5.9 Business conduct
Nedap is committed to fostering a corporate culture that aligns with its values of integrity, responsibility, respect and professionalism, as outlined in its code of conduct. To foster this culture and address business conduct matters, Nedap has implemented a range of policies and practices that ensure compliance with ethical standards and legal requirements.
Our corporate culture also promotes open communication and trust in the value chain. Our ambition to create a collaborative and empowering work environment, where every voice is heard and decisions are made with integrity, extends to our entire value chain. We are dedicated to preserving good relationships with parties in our supply chain. We also audit our key suppliers to ensure their continued compliance with environmental and social legislation, and alignment with our norms and values. We seek to uphold our culture in order to avoid negative impacts to people involved and to preserve valued relationships in the value chain.
5.9.1 Corporate culture and business conduct
Corporate culture and business conduct policies
Nedap's code of conduct, is at the core of its corporate culture, which emphasizes transparency, personal responsibility and adherence to ethical principles. The code of conduct applies to all individuals involved in or associated with our company. All employees working for Nedap, including subsidiaries, are required to complete a mandatory training on the code of conduct within a specified number of days after joining the company. This training is delivered digitally through our Learning and Development platform and must be repeated every three years, with the system ensuring compliance through tracking, reminders and a procedure for escalating non-compliance to team captains.
In addition to the general code of conduct training, the Legal team conducts specialized sessions focusing on key areas of business conduct, including anti-bribery and anti-corruption, compliance and the company’s whistleblower policy. These training sessions are provided every other year to business units and significant teams to ensure that employees remain well-informed and equipped to uphold the company’s ethical standards.
Reporting mechanisms
At Nedap, employees are encouraged to speak up and challenge individuals whose conduct falls short of the company’s ethical standards. Non-compliance with the code of conduct can have serious repercussions for both individuals and the organization, and as such, Nedap places a strong emphasis on enforcing its ethical principles to prevent harm to stakeholders.
To support this, Nedap has established mechanisms for reporting and investigating misconduct promptly, independently and objectively. Employees are encouraged to address issues directly with colleagues when possible. However, if this is not feasible, they can report concerns to various individuals within the company, including team captains, business unit leaders, confidential counselors or members of the Board of Directors. In cases involving misconduct by a member of the Board of Directors, reports can be escalated to the chair of the Supervisory Board. Nedap also has a whistleblower policy, which is published on the website. This policy ensures that current and former employees, as well as external partners, have a secure and confidential avenue for reporting any (suspicions of) misconduct within the organization. The mechanisms to protect whistleblowers are covered by the policy as well.
Additionally, any irregularities involving share trading or price-sensitive information must be reported to the insider trading compliance officer.
5.9.2 Management of relationships with suppliers
Nedap's supply chain consists of a diverse range of suppliers, categorized into strategic, key and other suppliers. Procurement is carried out both by the procurement team and independently by the various business units. Strategic suppliers are the electronics manufacturing services (EMS) partners to which electronic hardware of Nedap products, or parts thereof, have been outsourced. Key suppliers are critical partners that provide essential components, materials or services that are critical for Nedap and/or suppliers, with a yearly direct spend with Nedap exceeding €500,000.
Specific management processes apply to strategic and key suppliers due to their significant impact and/or relevance. For all other suppliers, the General Purchase Conditions of Nedap serve as the default terms for all purchasing agreements. However, business units may, at their discretion, opt to deviate from these conditions. At minimum, the code of conduct of Nedap applies to all purchase agreements that are concluded based on the General Purchase Conditions of Nedap 2024.
Due diligence
We conduct due diligence checks to ensure the responsible selection of suppliers. The due diligence assessment is an essential part of the qualification process of every potential new strategic or key supplier. The criteria are based on expected corporate social responsibility (CSR) behaviors, compliance with the code of conduct and Nedap's (sustainability) goals. This qualification process is managed by the appointed Corporate Team specialist within the procurement team. The Corporate Team specialist is supported by the relevant field specialist(s) from the involved business unit(s). A potential new strategic or key supplier can only be formally contracted after meeting the minimal requirements, as set during the qualification process.
For other potential new suppliers, the qualification process is limited to capabilities that Nedap deems necessary. The capabilities are decided by members of the Corporate Team or the operational management of the business unit(s).
Management of strategic and key suppliers
Strategic and key suppliers have a significant impact on Nedap's supply chain performance, particularly in relation to hardware. Therefore, we take a proactive and comprehensive approach to addressing, controlling and monitoring our suppliers' performance on CSR topics.
Strategic suppliers
The Agreement of Strategic Suppliers incorporates a structured system for monitoring and evaluating the ESG performance of strategic suppliers. This system is designed in alignment with the Quality Assurance Agreement contract document and contains clear and mutually agreed upon key performance indicators (KPIs) on ESG topics for strategic suppliers. KPIs are monitored, addressed and reported by suppliers on a quarterly basis to ensure ongoing compliance.
The KPI system is in place to ensure the actions of the strategic suppliers are not only economically driven, but also focus on sustainable and socially responsible practices. This approach reflects the CSR principles and makes sure the code of conduct of Nedap is respected. It allows Nedap to track and understand how primary suppliers are progressing in terms of their commitment to CSR.
Key suppliers
Key suppliers vary in their nature and impact. Some may produce a small but highly specialized part or product specifically for Nedap, while others supply bulk products tailored to Nedap's needs. Consequently, the ESG impact of key suppliers differs.
Key suppliers with a significant impact on ESG topics follow a process similar to that of strategic suppliers, with mutually agreed upon KPIs that are monitored and reported annually.
Key suppliers with a low impact on ESG topics undergo the previously mentioned qualification assessment and are subject to periodic evaluations. If there are indications or concerns that a supplier is not meeting Nedap's standards or is failing to align with the requirements outlined in Nedap's code of conduct, members of the Corporate Team and operational management of the relevant business unit(s), and, where possible, the supplier, will discuss appropriate corrective actions.
Audit
We have implemented an audit program to ensure that strategic and key suppliers comply with the established requirements. The procurement team conducts audits of these suppliers in line with the Procurement Guidance Audits document. This means that CSR-related topics are audited in alignment with the set KPIs. In addition, a CSR audit can be done upon request. Our audit program ensures that all suppliers are reviewed at least once per three-year cycle.
Each audit is concluded with a formal audit report, which includes a checklist of findings and a timeline for addressing any issues identified.