GRI 405/3-3, 406/3-3, 407/3-3, 408/3-3, 409/3-3
We expect our suppliers and business partners to comply with our or 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 Helios, and Fresenius Vamed have set out their requirements in Codes of Conduct for Business Partners and Suppliers, Fresenius Kabi in its Third-Party Code of Conduct. The codes include, e. g., details on the regulation of child and forced labor, and fair working and employment conditions such as working hours and wages.
In Codes of Conduct and in their further development, we also consider regulatory developments, such as the requirements of the German Act on Corporate Due Diligence Obligations in Supply Chains.
Transparency in the supply chain is important to identify and address human rights risks. Our business segments have each implemented a set of measures for evaluating suppliers in their specific supply chain. Corresponding explanations are provided below; additional information on procurement activities can be found in the Group Management Report. Progress made and new measures introduced in the reporting year can be found in the related section Human rights.
Fresenius Medical Care
Fresenius Medical Care’s Global Supplier Code of Conduct covers topics such as integrity and ethics, human rights and labor conditions, quality, occupational health and safety, and environmental protection. It also forms the basis of their contractual relationships with suppliers. Fresenius Medical Care continues to incorporate the requirements of the Global Supplier Code of Conduct in supplier contracts. Furthermore, the business segment has an onboarding process in place for suppliers to inform them of their sustainability requirements. This includes procedures to manage situations where suppliers do not wish to or are unable to adhere to these requirements.
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 risk-based supplier audits.
Since 2019, Fresenius Kabi has assessed the aspects of occupational health and safety, environment, human rights, business ethics, and sustainable procurement of relevant 1 strategic suppliers. 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.
According to the Supplier Compliance Clauses and Business Partner Compliance Clauses, Fresenius Kabi is entitled to review them and to terminate the contract in case of violations. If high risks are identified in the supplier evaluation, the responsible procurement department is informed. This department then contacts the high-risk supplier and asks for Corrective and Preventive Action (CAPA) and improvement of performance. During the next supplier evaluation, it is checked whether appropriate measures have been taken and, if necessary, the supplier is requested to take further measures.
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 procurement department regularly evaluates strategically important suppliers according to standardized criteria and processes. 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 Act on Corporate Due Diligence Obligations in Supply Chains as of 2023, are assessed. The relevant instruments for risk management, risk prevention and complaint management were not only designed, but already partially applied in 2022. In addition, a policy statement was drawn up and the uniform procedure for the required reporting and documentation agreed.
Helios Germany’s procurement department also takes 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. The Code of Conduct for Suppliers of Helios Germany is an integral part of all contracts since 2021, and compliance with it has been mandatory for suppliers and business partners since 2022. On this basis, the company consequently demands the inclusion of further, predominantly ecological and social, aspects. If suppliers violate the Code of Conduct, Helios Germany may impose requirements or sanctions on business partners.
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. The supplier evaluation is performed every two years. 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.
At Fresenius Vamed the Code of Conduct for Business Partners defines the business segment’s expectation of its business partners to comply with human rights, environmental protection, and sustainability. Further, corresponding guidelines regulate the risk-based audit of all business partners. All business partners within the scope of Fresenius Vamed’s Guideline for Business Partner Due Diligence are subject to an audit before signing a contract. If the contract becomes active, the audits are reviewed at least every two years and in case of increased risk at least every year.
If a business partner violates the principles of the Code of Conduct for Business Partners Fresenius Vamed reserves the right to decide on the continuation of the business relationship.
Progress and measures in 2022
GRI 2-6, 204/3-3, 408/3-3, 409/3-3, 414/3-3
In 2022, there were no significant changes in the supply chains of our business segments compared to the previous year.
Project on German Act on Corporate Due Diligence Obligations in Supply Chains
By preparing the installation of the Group Human Rights Office and the human rights functions in the business segments, additional organizational structures for human rights due diligence were created across the Fresenius Group in the reporting year. The departments within the business segments are closely involved in the implementation of risk analyses, which are also required under the German Act on Corporate Due Diligence Obligations in Supply Chains, which comes into force in 2023.
In addition to our Codes of Conduct for Business Partners, we also reviewed and further developed our reporting channels and incorporated the requirements of the German Act on Corporate Due Diligence Obligations in Supply Chains.
In 2021, we additionally included the category of human rights risks in our risk management system. We expanded this in the reporting year to include additional reporting options.
Further information on human rights due diligence and governance can be found in the Human rights section.
Supplier evaluation in 2022
In 2022, Fresenius Medical Care further developed its procedures for evaluating suppliers based on sustainability risks. The risk assessment approach, which is aligned with the requirements set out in the German Act on Corporate Due Diligence Obligations in Supply Chains, involves assessing the sustainability risk of suppliers based on country- and industry-level factors. Special focus is placed on suppliers that are critical to the business of Fresenius Medical Care. Furthermore, the business segment gathers information about the specific sustainability performance of selected suppliers via self-assessment forms. Fresenius Medical Care aims to use this information to identify suppliers that do not yet fully comply with its sustainability standards and initiate appropriate follow-up action.
Fresenius Kabi continued to work on integrating supplier assessments based on ESG criteria into supplier processes in the reporting year 2022. At the end of 2022, more than 85% of the relevant strategic suppliers had been evaluated against ESG criteria.
Helios Germany consistently demands its suppliers to take other, predominantly ecological and social aspects into account. The basis for this is a Supplier Code of Conduct for suppliers, which the division introduced in 2021 as part of the respective contract and compliance with which has been mandatory for the suppliers since 2022. In addition to requirements for environmental protection and human rights, it includes further requirements such as animal welfare and labor standards.
In 2021, Helios Spain launched an extensive analysis of direct suppliers to the central purchasing department, the construction and equipment division, and the quality department. In the reporting year, the project was further implemented. The framework audited in 2021 has been extended to the other suppliers as well as the purchasing processes of the clinics and health centers.
In 2022, a human rights risk assessment has been established in the project business of Fresenius Vamed, starting as a first risk analyses before start of a project and then being followed up during the term of the project. In the high-end service business and in the total operational management business, a process was set up for analyzing chances and risks including classification of products and services according to countries of origin and evaluation of the suppliers.
GRI 2-6, 204/3-3, 204-1, 408/3-3, 409/3-3, 414/3-3
In the reporting year, our global procurement activities demonstrated their reliability – despite the particularly volatile procurement market situation in 2022.
Some business segments have carried out supplier assessments and training. The aim of the respective assessments was to ensure that suppliers comply with the applicable specifications of the business segments.
In the reporting year, Fresenius Medical Care continued in its efforts to train procurement staff on sustainability topics. The business segment rolled out a global e-learning course on sustainable supplier management and enrolled 99% of the global procurement staff by the end of 2022.
Fresenius Kabi achieved its internally set ambition to assess 85% of selected strategic suppliers in the reporting year. The ESG performance of the majority of strategic suppliers was confirmed by the assessment. Strategic suppliers with a low ESG assessment score have been requested in 2022 to take measures to improve their performance.
In the reporting year 2022, the management approaches of Fresenius Helios and Fresenius Vamed to supply chain management remained largely unchanged. Progress and measures serve primarily to comply with the legal requirements of the on German Act on Corporate Due Diligence Obligations in Supply Chains. First findings from the measures are expected for the reporting year 2023.
As of now, we do not collect data on the proportion of spending on local suppliers on Group level. Nevertheless, business segments set a focus on local procurement. At Helios Germany for example, over 95% percent of the spending is with German subsidiaries of its suppliers.