How Axpo ensures responsible supply chains

Global supply chains are increasingly coming under political, regulatory and social pressure. Today, companies must not only make their own processes sustainable, but also take responsibility for human rights, environmental standards and fair working conditions throughout their entire value chain. Axpo wants and will raise up to meet those standards. One of the core pillars of Axpo’s sustainability approach is ethical and responsible business conduct in the procurement processes. In this interview, Cristina Spiegelburg, Supply Chain Sustainability Manager, explains how Axpo is addressing the challenges, which risks are particularly important and why cooperation and data quality play a central role.

What do “responsible supply chains” mean for Axpo?

For us, responsible supply chains mean that we not only make our own activities sustainable and ethical, but taking into account the entire upstream value chain. Specifically, this means that we only work with suppliers who meet ESG (environmental, social and governance) standards.

This is about more than just complying with legal requirements, it is about responsibility and due diligence. We use due diligence processes to identify and assess risks in the supply chain at an early stage and address them proactively. We pay particular attention to the issue of child labour, for example. Our company-wide Child Labour Policy sets out clear standards in this regard. 

Is there a binding code of conduct for suppliers?

Yes, we have a binding Code of Conduct for Business Partners that applies to all direct and indirect suppliers. It is an integral part of procuring all products and services.

The Code sets out clear expectations regarding ethical behaviour, human rights, environmental standards and business practices. 

Supply chains are often highly complex. How does Axpo achieve transparency right down to the raw materials? 

Transparency right down to the raw materials is a major challenge for the industry, including us. We are continuously working to improve the quality of our Tier 1 data to create an important and solid foundation for Tier+1 transparency, i.e. beyond the direct supplier relationship.

We focus on critical product groups and countries of origin where we identify an increased risk. For example, with regard to conflict minerals. These are raw materials whose extraction and trade are often linked to armed conflict, environmental destruction and human rights violations, and the financing of illegal activities in unstable regions. Against this backdrop, Axpo pays particular attention to products such as photovoltaic panels, wind turbines, batteries and workwear. 

As regulatory focus on Scope 3 emissions grows – i.e. indirect CO2 emissions along the entire value chain, - there is also increasing pressure to provide greater clarity in this area. However, the more global and complex a supply chain is, the more difficult it is to achieve complete transparency. This is why we rely, among other things, on cooperation with industry initiatives and exchanges with peers in order to leverage synergies and move forward together.

What measures does Axpo take to ensure that its suppliers comply with human rights, social and environmental standards among its suppliers?

We follow a structured approach throughout the supplier lifecycle. When selecting new suppliers, we first carry out a background check, focusing particularly on compliance, human rights and environmental aspects. If a supplier passes this check, they are registered and must sign two documents; our code for business partner and our child labor policy.

In addition, we conduct annual reviews using specialised tools. These reviews examine potential risks such as child labor and human rights violations, among other things. We then take a closer look at suppliers with increased risk and investigate any indications in greater depth.

We also conduct an internal conflict minerals survey. Although we generally purchase finished products and therefore do not directly source conflict minerals, we still check for potential risks in this area.

We are committed to continuously increasing transparency and improving data quality throughout the entire supply chain. This forms the basis for ensuring long-term compliance with social and environmental and establishing Axpo as a responsible and sustainable market partner. 

Who in the company is responsible for ensuring compliance with these standards?

The Corporate Procurement department is responsible for this and therefore bears a great deal of responsibility. It is a complex undertaking, but we have created supporting structures, such as our new Target Operating Model, which has been in place since February this year.

Our teams are now more specialised, enabling us to work in a more targeted and efficient manner. We are also making greater use of digital tools that simplify our processes across the group, allowing us to focus our energies on our core tasks. 

There is still a lot to do, but we are a strong teamand we are confident that we can master the ongoing challenge of ensuring sustainable supply chains.