Lenovo ESG
Supply Chain
Our Approach
Lenovo is committed to sound Environmental, Social and Governance (ESG) management across its end-to-end supply chain process. Along with demanding high-quality materials, parts, and products from our suppliers, we have ESG-specific systems in place, supported by contractual requirements to help ensure our suppliers meet or exceed applicable labor, environmental, health and safety, and ethics standards.
We recognize there is no end to this journey and there will be opportunities for improvement continually. Our approach includes:
Our Supply Chain at a Glance
As an approximate percentage of production spend:
of our procurement is with fewer than 130 large suppliers who typically have robust sustainability programs
of our suppliers are independently audited and covered in our direct validation efforts
of our suppliers have ISO 9001 and ISO 14001 certifications
of our suppliers issue formal public sustainability reports
of our suppliers are formal Responsible Business Alliance members
* Data as of July 2023 Key Supplier Base Report
Key Elements:
- Procurement Values and Ethical Dealings
- Conflicts of Interest and Business Integrity
- Supply Chain Security
- Human Rights
- Responsible Business Alliance
- Employment Agencies
- Climate Change
- Environmental Aspects
- Responsible Sourcing of Raw Materials
- Non-Discrimination and Non-Retaliation
- Supplier Diversity
- Sustainability Reports, Assessments and Product Certifications
- Supply Chain Due Diligence
- Reporting Concerns
Human Rights, Environmental Impacts, Integrity
We expect our suppliers to meet the highest standards of responsible and ethical conduct regarding how they treat their workers and the environment, and how they do business. This expectation is supported by contractual requirements.
Lenovo’s standard purchase order (PO),PO Terms and Conditions, and contracts stipulate supplier compliance with our comprehensiveSupplier Code of Conduct. This code upholds our values and includes provisions that prohibit human trafficking, discrimination, retaliation to worker complaints, bribery, and corruption. It also requires our suppliers to have formal grievance mechanisms in place. We will assess conformance to these requirements in making procurement decisions.
Lenovo works with the electronics industry on supply chain issues through ourResponsible Business Alliance (RBA) (formerly the Electronics Industry Citizenship Coalition (EICC)) membership. Lenovo contractually applies theRBA Code of Conduct and associated audit requirements.
Support of RBA programs and Validated Audit Process (VAP) audits
Lenovo requires suppliers to adhere to the RBA Code of Conduct. Regardless of their RBA self-assessment risk level, Lenovo requires 95 percent of suppliers by spend to conduct an RBA audit (including both Validated Audit Program (VAP) and equivalent independent, third-party audit (non-VAP audit) by RBA-approved auditors) every two years. Lenovo started an effort to require its suppliers to commit to achieving RBA VAP) Recognition and Factory of Choice (FOC) designations to demonstrate leadership in ESG.
In FY 2022/23, 83 percent of Lenovo’s suppliers by spend achieved VAP Recognition, and almost 17 percent of the spend was designated FOC. The table below provides an overview of Lenovo’s suppliers’ annual RBA audit performance.
Historical average scores1
| Labor Score | Health & Safety Score | Environment Score | Ethics Score | Management Score | Total Score | # of Priority findings2 | # of Major findings2 | |
| Suppliers | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2019 | 157 | 174 | 184 | 197 | 187 | 153 | 0.4 | 5.0 |
| 2020 | 157 | 173 | 189 | 199 | 190 | 155 | 0.3 | 5.4 |
| 2021 | 159 | 182 | 193 | 198 | 195 | 164 | 0.1 | 4.7 |
| 2022 | 160 | 182 | 190 | 199 | 196 | 164 | 0.2 | 4.4 |
| ODM Partners | ||||||||
| 2019 | 156 | 175 | 182 | 197 | 188 | 156 | 0.2 | 5.6 |
| 2020 | 166 | 188 | 196 | 200 | 197 | 172 | 0.2 | 3.3 |
| 2021 | 167 | 182 | 195 | 195 | 195 | 170 | 0.0 | 4.0 |
| 2022 | 165 | 191 | 187 | 198 | 194 | 172 | 0.0 | 3.8 |
*Data as in Lenovo FY 2022/23 ESG Report
1 Scores are based on calendar year.
2 The average number of findings is calculated based on the total number of findings and total number of reports per calendar year.
Responding to RBA audit labor-related results
When there are audit findings, we ensure closure of supplier action plan. In FY 2022/23, there were no violations reported related to forced labor or child labor by Lenovo’s suppliers who completed the RBA VAP audits. In FY 2022/23, 56 suppliers had other major labor findings identified in their audits. The most common supplier audit findings are related to an industry-wide problem of excessive working hours and insufficient time off for their employees.
