Compliance with our requirements in the areas of human rights and labor, environmental protection as well as occupational safety and health is crucial when selecting new suppliers and evaluating existing business partners, as well as for decisions regarding future supplier development.

Supplier Management is the organization, controlling and development of supplier relationships. By anchoring sustainability and human rights requirements and monitoring measures in the procurement process, we increase the effectiveness of our supplier management, reduce possible risks, create transparency along the supply chain and initiate improvement processes at suppliers.

Due Diligence in the Supply Chain

Infineon Supplier Code of Conduct

Our Supplier Code of Conduct is based on internationally recognized guidelines, such as the Principles of the UN Global Compact and the fundamental principles of the International Labor Organization as well as our Human Rights Policy, our Business Conduct Guidelines. Infineon is a global member of the Responsible Business Alliance (RBA) and therefore has integrated the principles of the RBA Code of Conduct into the Supplier Code of Conduct.

All of our Suppliers shall comply with the requirements described in our Supplier Code of Conduct and agree on contractual control mechanisms to verify compliance with those. In addition, each of our suppliers shall ensure that its affiliates, contractors and subcontractors also comply with all requirements described herein. Following a risk-based approach, major and high-risk suppliers, amongst others, are informed whenever there is an update of this document and trained on the current processes to monitor their compliance to the Infineon Supplier Code of Conduct. Our Supplier Code of Conduct has been translated into Malay, Chinese, Japanese and Thai languages. The translated versions are available for download below.

 

Supplier Code of Conduct

Supply Chain Risk Assessment

To address and mitigate Corporate Social Responsibility (CSR) risks throughout the supply chain, Infineon carries out an annual risk analysis in accordance with Infineon Technologies Human Rights Policy. In addition, Infineon will conduct ad hoc risk analysis in compliance with applicable national legislation.

Infineon developed a risk-based methodology of prioritization and segmentation to define the appropriate due diligence measures to apply to each supplier and define the suppliers that are in scope for dedicated additional due diligence measures.

In a first step, after having created a proper information basis, Infineon assesses the potential human rights and environmental risks based on external risk indicators, such as the country and industry risk factors of our suppliers.

Based on this initial screening, more information about suppliers in the highest risk segment is requested to derive a more granular and individual risk profile. For this purpose, Infineon uses self-assessment questionnaires (SAQs) as a tool for collecting supplier-level information.

Once completed, Infineon weighs and prioritizes these risks profiles appropriately to tackle the most relevant risks first and implement appropriate preventive measures.

We review our risk analysis process once a year and on an ad hoc basis to confirm the effectiveness of this process, and if required, further develop our process.

In addition to the regular, annual risk analysis, Infineon carries out an event-related ad-hoc risk analysis whenever Infineon has indications of a possible violation of human rights or environmental obligations by one of its direct and indirect suppliers.

Evidence of such a violation may arise from a variety of sources: Reports to grievance mechanism offered by Infineon, information in the media or reports from civil society, discussions among industry representatives, etc.

In order to reduce the burden on suppliers we request them to complete the self-assessment on the Supplier Sustainability Monitoring platform, Integrity Next. Their profile on the platform can be used by the suppliers to give answer to multiple customers. Infineon's CSR Assessment covers a wide range of question including Human Rights & Labor, Occupational Safety and Health, Environmental Protection, Supply Chain Responsibility and Anti-bribery & Anti-corruption.

Preventive and Corrective actions

Procurement experts are taking part in the global Infineon Human Rights Awareness training for suppliers. In addition, dedicated training sessions regarding the Infineon Supplier Code of Conduct and sustainability-related processes in procurement are being offered on a regular basis. On top of the worldwide training on the topic of human rights, courses are provided at least once a year within the procurement organization on the risk management system for human rights and environmental standards in the supply chain.

Every year Infineon honors the partnership and outstanding performance of key suppliers by inviting them to the Global Supplier Day. For the award for best supplier, Infineon values innovation, quality but also a clear commitment to social responsibility and sustainability.

With the publication of our climate targets in the 2020 fiscal year, an initiative was launched where we work together with suppliers to drive forward environmental sustainability and climate protection in the supply chain. The main priorities of this initiative are scope 3 emissions and the circular economy.

When necessary, corrective action plans are jointly agreed with the supplier. This procedure supports a fast and up-to-date assessment.

Based on non-conformities with the Infineon Supplier Code of Conduct or applicable law, sustainability audits can be performed by Infineon or a third party authorized by Infineon (e.g. RBA Validated Assessment Program (VAP)). If necessary, Infineon assists and cooperates with our suppliers in regards to the implementation of such corrective actions. We also enroll our suppliers in relevant trainings and capacity building initiatives (e.g. Responsible Factory Initiative) provided by the RBA.

If suppliers do not cooperate to the extent required or do not (fully) implement appropriate corrective actions within a reasonable deadline set by us, we will be entitled to suspend performance of the business relationship or termination of the business relationship in serious cases.

Our Commitment to Due Diligence in Raw Material Supply Chains and Responsible Sourcing Practices

The semiconductor industry utilizes various mined raw materials to manufacture devices and related products. Each material possesses specific electrical properties essential for product functionality. However, mining inherently carries potential social and environmental risks, and serious concerns regarding the impact of extraction have been raised in various reports. Social and environmental responsibility across all operations and global supply chains is a fundamental part of Infineon's corporate strategy. To respect people and the planet, responsible sourcing of raw materials is crucial. Our strategy for selected mined raw materials and the associated supply chain requirements are outlined in the Infineon Responsible Raw Material Policy

Conflict Minerals

Avoiding conflict minerals (3TGs) helps prevent human rights risks and abuses in global raw material supply chains. Although Infineon is not legally required to report on this under the US Dodd-Frank Act (as we are not listed on US exchanges), we uphold our commitment as a long-standing member of the Responsible Minerals Initiative (RMI). Since we do not source raw materials directly from mines or smelters, we work closely with our direct suppliers to try to determine their origin. We utilize a company-wide standardized process including defined responsibilities to ensure supply chain transparency, compliance with RMI standards, and standardized reporting via the Conflict Minerals Reporting Template (CMRT). During our annual investigation, we identify suppliers of materials containing 3TGs and request that they report the smelters in their supply chains. As part of our risk management, we only accept audited smelters according to the Responsible Assurance Process (RMAP) or a comparable standard to mitigate risks. This approach aligns with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Furthermore, our comprehensive declarations support our customers in conducting due diligence to fulfill their reporting obligations under the US Securities and Exchange Commission (SEC).

Other High-Risk Raw Materials

As a responsible company, Infineon included cobalt in its due diligence program starting in the 2020 fiscal year. We identify relevant suppliers during our annual investigation and request that they report smelters in their supply chains using the standardized Extended Minerals Reporting Template (EMRT).

To further strengthen our commitment to due diligence and responsible sourcing, we are intensifying our efforts to meet increasing customer requirements and prepare for emerging legal obligations regarding deeper supply chains. In addition to our existing focus on conflict minerals (3TGs) and cobalt, we will broaden our scope to encompass other high-risk raw materials:

To this end, we are developing a comprehensive approach to govern the responsible management of our priority raw materials and the affected supply chains. We have already piloted our inaugural risk analysis to prioritize high-risk raw materials and started to established a multi-level approach to prevent and mitigate identified risks. We consider cross-industry collaboration and the rollout of standards key levers for driving responsible sourcing. For this reason, we work closely with suppliers, industry associations, initiatives, and other companies to foster collaboration, share best practice and drive collective progress.

Read more in our Responsible Raw Materials Policy and Sustainability Report. 

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