As a provider of insurance services, we do not have a traditional upstream or downstream supply chain of raw and auxiliary materials or produced goods as is the case with manufacturing companies. Nevertheless, we too source a broad range of goods and services. They include, among other things, IT hardware and software, Cloud services, consulting and development services, building and office equipment, electricity, heat and water, services relating to logistics, building management and technology as well as food for our staff catering. Altogether, we procure goods for IT, the operation of our premises and the conduct of our business some 380 active suppliers. Roughly two-thirds of these suppliers are from Germany or indeed the Greater Hannover region. Above and beyond this, we source IT products primarily from the European Union and United States. Just 3% of our suppliers are based in other countries.
We consider it important and essential to manage our relationships with suppliers, in the first place with a view to ensuring observance of our compliance principles and mitigating associated environmental, social and governance (ESG) risks and, secondly, in order to track our procurement costs and reduce them wherever possible.
At the Hannover location three different areas are responsible for the procurement of a diverse range of goods and services: Facility Management (FM), Information Technology (IT) and the various specialist and service units that are not associated with FM or IT. In this context, the goods and services (IT hardware and software, consulting and development services, managed services as well as Cloud services) are purchased either directly from the vendor or through distributors.
IT suppliers to the Hannover location are commissioned, managed and evaluated using the service management system "ServiceNow". This system enables us to assign all vendors to one of the following categories:
All non-IT core vendors are evaluated along similar lines using a separate supplier management tool.
By engaging in an active dialogue we are able to build sustainable and robust relationships with our suppliers. Furthermore, the ongoing professionalisation of our procurement assures our competitiveness. We are currently taking steps to give greater consideration to cost/benefit aspects, improvement of service quality and the standardisation of services and conditions. Not only that, through consolidation of the portfolio of IT service providers we are also able to reduce our costs.
Since as long ago as mid-2012 our Code of Conduct for Suppliers has been in force for large parts of the company at the Hannover location. The Code of Conduct was developed by the areas of Facility Management (FM) and Information Technology (IT) with the support of Group Legal Services. It requires, among other things, compliance with environmental, governance and social standards and forms an integral contractual component in, for example, the tendering and contracting by Facility Management of infrastructure services as well as various construction projects. Existing supplier relationships in the areas of Facility Management and IT are also progressively checked for fulfilment of the Code of Conduct as part of an ongoing process.
In 2017 the Code of Conduct for Suppliers was revised against the backdrop of the new legal requirements associated with the UK Modern Slavery Act; the updated version was approved by the Executive Board on 29 June 2017. Specifically, the Code of Conduct for Suppliers requires – among other things – observance of legal and ethical provisions, respect for human rights and compliance with the core labour standards of the International Labour Organisation (ILO) as well as adherence to all applicable legal regulations governing health, safety and environmental protection. Hannover Re does not tolerate any form of bribery, corruption and/or embezzlement and similarly requires this of its suppliers. The Code of Conduct for Suppliers also stipulates that the right of freedom of association, e.g. to join trade unions and the employee council, must be safeguarded. Furthermore, the Code obliges suppliers to put in place a management system that assures compliance with the aforementioned aspects.
The Code of Conduct for Suppliers is publicly accessible on our website and must be signed by all new and existing suppliers.
Based on the criteria contained in the Code of Conduct for Suppliers, we conduct a corresponding evaluation of our suppliers at regular intervals. Our vendors and service providers are rated on the basis of self-reporting and with the aid of an application-supported process. Should they be assessed critically in an ESG risk category we assign them to a blacklist, as a consequence of which no further orders are placed with them. In this way we seek to minimise the risk of commissioning suppliers that cause adverse social impacts. An early-warning system ensures that an adequate lead time is available to select and as necessary familiarise an alternative vendor. No suppliers were identified as critical in the year under review.
In the context of our review of suppliers in the year under review we did not identify any suppliers at which freedom of association or the right to collective bargaining is significantly jeopardised or a substantial risk of child labour or forced/compulsory labour exists, nor were any determined to have violated environmental regulations.