Building an Ethical Supply Chain
We purchase manufactured components, raw materials, equipment, and services from a wide range of global suppliers for all of our businesses around the world. Our supply chain includes inputs to our medical and advanced industrial technology products, manufacturing equipment, logistics, packaging, information technology and much more. We are committed to purchasing from ethical suppliers and hold our supply base to the same ethical standards as we hold ourselves. In conjunction with our efforts to drive Novanta Way deeper into our daily activities, we consolidated the oversight of responsible procurement across Novanta businesses in 2022 along with tracking and measuring our performance based on a consistent set of internal ESG metrics. In addition, we incorporated “Environmental Management” and “Labor Rights” topics into our supplier on-boarding and re-certification audit process checklist.
We created a “Sustainable Supply Chain Roadmap” to harmonize our approach to responsible procurement and to ensure that we are working with suppliers with high environmental and social standards. As part of our roadmap, we require our key suppliers—defined as the top 80% of direct material suppliers by spend and critical material suppliers—to sign and adhere to our Supplier Code of Conduct, which outlines our expectations of policies and procedures that they are expected to comply with. As a baseline, all suppliers must comply with all the relevant laws and regulations in the countries in which they operate. Our Supplier Code of Conduct provides additional guidelines on:
- Labor rights, including child and forced labor, wages, and discrimination;
- Occupational health and safety, including emergency management, injury, and illness;
- Environmental impact, including pollution and hazardous materials;
- Ethics, including anti-corruption and non-retaliation;
- Conflict minerals due diligence; and
- Regulatory compliance, including self-assessments and training.
Key suppliers are required to accept our Supplier Code of Conduct. As such, all key suppliers have agreed to our most recent version of the Supplier Code of Conduct from 2021. In addition, we surveyed all our key suppliers in 2022 to better understand their environmental practices, including ISO certification, external ESG reporting, and internal ESG policies. Based on these responses and evidence provided to Novanta, we developed an environmental risk rating for each supplier. We will continue to monitor our suppliers based on the risk ratings and will work with them to extend our expectation for environmental sustainability practices through our supply chain.
Looking ahead to 2023 and beyond, we plan to survey key suppliers for health and safety, ethics, and human rights practices on a regular basis and evaluate them on an ESG scorecard with risk ratings for each category.