We expect our suppliers and business partners to comply with our and equivalent ethical, social, ecological, and human rights standards. To this end, they are expected to introduce processes to ensure compliance with applicable standards. The requirements for our direct suppliers, service providers, and other partners are set out in Codes of Conduct for Business Partners and Suppliers and corresponding contractual clauses. If we suspect that rules of conduct have been or are being violated, we react accordingly. Depending on how serious the misconduct is, we may, e.g., introduce additional control measures, such as audits, and request additional written confirmations from suppliers and business partners.
Guidelines and regulations
Our Codes of Conduct for Business Partners and Suppliers take into account the respective business models of the business segments. The Codes of Conduct are used in purchasing contracts and contracts with other business partners, e.g., distributors and sales representatives – as annexes or references. Fresenius Medical Care has embedded its expectations in its Global Supplier Code of Conduct. Fresenius SE & Co. KGaA, Fresenius Kabi, and Fresenius Vamed have set out their requirements in Codes of Conduct for Business Partners and Suppliers. Fresenius Helios defines its expectations of business partners in the respective contracts and in the Code of Conduct for Suppliers introduced at the end of 2021. The codes include details on the regulation of child and forced labor, and fair working and employment conditions such as working hours and wages.
Progress and measures 2021
Transparency in the supply chain is important to identify and address human rights risks. In the reporting year, our global procurement activities demonstrated their reliability – despite the particularly volatile procurement market situation in 2021. The business segments' individual measures are provided below; additional information on procurement activities can be found in the Group Management Report.
Fresenius Medical Care
Fresenius Medical Care’s Global Supplier Code of Conduct specifies its expectations of suppliers in terms of sustainable business practices, covering topics such as integrity and ethics, human rights and labor conditions, quality, occupational health and safety, and environmental protection. It forms the basis of their contractual relationships with suppliers. Fresenius Medical Care continues to incorporate the requirements of the Global Supplier Code of Conduct into supplier contracts and has updated all relevant procurement guidelines across the regions to include a reference to this document. In 2021, the business segment also developed an onboarding process for suppliers to inform them of the sustainability requirements. This includes procedures to manage situations where suppliers do not wish to or are unable to adhere to these requirements.
In the reporting year, various employees in Procurement, as well those working in Legal, Finance, and Compliance, participated in internal training courses on the Global Supplier Code of Conduct. Additionally, in 2021, Fresenius Medical Care developed a global e-learning course on sustainable supplier management, with the goal of reaching procurement staff in all countries by the end of 2022. It has also developed an internal process to manage supplier feedback, which will be rolled out in 2022.
In the context of its Global Sustainability Program, Fresenius Medical Care launched an initiative to evaluate suppliers based on sustainability risks. This helps to cluster suppliers according to these risks, which allows it to monitor them more closely and take the required action when necessary. In 2021, Fresenius Medical Care further developed its risk assessment procedures, taking into consideration the requirements of the new German Act on Corporate Due Diligence Obligations in Supply Chains, which will come into force in 2023. As part of this initiative, Fresenius Medical Care will ask critical suppliers to provide information about their sustainability performance via, for instance, a self-assessment form. Fresenius Medical Care will use this information to identify suppliers that do not fully comply with its sustainability standards so it can initiate appropriate follow-up action. In addition, Fresenius Medical Care continued to screen social media for negative reports regarding its suppliers’ business conduct related to sustainability. In 2021, the business segment screened 100% of its most important suppliers based on relevant spend.
Fresenius Kabi has identified strategic suppliers that the business segment monitors closely because of their importance to the business; this is managed by Fresenius Kabi's global strategic purchasing organizations. Based on defined processes, Fresenius Kabi classifies strategic suppliers according to their risk and evaluates them regularly. The business segment also conducts supplier audits.
Since 2019, Fresenius Kabi has assessed the aspects of occupational health and safety, environment, human rights, business ethics, and sustainable procurement of relevant¹ strategic suppliers, which has been further continued in 2021. This enables Fresenius Kabi to identify suppliers’ ESG performance (Environment, Social, Governance). Subsequently, suppliers can be requested to implement appropriate measures to reduce their ESG risks. Fresenius Kabi is supported in its supplier evaluation by an external service provider that provides ESG assessments for global supply chains. In addition, the business segment continued to work on integrating supplier assessments based on ESG criteria into supplier processes in the reporting year 2021. At the end of 2021, more than 70% of the relevant strategic suppliers had been evaluated against ESG criteria. The internally set ambition was thus achieved. The ESG performance of the majority of suppliers was confirmed by the assessment. Strategic suppliers with a low ESG assessment score have been requested in 2021 to take measures to improve their performance.
In view of the volatility on the procurement markets in the reporting year, Fresenius Kabi closely monitored the availability of materials required for the manufacture of products and ensured the best possible availability, for example by increasing inventory levels as applicable and continuing to certify alternative suppliers. Thus, in the reporting year 2021, Fresenius Kabi was able to mitigate supply bottlenecks for sourced products and avoided significant effects on the supply of vital drugs and medical devices to patients.
1 Suppliers of APIs, excipients, primary packaging materials, energy, disposal services, filters, granulates, lab consumables, secondary and tertiary packaging, strategic components, clinical studies, medical devices components.
At Fresenius Helios in Germany, the purchasing department regularly evaluates strategically important suppliers according to standardized criteria and processes. In 2021, the supplier evaluation for the years 2020 and 2021 was carried out on 204 suppliers with a procurement volume of around €1.03 billion. Criteria include the quality of processes, IT infrastructure, and the quality of operational and strategic collaboration. In addition to this focus, further environmental and social aspects, as required by the German Supply Chain Due Diligence Act as of 2023, were assessed. In 2021, on this basis, the potential human rights risk areas defined in 2020 were further evaluated and divided into specific risk groups.
Helios Germany's purchasing department will also take this Group-wide, uniform risk assessment on the topic of human rights into account for the further evaluation of its suppliers in order to ensure early identification of potential risks. Helios Germany also introduced a Code of Conduct for Suppliers at the end of 2021, which will be an integral part of all contracts in the future. On this basis, the company will consequently demand the inclusion of further, predominantly ecological and social, aspects in the future.
Fresenius Helios in Spain has developed a procedure for the general evaluation of all suppliers, elaborating different supplier categories and detailed criteria for analysis and evaluation for the different categories. To implement the supplier evaluation, software is used that allows traceability of the different actors involved in all phases of the evaluation process. Part of this project is a validation process to ensure that suppliers are aware of and accept the Code of Conduct. The processes established with this project are intended to improve supplier selection through a standardized, comprehensive evaluation. For this purpose, a modular questionnaire was developed. It includes, among others, general, financial, qualitative, social, and environmental aspects of suppliers, criminal incidents, and implementation of compliance, data protection, and cybersecurity. The objective is to ensure transparency and quality in various procurement areas – such as the evaluation of food safety, pharmaceuticals, construction and other work, and equipment. In the reporting year, Helios Spain thus launched an extensive analysis of direct suppliers to the central purchasing department, the construction and equipment department, and the quality department. Further implementation of the project is planned for the next two years at Helios Spain. Here, the framework audited in 2021 is to be extended to the other suppliers, as well as the purchasing processes of the clinics and health centers.
Fresenius Vamed already introduced a Code of Conduct for Business Partners in 2017, which was revised in 2020 and further rolled out in the reporting year. A key component is Fresenius Vamed's expectation of its business partners to comply with human rights, environmental protection, and sustainability.
With the further development of the business partner due diligence, Fresenius Vamed has also introduced corresponding guidelines, through which a risk-based audit of all business partners is regulated.