The aim of our procurement organization is to guarantee long-term reliability of supply for the production of Evonik products and to secure competitive advantages for our operating businesses. Alongside economic requirements, our procurement strategy takes account of criteria such as health, quality, safety, social factors, and environmental protection.
PROCUREMENT MANAGEMENT
Procurement is organized globally at Evonik and comprises direct procurement (raw materials, logistics, and packaging) and indirect procurement (general and technical goods and services). Both are subdivided into strategic and operational procurement activities. Global procurement is managed from Germany, with the support of regional units in Asia and North and South America.
PROCUREMENT MANAGEMENT AT EVONIK
The group procurement policy contains clear-cut specifications for sustainable procurement and dealings with suppliers. Compliance with these principles and their implementation are reviewed when selecting suppliers. If a supplier does not satisfy these requirements, Evonik expects that it will work consistently to remedy the defects identified as a precondition for entering into or continuing a business relationship. Exclusion criteria primarily constitute the supplier’s failure to comply with the ILO’s Core Labour Standards, serious occupational safety shortcomings as well as severe violations of recognized environmental and safety standards. Evonik is fundamentally willing to support suppliers in remedying any shortcomings. The chief procurement officer is responsible for implementing such actions. These specifications are detailed in the Procurement management manual and thus at a central organizational location.
The code of conduct for suppliers is based on internationally recognized human rights and formulates corresponding expectations of all suppliers.
The values and expectations set out in our code of conduct are communicated to all suppliers also via our general terms and conditions of purchase. Evonik holds regular Supplier Days to brief relevant suppliers about the company’s values and commitments. We are aware that actively involving those people who are (potentially) affected by human rights breaches, such as those who work in the supply chains, is a key component of human rights due diligence processes. Our aspiration going forward is to establish a structured dialogue process with the people who are (potentially) affected, related groups, and their representatives in order to give adequate consideration to their interests in our decision making as well as when defining and monitoring relevant targets and actions. We will roll out this process in 2025 as part of our human rights and environmental risk analyses.
QUALIFICATION AND EVALUATION OF SUPPLIERS
We expect our suppliers to share our principles and act correctly in every respect, which means honoring their responsibility toward their employees, business partners, society, and the environment. Validation is the first step in every new supply relationship. For this purpose, we notably use a validation process based on the values defined in our code of conduct for suppliers. All details are entered online and evaluated using a validation matrix. The initial validation involves a country-based assessment which does not include a separate review of the location of operations.
Successfully completed TfS assessments can similarly be used as evidence of validation. Overall, suppliers are evaluated using a method that identifies and quantifies risk factors as a basis for risk mitigation. This safeguards the supply of raw materials and technical goods to Evonik and enables us to gain access to new procurement markets and suppliers.
We apply the same care to evaluating existing supplier relationships. Alongside the annual evaluation of all major supplier relationships, a detailed review of strategic suppliers is undertaken. Based on the findings, specific improvement measures are initiated as required (see chart “Audit escalation process"). To minimize risks in connection with our management of contractors, we obtain and evaluate evidence and self-assessments on compliance with the relevant German legislation (the German Minimum Wage Act, the German Employee Secondment Act, and the German Ordinance on Craftsmen).
SUPPLIER VALIDATION AND EVALUATION
As regards our target of examining by 2030 over 90 percent of all significant raw material suppliers with an annual procurement volume of more than €100 thousand from sustainability perspectives through TfS or equivalent assessments, we had validated around 87 percent of the major raw material suppliers in accordance with applicable criteria as of the end of 2024.
Worldwide, the TfS member companies initiated 596 audits and 1,309 assessments in 2024. Evonik initiated 22 of these audits and 92 of the assessments. As a result, 1,568 suppliers were assessed in 2024 based on the audits, assessments, and supplier validations performed by TfS and directly by Evonik. About 87 percent of our direct and over 78 percent of our indirect procurement volume was covered by TfS assessments.
In 2024, we screened 1,454 new suppliers and identified no use of conflict minerals. This is equivalent to over 79.5 percent of new suppliers.
In the reporting period, TfS assessments were performed on 138 new suppliers of raw materials, technical goods, and services.
The chart “Sustainability performance of our suppliers” show their performance in the various evaluation categories used by the EcoVadis rating . Taking all criteria together, around 73 percent of our suppliers are within our target range of 45 to 100 points.
