwards, our intention is that all supplier relationships will be subject to monitoring – including an ESG risk assessment, integrated decision-making on sourcing, and decarbonisation of our supply chain. In doing so, the following topics are on our action list:

• Introduce suppliers (self-) assessment on ESG business practises
• Initiate measures to improve ESG business practices of suppliers
• Develop ESG audit scheme for selected suppliers
• Develop group-wide standards for calculating GHG emissions associated with products and services purchased by KAEFER