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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:
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 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 are independently audited and covered in our direct validation efforts
of our suppliers have ISO 9001 and ISO 14001 certifications
of our suppliers have ISO 9001 and ISO 14001 certifications
of our suppliers issue formal public sustainability reports
of our suppliers issue formal public sustainability reports
of our suppliers are formal Responsible Business Alliance members
of our suppliers are formal Responsible Business Alliance members
* Data as of July 2023 Key Supplier Base Report
Key Elements:
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 comprehensive Supplier 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 our Responsible Business Alliance (RBA) (formerly the Electronics Industry Citizenship Coalition (EICC)) membership. Lenovo contractually applies the RBA Code of Conduct and associated audit requirements.
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.
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
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.
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:
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:
Lenovo’s most recent supplier engagement efforts covered 98 percent of procurement spend. The efforts identified the following results (reported by total 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 |
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.