Sustainable Supply Chain Management
A long-term partnership between Infineon and its suppliers is a core element of our corporate supplier management philosophy. 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.
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.
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. In the 2022 fiscal year, for example, at our manufacturing site in Dresden (Germany), close collaboration with suppliers enabled a new refurbishment process for structured wafers that were rejected in the course of manufacturing.
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 towards Conflict Minerals and Cobalt
DRC Conflict Minerals
Respect for human rights is a matter of course for Infineon. Avoiding conflict minerals in the supply chain means that we are contributing towards the prevention of human rights abuses.
Infineon is not listed on US stock exchanges and therefore not legally required to publish a report on conflict minerals. Nevertheless, as a member of the Responsible Minerals Initiative, we uphold our voluntary commitment to responsibility within the supply chain. At the same time, our comprehensive declaration on the use of conflict minerals supports those of our customers who are required to perform due diligence within their supply chains to fulfill their reporting duties in accordance with the requirements of the United States Securities and Exchange Commission (SEC).
Since Infineon does not source these metals directly from mines or smelters, we identify their origin in close cooperation with our direct suppliers. For this purpose, we have introduced a standardized process throughout the organization based on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas in order to create the necessary transparency within our supply chain. Our targets and our requirements of our supply chain are set forth in the Infineon Conflict Minerals Policy and the Supplier Code concerning the Responsible Sourcing of Conflict Minerals. Read our Conflict Minerals Policy and our Supplier Code for a Responsible Sourcing of Conflict Minerals.
Voluntary cobalt assessment in our products
The Democratic Republic of the Congo has around 50 percent of global cobalt reserves and produces the largest quantity of cobalt in the world.
As a responsible company, Infineon has therefore, on a voluntary basis, expanded its activities relating to social and environmental responsibility in the supply chain by including cobalt in our due diligence program for the responsible procurement of minerals. In the course of our investigation, we identified all suppliers of material containing cobalt and questioned them about cobalt smelting in the supply chain. To ensure transparency, we are making the result of our review available to our customers in the form of a Cobalt Declaration (Cobalt Reporting Template).
Know more in our Sustainability Report page 47-49.