Linde works with suppliers in more than one hundred countries. In 2012, we purchased around EUR 10.9 billion (2011: approx. EUR 10.7 billion) worth of products and services from around 100,000 suppliers worldwide. Around EUR 9.2 billion of this amount related to the Gases Division and around EUR 1.7 billion to the Engineering Division. More than 70 percent of the total was spent in OECD countries. In non-OECD countries, China, South Africa and Brazil accounted for approximately 15 percent of the total purchasing volume of our Gases Division.
The most important items we purchase include energy, gas cylinders and valves, tanks and tank equipment, vehicles, IT products, and components for engineering projects, as well as various services. In 2012, Linde started several new projects to enhance procurement efficiency and make procurement management systems even more transparent. Improving energy management was one of the focus areas here.
Alongside commercial aspects such as quality, price and availability, we also take account of other sustainability aspects when selecting suppliers. Our Code of Ethics requires that Linde employees maintain fair and honest working relationships with suppliers. At the same time, we expect our suppliers to adhere to quality, environmental and social standards, as well as compliance regulations. These expectations are set down in our procurement guidelines. We inform suppliers of specific requirements. In 2013, we intend to expand the sustainability requirements for suppliers that are currently in force in the different divisions and merge them into a single guideline.
200 new engineering suppliers committed to Linde standard
We use various tools and measures to select and evaluate our suppliers. These include on-site audits and defined qualification processes for new suppliers, which entail self-assessments on quality, environmental and social issues. We also perform risk assessments to check compliance with standards. In the 2012 financial year, Linde conducted an analysis of sustainability risks in the supply chain. It is planned that a more in-depth analysis will follow in the course of 2013. Depending on the potential risks, we also carry out supplier assessments on site, for instance through quality audits that incorporate sustainability aspects. Site safety, for instance, is a particular priority for our Engineering Division, with construction projects all over the world. Linde has therefore implemented a standard that covers safety, health and environmental issues in engineering projects and made this a fundamental prerequisite for working with suppliers. It also addresses compliance with the principles set out in the UN Global Compact. In 2012, more than 200 suppliers for engineering projects were given this standard and confirmed that they understood its requirements. During the year under review, Linde conducted around 100 audits of engineering suppliers to check compliance with this standard – for instance in India and China. Suspected violations of Linde standards can also be reported to the Linde Integrity Line. All such reports of non-compliance along our supply chain are assessed. Allegations that prove to be substantiated may also result in termination of contracts with suppliers.
Raising staff and supplier awareness
To raise awareness of the importance of supply chain sustainability among staff in our procurement departments, we integrated a new information portal on this topic into our company intranet at the start of 2013. We also involve our service providers in our environmental and safety management activities, for instance by offering driver safety training courses for contractors commissioned by Linde to transport gases.