Sustainable
Procurement
Supply Chain Management
Version 1.3, July 2024

As soon as a company transfers
some of its reputational risk,
corporate social responsibility
and environmental impact elsewhere, it must tackle Supply
Chain Management as one of its
most pressing concerns.
Dr. Klaus Staubitzer
Chief Procurement Officer

Contents

Chapter 1:

4

Chapter 2:

5Chapter 3:

6

Chapter 4:

7

Chapter 5:

8Chapter 6:

10Chapter 7:

12Chapter 8:13

Siemens Values and Legal Requirements

Code of Conduct for Siemens Suppliers

Data Transparency

Suppliers‘ Ready-for-Business

Risk Analysis

Risk Detection and Assessments

Risk Management and Consequences

Company‘s Responsibility

Sustainable Procurement

Supply Chain Management

Chapter 1

Siemens Values andLegal Requirements
At Siemens, we define sustainable development as the means to achieve profitable and long-term growth. In doing
so, we align ourselves with the goals of the UN’s 2030 Agenda for Sustainable Development and the OECD Guidelines
for Multinational Enterprises. This applies as well to our Supply Chain Management. Only in close cooperation with all
stakeholders – specifically our suppliers and third-party intermediaries worldwide - we can seize the opportunities andminimize risks associated with the challenge of sustainable development.

Some examples:

According to the UN Global Compact, the “supply chain
can make a significant impact in promoting human rights,
fair labor practices, environmental progress and anticorruption policies”. Some of the biggest contributions canbe made on the United Nations Sustainable Development
Goals (SDG), especially regarding SDG 8 on Decent Workand Economic Growth, which among other things addresses
labor issues, and SDG 12 on Responsible Consumptionand Production. SDG 12 specifically calls on companies towork to adopt sustainable practices and increase reportingon their progress too. Efforts can be made to address poor
working conditions, ranging from minimum wage violations
to extreme occupational hazards, and eradicate all formsof forced labor and child labor. Unhealthy workplaces can becleaned up.

• European Union: Conflict Minerals Regulation,requirements on the corporate sustainability reporting:
The Corporate Sustainability Reporting Directive - CSRD
• United States of America: Dodd-Frank Act, Sec 1502
“Conflict Minerals”, California Transparency in Supply
Chains Act of 2010, Business Supply Chain Transparencyon Trafficking and Slavery Act of 2015
• Germany: Act on Corporate Due Diligence Obligations in
Supply Chains from 2023
• United Kingdom: Modern Slavery Act 2015
• France: Loi de Vigilance
Siemens Supply Chain Management (SCM) has to ensurethat Siemens meets all these requirements. SCM therefore
has implemented various procurement processes.
This Sustainable Procurement Brochure shall internally help
to understand and fulfill all sustainability requirements
within the business relations with our suppliers. Externally, it
shall inform our stakeholders on our SustainableProcurement efforts.

Siemens’ purchasing volume equals roughly half of our
total revenue from some 67,000 suppliers in around
140 countries. This brings an enormous responsibility
ensuring Human Rights, Employees’ Health & Safety andEnvironmental Protection at all our suppliers worldwide
as we claim: “We only do business with clean partners”.
Within the recent years numerous pieces of legislation
were published and require our absolute attention.
Besides others, EU law on environmental protection andhuman rights came into effect as well as legislation in
USA, UK, France, Denmark, Australia, and Germany. Morelegislation is about to come into effect.

Sustainable Procurement

4Siemens Values and Legal Requirements

Chapter 2

Code of Conduct for
Siemens Suppliers
The “Siemens Code of Conduct for Suppliers and Third Party Intermediaries” and thereon based company-wide,
mandatory requirements and processes ensure the effective establishment of the specified environmental, complianceand labor standards across all countries of operations.

