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 Questions or Concerns

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 since FY 2020/21. This requires significantly higher VAP audit scores with all Priority findings closed, site personnel to be formally trained on the RBA VAP process, and proof of functional grievance systems.

The table below provides an overview of Lenovo’s suppliers’ annual RBA audit performance.

Historical Average Scores¹

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.

* Data as in Lenovo FY 2023/24 ESG Report

When there are audit findings, we ensure closure of supplier action plan. In FY 2023/24, there were no violations reported related to forced labor or child labor by Lenovo’s suppliers who completed the RBA VAP audits. In FY 2023/24, 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 2023/24, some of Lenovo’s actions to prevent this practice were:

• Started to engage labor agents and contractors to submit RBA indirect SAQ*
• Implemented a third-party ESG risk assessment tool (EcoVadis) to screen suppliers throughout the supply chain
• Provided an online course 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

* RBA indirect SAQ is for service provider that is not directly involved in the manufacturing of an end product.

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 2023/24 Program performance as below:

• Lenovo is engaging and incentivizing its suppliers to also commit to the Science-Based Target initiative (SBTi).
• During the reporting period, 42 percent of its suppliers by spend have committed to set or have set SBTs. It is the Lenovo’s goal to achieve 95 percent of suppliers by procurement spend to implement SBTs.

• During the last data collection period, 85 percent of procurement spend was with suppliers with quantified water reduction goals.
• Water risks within Lenovo’s operational footprint and supply chain are assessed annually using publicly available water risk tools (World Resources Institute’s Aqueduct and WWF’s Water Risk Filter Tool).

• In 2023, Lenovo achieved a CDP score of “A-” for its Supplier Engagement Rating in Climate Change, also listed on the Supplier Engagement Rating Leader Board (has maintained this honor for six consecutive years, since 2018).
• Lenovo’s increasing efforts to optimize supply chain environmental impact has been recognized by the Institute of Public & Environmental Affairs (IPE) Green Supply Chain Corporate Information Transparency Index (CITI) and the Corporate Climate Action Transparency Index (CATI) and was ranked among the Top 10 in the IT industry.

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 2023/24, 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.

• Lenovo strategically expanded the scope of ESG assessments to suppliers across all categories by launching the EcoVadis tools. In FY 2023/24, it expanded the scope of ESG assessments from key Tier 1 suppliers to strategic Tier N and general procurement suppliers.
• Lenovo has implemented the EcoVadis IQ tool to screen suppliers’ ESG risk, based on their inherent sustainability risks and procurement information. In FY 2023/24, approximately 2,000 production and general procurement suppliers were processed in the EcoVadis IQ tool, and over 120 suppliers were invited to conduct an EcoVadis ESG assessment.
• Lenovo continues to ensure that all strategically important suppliers participate in the EcoVadis program and achieve at least 45 of 100 points or a comparable audit result. Suppliers scoring less than 45 out of 100 points must implement a corrective action plan (CAP) and the progress will be tracked within 90 days. After the implementation of CAP in FY 2023/24, the average EcoVadis scores of suppliers under 45 increased 4.7 points.
• In 2023, Lenovo has been recognized for its exceptional commitment to sustainability by receiving the Outstanding Leadership Program award at the 2023 EcoVadis Sustainable Procurement Awards. This prestigious accolade is a testament to Lenovo’s dedication to advancing sustainable practices throughout its procurement processes. The award recognizes the efforts of Lenovo’s employees and partners who have worked to embed sustainable practices into its supply chain.

• ESG performance of Lenovo’s 90% of suppliers by procurement spend is quantified and assessed with 30 key indicators across RBA, environmental impact, responsible sourcing of raw materials, sustainability reporting, EcoVadis and other ESG factors.
• Leveraging the advanced ESG digital platform, Lenovo has increased the visibility of ESG performance across 98% of production procurement. This platform is designed to automatically send ESG questionnaires to Lenovo’s suppliers each quarter, requesting them to report on their latest sustainability initiatives. Upon receiving the completed questionnaires, the platform automatically calculates scores based on preset scoring criteria, reflecting each supplier’s ESG performance quarterly. This innovative approach not only streamlines the process of monitoring and evaluating Lenovo’s suppliers’ commitment to ESG standards but also promotes continuous improvement by providing timely feedback.
• ESG is then applied as an overall penalty/credit multiplier across the approximately 200 supplier performance evaluation report cards issued each quarter.

• Lenovo has an enhanced ESG digital platform with a supplier training module. This module offers a comprehensive suite of ESG training courses, ranging from detailed explanations of its ESG project requirements to sessions on the latest developments and best practices in ESG related issues.
• 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 900 supplier attendees at 2023 Lenovo Standards and Certification Supplier Conference.
• In FY 2023/24, three webinars for suppliers were held (including one with CDP, one 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 633.
• In FY 2023/24, Lenovo GSC ESG team successfully held the 2023 Lenovo Supplier ESG Day online event. The event introduced Lenovo’s supply chain ESG Programs and new initiatives, and also shared best practice in supply chain carbon reduction and climate action, with an attendance of 671.
• In FY 2023/24, Lenovo’s online learning module to suppliers went live. By the end of FY 2023/24, Lenovo has released 17 online ESG courses for suppliers to learn, and 787 supplier representatives learn courses at this training platform.

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.