Supply Chain Integrity Objective The long-term objective for the Group’s supply chain management is to reduce risks, contribute to supply chain integrity an elevate sustainability performance throughout the value chain. That includes ensuring that all suppliers comply with the ASSA ABLOY Code of Conduct. Systematic auditing is an important tool in managing risks and identifying potential synergies. Important areas in the future ASSA ABLOY will continue to grow in new markets. As a result of for example acquisitions, new suppliers need to be included in the audit program. This creates challenges for ASSA ABLOY, and it becomes increasingly important to ensure a consistent approach for securing supply chain integrity. To manage future challenges, ASSA ABLOY continues to refine the systematic processes, templates and scoring principles and to further expand sustainability audits on suppliers on the new markets. Other important areas ahead are: Including new criteria in the audit tools such as conflict minerals will require follow-ups in the coming years. Including suppliers in the environmental product declaration (EPD) process. As the Group has decided to provide EDPs to all customers, suppliers will have to do the same. Increase the use of third party auditors to complement internal auditoris. Continue to implement a new audit system to make the entire process smoother and more robust. Sustainability spend in low cost countries Performance 2015 In 2015, 890 sustainability audits were completed, including follow-up audits. The audits showed that: 1,362 (890) active suppliers were classified as reliable Seven suppliers were blacklisted and 92 put on New Business Hold (NBH) by the Group, meaning they were not eligible for new business from any ASSA ABLOY entity. Priorities to drive progress In 2015, ASSA ABLOY's sourcing organization focused on suppliers' compliance with the ASSA ABLOY Code of Conduct. Some major developments in 2015 are: New financial and sustainability business intelligence system External assessment of ASSA ABLOY’s internal supplier auditing systems New ASSA ABLOY business partner Code of Conduct under development Suppliers classified as reliable Organizational responsibility Group Management sets the sustainability targets and the overall framework, whereas each division is responsible for implementing and maintaining a sustainable supplier base. Group Supply Management leads a Sustainability Steering Council with representatives from each division. The Council coordinates activities and follows up on progress. All divisions follow the same guidelines and processes, which are provided by the Group Supply Management. The divisions report to the Sustainability Steering Council on a monthly basis. Securing supply chain integrity It is important that the sustainability audits are conducted with the same approach across the Group. Suppliers shall be scored in the same way, regardless of auditor and geography. In 2013, relevant personnel were trained in ISO 14001 by external experts. Below are the measures ASSA ABLOY take to ensure that audits are conducted in the same way across the Group: New audit leaders in Asia, South and Central America and Eastern Europe have been trained in the ASSA ABLOY audit method and scoring principles by external experts. At year end 2014 the Group has over 80 internal auditors. A color-coded traffic light system is used to score the suppliers in the audit. Calibration audits are performed every year. The need for calibration audits will increase along with the number of audits and internal auditors.