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Sustainable Management
Dialog is the key to responsibility.

Sustainability

The Schaeffler Group wants to actively shape the “Mobility for tomorrow”. For the company, forward-thinking and responsible action means continuously developing ourselves in the interest of our stakeholders. Managing the company with integrity and the compliance with Codes of Conduct along the entire supply chain provide the foundation for these activities.

Sustainable Management

Combining Economic Success with Responsible Action

Employees of the Schaeffler Group discussing responsible business practices at Schaeffler.
Employees of the Schaeffler Group discussing responsible business practices at Schaeffler.

The Schaeffler Group’s self-understanding is based on responsible corporate behaviour. The Schaeffler Group places a high value on combining economic success with responsible action for the environment, people, and society. Our corporate values sustainable, innovative, excellent, and passionate, lay the groundwork for long-term, profitable growth.

The Schaeffler Group’s actions are shaped by the principles of integrity-based company management. This includes openness to the needs of the people, as well as fairness, mutual respect, and trust. This applies to our own employees as well as to customers, suppliers, and the entire spectrum of stakeholders of the Schaeffler Group.

Our Strategy “Mobility for Tomorrow”

4 Focus Areas and 8 Strategic Pillars for Continued Profitable Growth

O ur world is in motion at a pace that is gathering speed. Climate change is progressing, and urbanization, globalization, and digitalization are on the rise. These factors will impact and alter the way we live and work in the future. That applies in particular to the area of mobility and goes well beyond our cars to other forms of transportation, both in cities and in the spaces between them. Schaeffler is determined to play an active role in shaping these changes.

With its strategy “Mobility for tomorrow”, finalized during the course of the year 2016 following in-depth consultations with executives and the Supervisory Board and adopted in November, Schaeffler has set the course for sustainable profitable growth.

Mission
"Guided by the values of a global family business, we work closely together with our customers as true partners to deliver a compelling value proposition through our best-in-class expertise in manufacturing technology and systems know-how. In doing so, we contribute to the success of our customers, the advancement of our employees, and the prosperity of our society.”

Vision
“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.”

4 focus areas and 8 strategic pillars

The 21st century world is changing at an unprecedented pace. Rising demands for environmental protection have led to the transformation of energy systems. Urbanization is progressing rapidly, and globalization and digitalization connect the entire world, both physically and in virtual space. Based on these longterm trends, automotive and industrial supplier Schaeffler has defined 4 focus areas as part of its strategy “Mobility for tomorrow” on which the company intends to concentrate in the future.

In order to achieve profitable growth in all focus areas, Schaeffler has determined 8 strategic pillars that define the scope for future entrepreneurial action. On one hand, these pillars define the company’s self-understanding as a global technology partner of the automotive sector and industry, that delivers both components and systems. On the other hand, they specify the prerequisites as well as the values by which Schaeffler lives.

1. We want to be the preferred technology partner for our customers.

2. We are an Automotive and Industrial supplier.

3. We are a global company with a local presence throughout the world.

4. We produce components and systems.

5. We view E-Mobility, Industry 4.0, and Digitalization as key opportunities for the future.

6. We strive for the highest possible quality, efficiency and delivery performance.

7. We want to be an attractive employer.

8. We live by the values of a global family business.

Strategy “Mobility for Tomorrow”

Corporate Governance

Transparency, Trust, and Teamwork

Corporate governance stands for responsible management focused on adding long-term value. Efficient collaboration between the Executive Board and the Supervisory Board, as well as openness and transparency in corporate and financial communication are important aspects of corporate governance at the Schaeffler Group. They strengthen stakeholders’ trust in the leadership and monitoring of the company.

The Schaeffler Group’s manner of conducting business is based on integrity, fairness, and mutual respect. Transparency, trust, and teamwork are the three key success factors for achieving this. Transparency generates trust, and trust is the foundation of good teamwork. The updated Schaeffler Group Code of Conduct, approved by the Executive Board, provides guidance in this area. These basic principles apply to everyone equally – the Executive Board, the leadership team, and all employees.

