Sustainable supply chain

Leonardo is committed to building a solid and reliable supply chain, within an innovative and integrated ecosystem capable of supporting social and economic development in territories where the company has a presence.

Promoting sustainability across a supply chain that spans 77 countries and comprises 11,000 companies is a key factor for competitiveness, ensuring a significant impact in the countries where Leonardo operates.

€8.9 billion

€8.9 billion

the value of purchases (52% goods, 48% services)

63%

63%

value of purchases to revenues

82%

82%

purchases from domestic markets, with a supply chain of over 7,000

100%

100%

suppliers that have accepted the Supplier Code of Conduct

Leonardo's procurement of goods and services is concentrated in Italy, the United Kingdom, the United States and Poland – four domestic markets in which Leonardo has promoted the creation of entire industrial districts, supporting local social and economic development and making continuous use of local suppliers, largely small and medium-sized enterprises (SMEs).

86%

86%

of suppliers are Italian SMEs

71%

71%

of suppliers are UK SMEs

71%

71%

of suppliers are U.S. SMEs

87%

87%

of suppliers are Polish SMEs

Impact of domestic small and medium-sized enterprises (SMEs) on the number of suppliers based in each country

2020 DATA

 

To develop the Group’s supply chain in line with its Sustainability Goals and Sustainability Plan, Leonardo is involving its suppliers in initiatives and management models – LEAP, LEADS, the Supply Chain Sustainability Manifesto that focus on key aspects such as digital transformation, safety, cyber security, and social/environmental responsibility. These efforts generate a significant industrial and employment benefit across the entire supply chain.

For example, leveraging new digital technologies results in the creation of a ‘collaborative digital ecosystem’ with SMEs, accelerating the development of new products and improving the efficiency of operations along the supply chain and the provision of services to customers. Collaborating with the supply chain is essential to develop a sustainable and circular shared model. This is particularly relevant for the AD&S sector, which is characterised by very long innovation and development cycles.

Leonardo supports the supply chain with specific training activities to keep suppliers constantly up to date on strategic issues with the greatest impact, while asking them to observe a series of important requirements.

All suppliers are required to share and observe Leonardo’s environmental, ethical and social responsibility principles, such as the Modern Slavery Act, by viewing and accepting its Code of Ethics, its Supplier Code of Conduct and the guidelines of its Organisation and Control Models, and by complying with its economic, financial and legal ethics and anti-corruption requirements. These requirements are verified during the supplier pre-qualification phase and monitored throughout the supply relationship.

Leonardo assesses and classifies its suppliers using a structured process based on the following criteria: turnover; supply risk (difficulty in securing an alternative supplier); financial health and dependence on Leonardo; technical and management skills; sustainability and performance (quality and punctuality of deliveries). Specific risk mitigation actions are defined for strategic/critical suppliers (which are those suppliers with high-volume turnover and high-risk of supply), and for suppliers with a high ESG risk.

The selection process and the supplier relationship are managed entirely through the Procurement Web Portal as a guarantee of transparency and information traceability.

Monitoring activities (documents, inspections, on-site audits) Improvement plans Pre-qualification / qualification revocation Black list Registration on the procurement portal 1 Pre-qualification 2 Qualification 3 Selection 4 Management and monitoring 5 Evaluation of ethical, legal, social and economic- financial requirements Assesment of technical and organisational capacities, of health and safety, and of environmental management Acceptance of the Code of Ethics, Anti-corruption Code, Supplier Code, Organization Management

In 2020, Leonardo conducted supplier investigations based on ethical and anti-corruption considerations, resulting in the initiation of specific proceedings, including 114 pre-qualification revocations at contract renewal and 103 pre-qualifications denied to new suppliers.

CONFLICT MINERALS

Leonardo acknowledges and promotes ‘conflict minerals’ regulations, where relevant, and particularly the provisions of the ‘Dodd-Frank Wall Street Reform and Consumer Protection Act (2010)’ and of applicable European regulations. ‘Conflict minerals’ include tin, tungsten, tantalum and gold.

As required by Leonardo’s Supplier Code of Conduct, suppliers must not establish relations of any kind with organisations involved in human trafficking, child labour or forced labour in general. Suppliers undertake, through appropriate measures and due inspections, to identify the presence of minerals (tin, tantalum, gold and tungsten) sourced from conflict zones (such as the Democratic Republic of the Congo) in the products, components, parts or materials they supply.

Leonardo has issued a Group Policy to define the general principles and rules of conduct to be observed by suppliers covering the provision of ‘conflict minerals’, with the aim of strengthening the Group’s commitment towards a sustainable and responsible supply chain. Moreover, for strategic suppliers, it has introduced an ESG assessment, which envisages additional audits for risks associated with the management of ‘conflict minerals’, and mitigation actions in line with Leonardo’s policy.