The Code of Conduct commitment processes for suppliers
are Siemens-wide mandatory:

The Code of Conduct covers the following requirements:– Human Rights and Labor Practices, including (beside others)• Prohibition of Forced Labor• Prohibition of Child Labor• Health & Safety for Employees• Security Forces• Grievance Mechanism• To become “Ready-for-Business” all new suppliers have tocommit to the Code of Conduct. The commitment mustbe given during the supplier’s registration process in ourglobal procurement application SCM STAR.
• All new and extended procurement contracts have toinclude the Code of Conduct commitment, a paragraphon Supplier Self-Assessment and Audit-right and a
specific termination clause in case of major breach of ourCode of Conduct requirements.
• All worldwide available Siemens Conditions of Purchasehave to include the principles of the Code of Conduct.

– Environmental Protection (beside others)• Environmental pollution• GHG emissions• Land, forests, and waters• WasteSiemens requires all its suppliers to promote and follow-up
the implementation of the requirements of the Code ofConduct in their own supply chain.

– Fair Operating Practices, including (beside others)• Anti-Corruption and Bribery• Anti-Money Laundering, Terrorism Financing• Data Privacy

As companies are facing the challenge of complying with amultitude of different environmental and labor standards,
we intend to avoid a „code mania“ and we are striving toreduce the duplication of efforts at suppliers while
maintaining our high environmental and labor standards. We
have, therefore, introduced a corporate managed procedure
for accepting industry-specific codes as equivalent to therequirements of our Code of Conduct, as well as those ofsuppliers and associations, when their requirements comply
with our own requirements.

– Responsible Minerals Sourcing– Compliance to Code of Conduct in own supply chain

Sustainable Procurement

5

Code of Conduct for Siemens SuppliersChapter 3

Data Transparency
Data transparency is a prerequisite for all procurement activities and a must for fulfilling sustainability requirements in thesupply chain and its legal obligations.

Our Siemens-wide implemented procurement applications “SCM STAR” (STrategy And Realization) and “SCM CoRe”(Controlling and Reporting) provide all Siemens procurement data centrally.
In order to systematically leverage the potential of the procurement function in terms of opportunity and risk management
across all our businesses and regions, standardized extraction and central provision of all procurement-relevant informationis crucial. For this purpose, all relevant procurement information is administered in a central database where the data isaggregated and made available to individual users (Controllers, Buyers, Commodity Managers, Purchasing Councils, ProjectProcurement Managers).

SCM STAR is a cloud-based Siemens procurement application
integrating areas of Supplier Management, Contract
Management and Sourcing where all employees withprocurement responsibilities have access to. SCM STAR has
the following benefits:

SCMCoRe contains – amongst others – following data on allpurchases of goods and services:• Supplier information (incl. registered name, address andcountry)• Identifier for Account (IfA): Internal unique identification
number for suppliers• Commodity Code (ESN): Internal 3-digit ESN classification
key for all purchased goods and services• Purchasing Volume• Reduced complexity of processes based on marketstandards• Transparency and end-to-end coverage of Source-toContract (S2C) processes• One single S2C cockpit for buyer and supplier interaction• Modular and integrative solution

This system includes all necessary information for strategic procurement and our supplier management processes, such as
qualification, evaluation, risk & opportunity management as well as development of suppliers. In addition, it also provides
functions for electronic information exchange with suppliers including the Corporate Responsibility Self-Assessment.

Sustainable Procurement

6

Data Transparency

Chapter 4Suppliers‘
Ready-for-BusinessWe have implemented a mandatory, Siemens-wide Supplier Management Process to ensure that wecollaborate with the best suppliers. All relevant aspects in relation to procurement, quality, logistics
and technology have to be considered, as well as strategy, innovation, potential and risks.
Innovations and potential procurement options are monitored regularly along with important market
and technology trends.

Especially at the beginning of a potential collaboration with a supplier it is important to verify
suppliers’ commitment in order to act in the sense of our values and according to our requirements.
Therefore, suppliers nominated on basis of preselection must clearly provide a commitment of theirobligation to fulfill all minimum requirements. This includes the suppliers‘ agreement to abide by theSiemens Code of Conduct.
Only if the supplier has successfully completed the registration and qualification processes, it isassigned with the status “Ready-for-Business” (R4B) and can be utilized by Siemens buyers.

