Procurement
Doing our due diligence
Human rights in the supply chain
We respect human rights and are committed to seeing that they are also upheld in upstream value creation activities. Our aim is to prevent the violation of human rights in the supply chain.
We are conscious of our responsibility as a company with global operations, and aim to carry out our due diligence with regard to human rights. As a signatory of the UN Global Compact, MTU fully respects the internationally proclaimed human rights set out in the United Nations’ Universal Declaration of Human Rights and applies that to the supply chain as well. In particular, we pursue the goal of preventing human rights violations that could affect employees (zero-tolerance principle). Read more at Employees MTU also expects its suppliers to uphold human rights and create fair working conditions.
Code of Conduct for Suppliers
The Code of Conduct for Suppliers applies to upstream value creation activities. Our suppliers must commit to compliance with the Code of Conduct, which is based on the ten principles of the UN Global Compact, which in turn are derived from international initiatives and conventions for the protection of human rights. The Code of Conduct requires suppliers to observe and uphold human rights and to ensure that they are not complicit in any human rights violations. That includes compliance with labor standards regarding the freedom of association, the right to collective bargaining, the prohibition of forced and child labor, the equality of remuneration regardless of gender, and equal treatment of employees. And finally, we require our suppliers to apply the Code to their subcontractors and reserve the right to terminate any contract with a supplier using child labor to manufacture products supplied to MTU, without prior notice. → MTU’s Code of Conduct for Suppliers
Established reporting procedures are in place to ensure that we can systematically follow up on all complaints or reports of human rights infringements. Employees and external stakeholders can make reports to the Compliance Officer as a confidential contact point in the Group, or anonymously via the web-based iTrust reporting system, available in multiple languages. This applies to all human rights concerns. → See Compliance for information about handling reports
In the reporting period, no reports of suppliers violating the Code of Conduct regarding human rights were submitted. Furthermore, no supplier relationships were terminated due to sustainability shortcomings with regard to human rights.
New Code of Conduct rolled out starting in 2023
Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) took effect for MTU Aero Engines AG in 2023. In the reporting year, an interdisciplinary project team prepared the implementation of the specifications. In the course of this, MTU’s revised Code of Conduct for Suppliers has been in force starting in 2023. On the topic of human rights, this also formulates requirements for appropriate payment, occupational health and safety, and environment-related topics such as the handling of hazardous substances and waste, as well as expectations regarding environmental protection and climate action.
Risk analysis and monitoring of sustainability performance
We regularly conduct a risk analysis of suppliers to the sites in Germany, Poland and Canada as well as the MTU Aero Engines North America subsidiary. The risk analysis takes into account MTU-specific product groups and the countries they are sourced from. It incorporates the findings of the Global Slavery Index compiled by the Walk Free Foundation, which evaluates countries regarding forced and child labor and legal frameworks, among others. This risk analysis is integrated into the existing risk process for suppliers. In the next step, we plan to audit key suppliers to check their compliance with sustainability criteria. To this end, MTU implemented an ESG (environmental, social, governance) assessment tool and began rolling it out. A pilot for OEM suppliers on sustainability performance monitoring was launched. MRO also conducts a supplier evaluation twice a year for suppliers of the German sites.
Throughout this process, we again in 2022 identified no supplier that poses a significant risk as regards child, forced or compulsory labor, or at which the freedom of association or right to collective bargaining could be compromised.
Conflict minerals: Transparency about raw materials used
We take various steps to safeguard the respect of human rights in the supply chain. This applies especially to the procurement of certain raw materials known as conflict minerals: for example, tantalum, tin, tungsten and gold, which can be found in some of our engine components. These minerals can cause problems in procurement because they are sometimes mined in Central African countries, where the profits are used to finance armed conflicts that commit human rights violations. MTU strives for a sustainable and transparent value chain that excludes the use of conflict minerals. The company never deliberately purchases conflict minerals, but they can find their way into production or pre-production at the various levels of the global supply chain. According to the provisions of the Dodd-Frank Act applicable to companies listed on stock exchanges in the United States, our American partners and customers require that we disclose the origin of minerals used in our components and limit our sources to certified mining companies and primary-alloy producers (Conformant smelter and refiner lists). In turn, MTU demands that its relevant suppliers should specify the origin of such minerals, in order to ensure that the value chain contains only conflict-free raw materials. The general terms and conditions and contract provisions require suppliers to provide information about the source of minerals in accordance with the EICC/GeSi Conflict Minerals Reporting Template.
When MTU requested information from suppliers in 2022, it discovered nothing to indicate that MTU components contain conflict minerals.
