GRI-G4  DMA, SO10, SO9
This content was subject to assurance by SGS Italia S.p.A. (14 March 2014).

Impact on society across the supply chain

The Group does not tolerate unethical or corrupt practices by its business partners, since bribery and corruption undermine investments and distort international competition through direct, material impact on our business operations and on society’s democratic institutions.

Thus, the highest standards of integrity, honesty and fairness are a must for all business activities, and any form of bribery, corruption or money laundering is strictly forbidden. In order to prevent, mitigate or redress any negative impact on society by setting precautions in place, the Group performs a detailed spend analysis.

Monitoring changes in the financial situation of suppliers is a cornerstone of our supply chain management. A tool for different spending categories gives a clear picture of delivery data broken down by commodity and by supplier. Thus, an economic risk analysis is regularly performed through the spend analysis process covering roughly 100% of annual purchase value of direct material suppliers. Depending on the supplier’s strategic role, the economic risk analysis may be performed annually, or more frequently if warranted. The evaluation is conducted based upon a supplier's public financial reports, where available, and/or of the management of confidential information for different key areas. In the Group’s systems, the financial information of each supplier is recorded and a score is calculated. If the minimum threshold rating required is not reached, the supplier is placed on a financial watch list and can be eliminated from sourcing decisions. An action plan may be designed in order to identify the appropriate measures. Troubled suppliers are managed through a dedicated process and weekly meetings are held with the relevant departments of all Group operating segments.

In addition, due to our awareness of the corrosive effects of corruption on societies, we constantly monitor suppliers' compliance with recognized business ethics standards through the self-assessment questionnaire and follow up with on-site audits if needed. Suppliers are expected to comply with all applicable laws on bribery and corruption, money laundering, infringement of data protection, insider dealing, conflicts of interest, anti-competitive behavior and unethical contract tendering. Their approach to management should include policies, goals and procedures, as well as the review and evaluation of process risk to assure ethical operations and activities. Likewise, they must not have had either pending lawsuits or passed rulings in the past year relating to these issues. Since ethical business practice is more important than ever, our suppliers must continually review ethical values and policies and closely monitor their operations for potential issues; accordingly, their role in supply chain ethics is key. For this reason, training and awareness programs have been carefully designed – in some specific cases by working together with other automakers – to encompass  numerous topics, such as working conditions, ethics and environmental footprint. We gauge their efforts and progress during our assessments by including specific questions on community development activities and, whether they have adopted social accountability standards or have implemented a process to measure and verify sustainability performance of their suppliers and sub-suppliers. In this way, we hope to champion more positive change and help strengthen communities and markets .

In 2013, self-assessment questionnaires identified four suppliers as having - or risking - a significant negative impact on society specifically in the area of supply chain management. Additionally, based on audits conducted following the 2012 self-assessment process, we implemented 45 action plans about inclusion of monitoring activities and supply chain involvement for 18 suppliers (38% of suppliers audited(1));  no contracts were canceled.

(1)  The percentage is calculated based on the number of 47 suppliers audited. The analysis of the action plans for the remaining 25 suppliers audited will be completed in 2014. No significant issues have arisen during  these audits.