Sustainable Procurement

7Suppliers‘ Ready-for-BusinessChapter 5

Risk Analysis
Siemens has implemented a system of interconnected processes and tools to ensure full transparency
and awareness for our purchases and for our supply chain risks & opportunities. It is important not
only to implement “stand-alone” processes for different risk areas but to develop a comprehensive
system covering all Code of Conduct requirements. This, however, is a lengthy and continuous processwhich – step-by-step – adds new elements. We are working constantly on improving our Sustainable
Procurement processes by considering the highly diverse and complex requirements by laws,customers, stakeholders and NGOs.

Critical suppliers can be identified. We have implemented processes to cover supplier risks according
to our Code of Conduct categories.
Risk analysis by using risk indicators:
In order to assess the sustainability risks of all our Siemens suppliers at least once per year, we utilize theprofessional services of an external provider. This provider uses internationally available information
segmented into several risk indicators and combined with country-, industry- and commodity risk
categories. Within that, the risk indicators are weighted. Finally, each supplier is allocated into the risk
categories “Low / Medium / High / Extreme”.
This provides a clear understanding and walks us through all legislative requirements we must meetin the different regions we procure.
It is also the basis of the decision which suppliers should be audited by a so-called “ExternalSustainability Audit” within a fiscal year.
Risk analysis by using Sustainability Self-Assessments:
Suppliers based in higher risk countries have to run through a Corporate Sustainability Self-Assessment(CRSA) during the supplier onboarding / Ready4Business process. This process has to be renewed all
3 years. Only suppliers who pass the requirements can receive the “Ready4Business” status and canbe utilized as Siemens suppliers. Otherwise, they will be blocked in our central supplier management
tool.

Sustainable Procurement

8

Risk Analysis

Risk analysis on suppliers providing products relevant regarding Responsible Minerals Sourcing(incl. “Conflict Minerals”):
Siemens has rolled out a uniform and enterprise-wide process (“Supply Chain Due Diligence”) todetermine the use, source, and origin of the relevant minerals in our supply chain (3TG - Tin, Tantalum,Tungsten, Gold + Cobalt, Mica) which originate especially from Conflict-Affected and High-Risk Areas.
Siemens relies on the “Responsible Minerals Assurance Process” (RMAP), which is the flagship programof the “Responsible Minerals Initiative” (RMI). Focusing on a “pinch point” (a point with relatively fewactors) in the global metals supply chain, the RMAP uses an independent third-party assessment ofsmelter/refiner management systems and sourcing practices to validate conformance with RMAPstandards. The assessment employs a risk-based approach to validate smelters‘ company-level
management processes for responsible mineral procurement.
The RMAP standards are developed to meet the requirements of the OECD Due Diligence Guidance,
the Regulation (EU) 2017/821 of the European Parliament and the U.S. Dodd-Frank Wall Street Reformand Consumer Protection Act.
Basis of this process are – again – our SCM Procurement tools SCM Star and SCM CoRe. We search for
all goods purchased with the possibility of having Conflict Minerals (3TG - Tin, Tantalum, Tungstenand Gold), Cobalt and Mica included. Corresponding suppliers are contacted. Where necessary, wework with suppliers to remediate risks and perform additional due diligence so that we can continue
to source responsibly, building on established management processes.
Risk analysis on suppliers providing products or services with a high CO2 footprint:
In 2016, the Siemens Board published the Siemens target for own operations to be Carbon-Neutral
by 2030 (50% reduction by 2020). Supply Chain Management (SCM) is involved in many areas toensure reaching this target. In 2020, Siemens committed itself to a Scope 3 upstream target: 20%
CO2e reduction of our entire supply chain by 2030, CO2e neutral by 2050.
In order to reach this target, in 2017, we started our “Carbon Reduction@Suppliers” project cooperatingwith an external service provider. Together, we managed to develop an economic model which
identifies the CO2e footprint of all our Siemens suppliers. Based on this model, we developed thismodel further creating a carbon web-assessment “supplier+s” in partnership with our provider “ctrl+s”.
By rolling out this carbon web-assessment into our supplier base, we show our suppliers the mostimportant CO2e emitters and explain how their carbon footprint can be sustainably reduced. Afterthe learning stage has been completed, we retrieve the supplier’s information on planned or alreadyexecuted emission reduction efforts in the carbon web-assessment.
More information is provided at www.siemens.com/carbon-suppliers.