Lenovo requires its outsourced manufacturers to report their employees’ working hours and time of performance monthly via an online tool so that it can take action to resolve any issues that are identified. Agreements for improvement were reached with suppliers, as a result, no relationships were terminated due to aforementioned labor findings.
Forced Labor
To better detect and mitigate the forced labor risks, Lenovo adopts and implements preventive measures. In FY 2022/23, some of Lenovo’s actions to prevent this practice were:
- Added a section covering “Employment Agencies” to the latest version of the Supplier Code of Conduct for enhancing the management of labor agents and contractors
- Implemented a third-party ESG risk assessment tool (EcoVadis) to screen suppliers throughout the supply chain
- Provided a live education session to buyers on forced labor and potential red flags related to forced labor
- Provided a webinar to suppliers on the topic of Labor Compliance Management
- Invested in a third-party supply chain risk management platform (Everstream Analytics)
- Conducted verification through RBA audits and participated in regular RBA Responsible Labor Initiative and VAP workgroup engagements
Environmental Impact
Currently, we ask our suppliers to report their environmental impact data (GHG emissions, water, waste, renewable energy) formally via the RBA or the CDP reporting methodologies in addition to responding to the Institute of Public and Environmental Affairs (IPE).
The FY 2022/23 Program performance as below:
Climate Change
Science Based Targets for Suppliers
Water
Waste
Recognition
Responsible Sourcing of Raw Materials
- Lenovo is committed to ensuring that minerals used to manufacture products do not contribute to human rights abuse and environmental degradation, and requires its production procurement and ODM suppliers to do the same. Lenovo supports the efforts of the RBA Responsible Minerals Initiative (RMI) to address materials beyond the conflict minerals of tin, tantalum, tungsten and gold (3TG). In FY 2022/23, Lenovo conducted extensive due diligence for its supply chain using the RMI program’s Conflict Minerals Reporting Template (CMRT) and Extended Minerals Reporting Template (EMRT) and the RMI Responsible Minerals Assurance Process (RMAP). Lenovo will coordinate with the RMI as RMI performs risk profiles on other materials, assess the content in its products, and further develop due diligence efforts to mitigate supply chain risk. For more information, please visit the Lenovo Responsible Sourcing webpage.
- FY 2022/23 Program Performance (% of Procurement Spend)
| 100% | Conformant or active 3TG smelters & refiners |
| 96% | Suppliers with public conflict mineral policy |
| 79% | Suppliers who are formal RMI members |
| 76% | Suppliers with public conflict minerals report |
EcoVadis
Supplier ESG Performance Evaluation
- ESG performance with our top suppliers (typically 95 percent of our procurement spend) is quantified with 32 key indicators across RBA, Environmental Impact, Responsible Sourcing of Raw Materials, EcoVadis and Sustainability Reporting factors. For suppliers belonging in the remaining procurement spend, their ESG performance evaluation is based on their EcoVadis rating. ESG is then applied as an overall penalty/credit multiplier across the approximately 200 supplier report cards issued each quarter. Furthermore, we track the financial and business stability of over 300+ suppliers with two real-time risk-monitoring tools-D&B and CRM. Business stability is a strong leading indicator of sustainability programs.
Supplier Engagements
Lenovo offers and provides the following training programs to suppliers, in order to facilitate supplier capability building:- Semi-annual communications on the RBA, environmental impact, responsible sourcing of raw materials, key ISO certifications, ESG Reporting and Supplier Code of Conduct expectations.
- Lenovo created education material for suppliers to learn its ESG requirements while providing an education session to 1,200 supplier attendees at 2022 Lenovo Standards and Certification Supplier Conference.
- In FY 2022/23, Lenovo’s GSC ESG attended the procurement team’s quarterly business review (QBR) with 15 suppliers for one-on-one ESG guidance and education.
- In FY 2022/23, five webinars for suppliers were held (including one with CDP, two with EcoVadis), covering topics including Lenovo Supplier ESG Requirements for Suppliers, CDP Disclosure Training, EcoVadis CSR Rating, and EcoVadis Post Assessment, and RBA Compliance. Total attendee numbers were 1,529.
- For the specific Supplier Emission Reduction Program, Lenovo also held four webinars on the topics of energy and cost savings, renewable energy trading in China, Science Based Targets, and carbon credits.
Supplier ESG Awards
Five suppliers received the ESG award at the 2023 Supplier Conference. This is the second year that Lenovo awarded suppliers based on their ESG performance. The 5 suppliers are BOE, Celxpert, Darfon, LGES, and Simplo. Winners are supportive of Lenovo Procurement ESG Initiatives and are leading in ESG performance.
