We have business relationships with suppliers in more than 100 countries. When selecting suppliers, we consider not only commercial criteria such as quality, price and availability, but also aspects such as safety and the environment. In 2016, we expanded the measures we adopt to promote diversity in the supply chain, especially in the United States and in South Africa.
The most important items we purchase include energy, gas cylinders and valves, tanks and tank equipment, vehicles, IT products, services, and components for production plants, as well as equipment and consumables for our Healthcare business. Budget spent in OECD countries accounted for around 80 percent of our expenditure on goods and services in 2016. We purchase about 70 percent of the goods and services locally in the countries where they are needed. This cuts down the distances travelled and reduces costs and emissions. Working with local companies also enables us to support the regional economy.
of products and services purchased in the countries in which they are required
of strategic suppliers committed to Linde Code of Conduct
suppliers assessed with regard to environmental, safety or other sustainability issues
Our global Code of Conduct for Suppliers sets out minimum requirements for safety, environmental protection, labour rights and human rights, and corporate integrity. Since 2013, it has been a mandatory part of the contract for all new suppliers. At the same time, there has been a continual process of ensuring that those suppliers with whom contracts were signed prior to also agree to be bound by the Code of Conduct for Suppliers. By the end of 2016, around 80 percent of our strategic suppliers had signed up to the Code of Conduct.
Evaluating our suppliers
We conduct random checks to ensure that our suppliers comply with the guidelines set out in our Code of Conduct. We focus in particular on suppliers in higher-risk areas with regard to sustainability: for example, environmental protection, safety or social issues. In 2016, we reviewed over 900 suppliers to ensure that they complied with our guidance on environmental and safety issues and other issues relating to sustainability. We investigate any breaches of our requirements by our suppliers. When conducting reviews of construction sites during the reporting year, we identified around 270 deviations from the Code of Conduct, some of which related for example to risk assessments and work permit procedures, order and cleanliness, work involving a risk of falls, and environmental protection. We then worked together with the contractors affected to devise measures to improve the situation and to monitor their implementation. Eleven cases were reported in 2016 via our Integrity Line which also related to supplier relationships. In two cases, the supplier relationship was terminated. In 2017, we plan to develop and introduce new minimum requirements in our Engineering business for standards and processes when we are working together with suppliers and logistics service providers. The aim is to improve our partners‘ safety performance and avoid accidents.
We also involve suppliers in our own safety and environmental management. In 2016, we carried over the programme designed to promote safety-conscious behaviour on construction sites, which we launched in 2015, to all construction sites managed by our Linde Division. We were able to reach a total of around 6,400 contractors’ employees in this way. Drivers who are contractors as well as our own Linde drivers regularly participate in driver education programmes and training. Measures such as these help to build reliable supply relationships and to ensure that suppliers comply with our requirements and improve their performance.