We work together with suppliers in more than 80 countries. When selecting suppliers, we consider not only commercial criteria such as quality, price and availability, but also aspects such as safety and environmental protection.
The most important items we purchase include energy, gas cylinders and valves, tanks and tank equipment, vehicles, IT products, services, components for production plants, as well as equipment and consumables for our Healthcare business. Around 72 percent of our expenditure on goods and services in the reporting year was incurred in OECD countries. Our total expenditure on goods and services in 2017 was EUR 10.6 bn (2016: EUR 10.4 bn). We purchase about 70 percent of the goods and services locally in the countries where they are needed. This cuts down distances travelled and reduces costs and emissions. Working with local companies also enables us to strengthen the economy of the region.
Again in 2017, we expanded the measures we employ to promote diversity in the supply chain, especially in the United States and South Africa. In South Africa, for example, we supported small and medium-sized suppliers in reaching and complying with our standards.
Our global Code of Conduct for Suppliers sets out minimum requirements for safety, environmental protection, labour rights and human rights, and corporate integrity. The Code of Conduct for Suppliers forms part of the local terms and conditions which every supplier wanting to enter into a business relationship with us must accept. It is therefore 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 2013 also agree to be bound by the Code. By the end of 2017, around 80 percent of our strategic suppliers had signed up to the Code of Conduct. We define strategic suppliers as those suppliers who, when taken together, represent 80 percent of all our expenditure on procurement.
Evaluating our suppliers
We conduct random checks to ensure that our suppliers comply with the provisions set out in our Code of Conduct. We focus in particular on suppliers in higher–risk areas with regard to sustainability. In 2017, we reviewed over 100 suppliers in total 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 suppliers. We pay particular attention to the transportation of products and to Linde construction sites. When conducting reviews of construction sites during the reporting year, we identified around 200 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 or environmental protection. We then worked together with the contractors affected to devise measures to improve the situation and to monitor their implementation. In 2017, 34 cases were reported via our Integrity Line which also related to supplier relationships.
We also involve suppliers in our own safety and environmental management. In 2017, we continued to carry over the programme launched in 2015 to promote safety-conscious behaviour on construction sites to sites managed by the Linde Engineering Division. We were able to reach a total of around 2,500 contractors’ employees in this way. Drivers who are contractors as well as our own Linde drivers regularly participate in our driver education programmes and training. Measures such as these help us to build reliable supply relationships and to ensure that suppliers comply with our requirements and improve their performance.