Sustainable Procurement

9

Risk Analysis

Chapter 6

Risk Detection andAssessmentsControlling risks need not necessarily lead to audits. There are alternative possibilities for effective
detection and development. We, therefore, implemented a set of interconnected controllingmechanisms which are customized to assess our suppliers’ sustainability performance.

Corporate Responsibility Self-Assessments
We found that sustainability topics are observed or understood in different ways in different regions/countries. Therefore, we have categorized our suppliers according to their physical location: forthe categorization of a higher risk status we use the expertise of an external service provider as
already explained in chapter 5 section “Risk analysis by using external risk indicators”. Supplierswith a respective purchasing volume located in a higher risk country have to conduct our Corporate
Sustainability Self-Assessment. Based on the answers we decide if the candidate fulfills ourrequirements, has to set up development measures or has to be rejected. Even been accepted as oursupplier, this process has to be renewed all 3 years.

External Sustainability Audits
The External Sustainability Audits are conducted by an assigned internationally recognizedsustainability auditing company. Using an external partner ensures a thorough and independent
assessment of the implementation of our requirements and identifies any potential risk in thesupplier‘s practices. The audits follow a standardized process and generate a corrective action
plan to the supplier, not only covering the implementation of requirements but also providing
recommendations for the further development of sustainability practices.

Sustainable Procurement

10

Risk Detection and Assessments

Responsible Mineral Sourcing
We implemented an annual Supply Chain Due Diligence process. By surveying our suppliers withResponsible Minerals Initiative’s “Conflict Minerals Reporting Template” (RMI’s CMRT), we identify allsmelters & refiners in our supply chain. All eligible smelters or refiners will be reached out and audited
via RMI’s “Responsible Minerals Assurance Process” (RMAP) where Siemens is a member company andactively supports the smelter engagement.
Carbon Web Assessment ("supplier+s" by ctrl+s)
In our Carbon Reduction@Suppliers program, we collaborate with an external partner to analyze theeconomic data and model the carbon footprint of each of our suppliers. To facilitate this process, weutilize a Carbon Web Assessment called supplier+s that highlights the main sources of suppliers’ CO2eemissions and provides guidance on how to reduce them.
It is based on the following methodology:→ The basis is the model calculation of our external partner ctrl+s, which divides our suppliers into
product and service categories and country of origin and assigns an industry average for CO2e.
→ We ask our suppliers to provide information via the “supplier+s” assessment about theirimplemented CO2e reduction measures and their general CO2e management. Based on theiranswers, we calculate the resulting emission reduction and the supplier’s remaining carbon
footprint.
Beyond all the globally defined risk detection processes Siemens has a major advantage because theworld-wide Siemens organization is based in most countries in which our suppliers are located. Thismeans that our local buyers are in the optimal position to know their suppliers best and they can visit
suppliers on-site during their negotiations and general meetings, for example.

Sustainable Procurement

11

Risk Detection and Assessments

Chapter 7

Risk Management andConsequences
Results of the different assessments with minor deviations and suspicion of serious deviations triggera corrective action process.
If non-conformance with our Code of Conduct is identified, Siemens will work together with thesupplier to mutually agree on corrective actions which have to be implemented within an agreed timeframe. If all efforts to develop the supplier remain unsuccessful, whether due to lack of willingness orinability, Siemens reserves the right to terminate the business relationship and phase out the supplier.
Those suppliers can be blocked in local systems around the world via our IT-based Global Master DataManagement process for suppliers.

Sustainable Procurement

12

Risk Management and Consequences

Chapter 8Company‘sResponsibility
Establishing Sustainable Procurement (e.g. Human Rights, Health & Safety standards, Environmental
Protection, fighting against Corruption) shall not be a secret internal company policy – it is not
implemented to gain an economical advantage against competitors. It must be shared publicly as aninspiration to jointly work for a better life for all who take part in our interconnected world.
It is a company’s responsibility – or less abstract: every buyer’s responsibility – to ensure that allmeasures offered are used to improve the lives of our suppliers‘ employees and the conditions in thesocieties in which they are based.

Sustainable Procurement

13Company‘s Responsibility