Schaeffler Group Corporate Code of Conduct

The governance structure of the Schaeffler Group encourages transparency and supports the values of a global family business.
The governance structure of the Schaeffler Group encourages transparency and supports the values of a global family business.
Governance structure at the Schaeffler Group

The governance structure of the Schaeffler Group encourages transparency and supports the values of a global family business. The elements of the governance structure support our business units in effectively identifying and managing risks. The structure follows a two-tier model set out in the Stock Corporations Act. The Executive Board has direct responsibility for managing the company. The members of the Executive Board are jointly responsible for managing the company. The Chief Executive Officer coordinates the activities of the members of the Executive Board. The Supervisory Board appoints, supervises, and advises the Executive Board and is involved in decisions that are fundamental to the company. The Chairman of the Supervisory Board coordinates the work of the Supervisory Board.

Focus on human rights aspects

Due to our complex international supply chain, the Schaeffler Group is exposed to a certain level of risk of being confronted either directly or indirectly with legal violations or human rights violations. The company’s acceptance of responsibility and due diligence processes in relation to human rights issues are primarily oriented towards the “UN guiding principles on business and human rights” and towards the ten principles of the UN Global Compact.

Both the Modern Slavery Act (MSA) introduced in Great Britain and the German Action Plan for Economics and Human Rights require companies to formulate and implement goals and measures to protect human rights along their supply chains. The Schaeffler Group fulfills these requirements with structured activities designed with long-term considerations in mind.

Using a risk-based process, the Schaeffler Group develops processes to fulfill the Modern Slavery Act. After excluding low-risk business partners, we plan to review our remaining partners as part of an onboarding process. The review includes asking questions about the company’s business models as well as their organizational structures. If there are any concerns in individual cases in this respect, the partners in question will either not be integrated into the business relationship or specific measures will be agreed upon in each individual case to counteract the risk of forced labor and slavery. Controlling and monitoring aspects should also be established in contracts with companies as part of this company-specific collaboration, in order to permanently exclude any legal violations.

Schaeffler AG and its group companies have taken measures to provide their own personnel initial training on human rights aspects. They are pursuing a top down approach. After top management was sensitized to these issues through initial communication measures in 2016, starting in 2017 we plan to integrate employees into the process under a need to know principle. The knowledge we establish in this way should form the foundation of a culture that avoids forced labor and slavery in an even more structured manner. It will support the compliance processes we have established.

The groupwide risk management system is based on the management-oriented enterprise risk management (ERM) approach, which in turn has its basis in the globally recognized framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further information on the Schaeffler Group risk management system is provided in the Annual Report 2016.

Besides inclusion in risk management, we also began to establish a structured business partner due diligence process in 2016. As part of this process, central business partners of the Schaeffler Group were reviewed with regard to their recognition of and adherence to international principles and guidelines on human rights, among other issues.

Data protection, information, and IT security

The protection of personal-, product-, and process-related data is an integral part of responsible management for the Schaeffler Group. Our business partners and employees trust us with their sensitive data, and we are aware of our responsibility to protect this data from unauthorized access. For this reason, we sensitize our employees to handling sensitive data in training sessions. Such training sessions on data protection, information, and IT security are held on an ongoing basis within the Schaeffler Group.

Supplier Relationships

A Global Player with a Local Presence

The Schaeffler Group obtained goods and services from approximately 34,000 suppliers in approximately 80 countries in 2016. The volume of these purchases related primarily to the Europe (63.4 %) and Americas (17.7 %) regions. 11.5 % and 7.4 % related to the Greater China and Asia/Pacific regions, respectively. Following our guiding principle “We are a global player with a local presence”, the Schaeffler Group builds strong cooperations with local suppliers. By creating jobs and infrastructures, our own business success thus provides the respective region with economic benefits.

34,000

suppliers from 80 countries work with Schaeffler. (2016)

Responsible supplier management

In the future, the Schaeffler Group’s purchasing department plans to expand its role as “manager of external value creation”, thus growing the company’s value. Apart from financial aspects, complying with ecological and social standards is gaining significance for longterm and successful business relations.

