Supply Chain Responsibility
At SARIA, we seek to promote integrity as well as socially and environmentally responsible behaviour in our supply chains. As a global company, we procure materials and services from all over the world. Therefore, we assume responsibility that extends beyond our factory gates. To build responsible and stable supply chains, we continuously develop our supply chain organisation, policies and processes. Creating awareness among our procurement community and our suppliers complements our approach.
In 2022, we took comprehensive actions to account for the requirements of the German Supply Chain Due Diligence Act (“Lieferkettensorgfaltspflichtengesetz”), which aims to prevent, detect and mitigate human rights violations and environmental hazards related to human rights risks in supply chains:
establishes our overall risk management strategy
comprises members of group compliance, procurement, sustainability and risk management and coordinates all activities at group level
such as the SARIA Code of Conduct, the Supplier Code of Conduct and our Sustainable Procurement Policy, to meet the new legal requirements
compliance officers prepared and completed an internal risk analysis in coordination with local departments in Q4 2022 to assess material risks within our own business units
was implemented to screen and determine the overall risk score of suppliers based on sustainability-related industry and country risks as part of our supplier risk management
we train our employees with a programme explicitly developed to cover human rights violations in the supply chain
was prepared to facilitate the use of our anonymous complaints procedure
further steps will be taken with high-risk suppliers to ensure compliance with legal provisions and our expectations along our supply chain
SCDDA Risk Management Responsibilities
Supply Chain Responsibility
In all of our approaches, we always seek to integrate our systems. This is why we not only use the EcoVadis IQ tool for assessing risks in our supply chain. In combination with the EcoVadis ratings module, it strengthens our basis for in-depth supplier assessments. These allow us to judge the sustainability performance of our suppliers and demand corrective actions directly via a corrective action plan module when necessary.
Driven by the idea of partnership, we seek to support our suppliers in addressing gaps and shortcomings in their operations. The assessments provide them with valuable data and analyses to develop meaningful measures and seek necessary support and advice. In addition, we offer training for our suppliers in the same way as for our procurement community. At SARIA, collaboration and compliance always go hand in hand.
To account for the complexity and global scope of our sourcing and purchasing, we take a complimentary approach that takes into account our centralized indirect procurement and the direct procurement in our business units. We want them to be as close to their suppliers as possible, which entails them taking additional measures to screen and assess suppliers.
For example, Bioiberica, our business unit in the area of life sciences, uses ‘Refinitiv’ as a tool to assess customer and third-party risk, and manage due diligence regarding clients and suppliers. ‘Refinitiv’ provides aggregated information that permits the immediate screening of persons and companies for sanctions, legal and regulatory enforcement, adverse media reporting and political exposure. Based on the data available, Bioiberica is able to detect non-financial risks systematically at an early stage.
Protecting ourselves against risks in the supply chain is also crucial for our reputation and our own Environmental, Social and Governance (ESG) performance, which in turn helps to increase our attractiveness as a reliable and responsible supplier. Sustainable procurement is one of the four areas of the EcoVadis assessment we undergo ourselves. Due to the systematic and encompassing efforts of our Sustainable Procurement Programme, we have been able to constantly improve our performance in this area. Because of this progress, together with advancements in the other areas of evaluation, we were awarded silver status in 2022 for the second year in a row.
At SARIA, we not only try to integrate sustainability into topics, such as supply chain or risk management, but also into our financing operations. With several of our finance partners, we have agreed on linking our ESG performance and the financial terms they offer us. In practice, this means that the better our sustainability performance, the more favorable the interest rates we are granted.
Our overall aim is to tie all of the Group’s major new financing instruments to ESG criteria in order to continuously extend the use of sustainable finance tools. In 2022, we reached a major milestone in this regard by linking our key anchor financing, a revolving credit facility that provides us with liquidity for our operations, to ESG criteria. Just as our credit facility equips us with flexibility, the respective ESG performance can be measured based on either our EcoVadis rating or predefined key performance indicators (KPIs), which permit evaluation based on clear and transparent criteria.