Suppliers


“Suppliers and outside workers play a key role in improving the competitiveness of the business. While seeking the keenest competitive edge, the Group bases it relations with suppliers and outside workers on fairness, impartiality, and ensuring equal opportunities for all parties concerned. The Pirelli Group requires that its suppliers and outside workers comply with the principles and rules in this Code.”
(Ethical Code – Suppliers and Outside Workers).





SUPPLY CHAIN SUSTAINABLE MANAGEMENT SYSTEM.


Starting from the supplier selection stage, the social, environmental and ethical responsibility of the business are assessed together with the quality of economics and of the product or service to be supplied. Potential suppliers seeking approval in the Pirelli register must use the Pirelli portal dedicated to this procedure. On logging onto the portal potential suppliers must first answer a pre-assessment questionnaire that addresses elements of economic, social and environmental sustainability. Filling out the questionnaire is one of the essential conditions required whistleblow for qualification. The rating relative to ESG elements (Environment, Social, Governance) has an incidence of 33% in the final rating of candidate suppliers. The portal has also been designed to support the realisation of communication, awareness raising and training campaigns for suppliers, for which sustainability is an essential element, with special reference to aspects of social and environmental responsibility.

With regard to the contractual stage, from 2008 the sustainability clauses have been introduced systematically in contracts and orders for the purchase of goods and/ or services and/or works, both with private suppliers and with the Public Administration (or institutes/enterprises under public control) or NGOs, worldwide.

In 2012 the clauses were improved in the drive to achieve greater syntactical simplicity, although while maintaining the pivotal elements of social and environmental responsibility and business ethics currently present, and also the facility for verification by Pirelli by means of audits.

In particular, the clauses:

call for awareness, on the part of our suppliers, of the principles, commitments and values set down in the Pirelli sustainability documents, namely "The Values and Ethical Code", the "Code of Conduct", and the "Social Responsibility Policy for Occupational Health, Safety and Rights, and Environment", published and accessible on the Web, which enshrine the principles on the basis of which Pirelli manages its activities and contractual or non-contractual relations with third parties;

require that Suppliers confirm their commitment to:

  • not using or supporting the use of child labour and forced labour;
  • ensuring equal opportunities and freedom of association, promoting the development of each individual;
  • opposing the use of corporal punishment, mental and physical coercion, and verbal abuse;
  • compliance with the laws and industry standards concerning working hours and ensure that waves are sufficient to cover the basic needs of personnel;
  • establishing and maintaining the necessary procedures to evaluate and select suppliers and sub-suppliers on the basis of their commitments to social and environmental responsibility;
  • not tolerating any type or bribery in any form or manner and in any legal jurisdiction, even where such practices are effectively permitted, tolerated, or not subject to prosecution;
  • assessing and reducing the environmental impact of their own products and services throughout their entire life cycle;
  • using resources responsibly with the aim of achieving sustainable development in compliance with the principles of respect for the environment and the rights of future generations
  • imposing the foregoing principles, values and policies on any subcontractors and sub-suppliers, regularly monitoring the effective respect of this obligation.

On the basis of these sustainability clauses Pirelli is entitled to conduct audits at any time it deems fit, either directly or through third parties, to assess the supplier's effective compliance with the obligations it has assumed (a more detailed examination is given further ahead in this heading).

The sustainability clauses have been translated into 24 languages in order to ensure the utmost clarity and transparency for suppliers in terms of the contractual obligations they enter into not just in their relations with the company but also at their own facility and in their relations with their own suppliers.

To provide the maximum guarantee, the Group's suppliers are provided with the Whistleblowing Procedure (ethics@pirelli.com), expressly indicated in the clauses and available to report, in the utmost confidentiality, any violation or suspected violation they become aware of in relations with Pirelli and with reference to the contents of the "Values and Ethical Code", "Lines of Conduct" and the "Social Responsibility Policy for Occupational Health, Safety and Rights, and Environment" of the Group. With reference to the number of concerns raised by Group suppliers using the whistleblowing procedure, we confirm that at the time of writing none have been received. It is not objectively possible to confirm with absolute certainty that no whistleblowing reports were received from suppliers because several concerns were raised anonymously, as specified in the heading "Group Whistleblowing Procedure" in the first chapter of this report.

In addition, each purchase contract gives the name of the reference buyer so that the counterparty always has access to a company channel to use to transmit any feedback.

Monitoring of the supplier is performed through the Vendor Rating procedure, aimed at defining the quality level of supplies, the quality of the commercial relationship, the technical-scientific collaboration and performance in relation to safety in the workplace, the environment, and social responsibility by means of onsite audits and periodic monitoring of the state of completion of the actions set down in any improvement plans signed with the supplier. The results of the Vendor Rating are reviewed periodically and commented on by the Purchasing Department at the time of meetings organized with the suppliers, in order to identify any corrective or performance improvement actions required. The Vendor Rating covers all the goods and geographical purchasing areas and utilized as an integral part of commercial negotiations.

The suppliers sustainability audit activity is discussed in a heading further ahead in this chapter, to which we invite you to refer for further details.

In the aim to achieve shared development, interaction with suppliers is subject to continual improvements of the process in both qualitative and instrumental terms.

The Group Purchases Portal, which is complete with purchasing standards and procedures, ensures uniformity of the process and a guarantee of transparency, in addition to functioning as a communication, continuous training and knowledge sharing tool. The new version of the portal, the implementation of which started in 2011, was made fully operative over all industrial units in 2012, thus constituting the reference platform for both Group suppliers and for company purchasing managers.

The portal allows the maximum level of information sharing among the various countries in which the Group operates and tracks the alignment of suppliers with the Group Sustainability Model, starting from the approval stage and proceeding up to the uploading of the implementation status of any recovery plans agreed between Pirelli and its suppliers resulting from third party audits into the sustainability of the supplier in question.

 


Last Revised: 12 Jul 2013