The Schaeffler Group expects that its suppliers adhere to statutory regulations on human rights, occupational health and safety, and environmental protection. The Schaeffler Group formulates these minimum requirements of its suppliers in its Supplier Code of Conduct. External regulators and observers such as the Global Reporting Initiative (GRI) also ascribe growing importance to the issue of sustainable procurement.

Quality, supplier reliability, and environmental aspects are central issues in supplier meetings.
Quality, supplier reliability, and environmental aspects are central issues in supplier meetings.
„Premium Suppliers“ as preferred partners in innovation

After holding a “Premium Supplier Day” in 2015 – an event the Schaeffler Group organizes together with Continental AG every two years alternating with the Supplier Day in the individual companies – the Schaeffler Group Supplier Day took place in October of 2016. 100 suppliers were invited to the event.

114

potential suppliers were reviewed with regard to sustainability aspects. (2016)

In regular supplier reviews, both companies assessed strategic suppliers within the framework of their purchasing cooperation in a strategic selection process. They investigated not only suppliers’ product portfolios, but their quality and logistics performance as well. Suppliers meeting all of the requirements were admitted to the Premium Supplier Circle.

The award-winning suppliers with Oliver Jung, Chief Operating Officer and Michael Hartig, Head of Corporate Purchasing.
The award-winning suppliers with Oliver Jung, Chief Operating Officer and Michael Hartig, Head of Corporate Purchasing.
Memberships

Active in a Variety of Initiatives and Membership

The Schaeffler Group is active in a variety of initiatives and holds membership in various associations related to sustainability. In this way, the company supports sustainable business practices even beyond its own corporate activities.

Memberships

econsense

econsense - Forum für Nachhaltige Entwicklung der Deutschen Wirtschaft e.V. (Forum for Sustainable German Economic Development) is a collaboration between leading global companies and organizations within the German economy focused on issues of sustainable development and corporate social responsibility. The corporate network was founded in 2000 as an initiative of the Bundesverbandes der Deutschen Industrie e.V. (BDI - Federation of German Industries), and serves as a think tank and platform for dialog. The Schaeffler Group has been involved since 2016, one of over 30 member companies from a wide range of sectors. The goal of econsense is to drive forward sustainable development in the economy, and to take on social responsibility together.

econsense - Forum for Sustainable German Economic Development

Diversity Charta

The Schaeffler Group not only fulfills our obligations related to “diversity” within the company, but also affirms our commitment to these issues externally as well. Schaeffler has pledged to uphold the standards of the Charta der Vielfalt (Diversity Charta), thereby establishing a corporate culture based on integration and mutual respect. We signaled this commitment by signing the “Charta der Vielfalt,” an initiative to advance corporate diversity, in May of 2008.

Diversity Charta

Knowledge factory

In 2015, the company became a member of the "Wissensfabrik – Unternehmen für Deutschland" (knowledge factory - companies for Germany) business initiative. The knowledge factory supports education and entrepreneurship in Germany by acting as a mediator between the economy, educational organizations and the sciences. It aims to promote the exchange of knowledge and experience, creativity and teamwork skills, and to give innovative ideas a head start. The network comprises about 130 companies and foundations.

Knowledge factory - companies for Germany

In Focus

Actively Preventing the Use of Conflict Minerals

The duties of the corporate governance system of the Schaeffler Group also include ensuring material-specific compliance with laws and standards (material compliance). We use material compliance management as a key instrument. Through this, we work to ensure that the components and raw materials we use fulfill applicable laws and regulations.

In addition, Schaeffler takes a responsible approach in the use of raw materials like tin, carbide, tantalum, or gold, as the mining of such materials is used to finance martial conflicts and human rights abuses in some countries. The Schaeffler Group established a monitoring process in 2013, and provides information on material origins to companies who submit inquiries. We use the “Reasonable Country of Origin Inquiries” (RCOI) to ascertain the regions in which the ores were originally mined and to initiate any necessary targeted supply chain activities. In doing so, we respond to the demands on our supply chain resulting from OECD guidelines and the new EU regulation on trading in conflict minerals.

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