Analyzing and Managing Supply Chain Responsibility
To better understand CSR risks in the supply chain, Lexmark analyzes the spending behavior of that chain, evaluating basic information (total number of suppliers, geographic spread, and so on), as well as social and environmental aspects such as supplier diversity and environmental factors. These spending analyses are conducted with specially developed data-collection tools and are conducted in collaboration with consultants specializing in supply chain analyses.
Over the last four years, 100 percent of Lexmark procurement spending was subject to our spending-analysis process. Through this process, we have identified critical suppliers–our high-volume, high-spending suppliers, suppliers of critical components and unique or sole source suppliers. Lexmark has over 9,000 suppliers, 1.6 percent of which have been identified as key and strategic1.
Less than 1 percent of our suppliers are determined to be high risk. Based on how critical the risk is, Lexmark conducts a deeper analysis of economic (cash management), environmental (weather-related), and social (war and political instability) risk factors.
These risks are managed in part through the EICC Code of Conduct. This code prescribes best practices related to environmental performance in operations, human rights (forced or child labor, freedom of association, International Labour Organization conventions), working conditions (working hours, layoff practices, remuneration), occupational health and safety and business ethics (corruption, anti-competitive practices). To improve business practices and assist companies in identifying risks and driving improvements, self-audits and site audits are conducted in conformance to the EICC Code of Conduct, laws, and regulations.
Lexmark requests information from its suppliers to determine their policies and principles that protect the environment and promote social responsibility. We encourage suppliers to demonstrate continual improvement through the completion of the EICC Self-Assessment Questionnaire (SAQ) or Lexmark Supplier Corporate Social Responsibility (CSR) Questionnaire. We also ask that they publish an annual sustainability report including content and metrics based on an internationally recognized reporting framework such as the Global Reporting Initiative or similar reporting format.
The Lexmark Supplier CSR Questionnaire provides us greater understanding and transparency of the CSR initiatives of the key suppliers of goods and services that support our operations. The questionnaire input creates ongoing discussions between Lexmark and its suppliers so that we can document our progress on environmental and social initiatives, and explores how we can improve as responsible corporate citizens. The Lexmark Supplier CSR Questionnaire requests information from our suppliers in the following areas:
In 2015, Lexmark began collaboration with the EICC and CDP to incentivize our suppliers to disclose their environmental information. Our goal is to disclose the energy consumption and emissions of our suppliers to improve the management of environmental risk, prevent climate change and protect our natural resources. Lexmark measures and discloses our environmental information and we request our key and strategic suppliers to collect and report their environmental data to drive action toward a more sustainable world.
On an annual basis, Lexmark reports the percentage of key and strategic suppliers who have issued an internationally recognized sustainability report. In selecting and retaining qualified suppliers, Lexmark will show preference to suppliers who meet or exceed our expectation in the area of sustainability and reporting. The percentage of our key and strategic suppliers who have issued a sustainability report in 2015 is 50 percent. Lexmark will continue to work with our key and strategic suppliers to increase this percentage.