Siemens: A Good Sustainable Development

Presentation written by:

Mélanie COMBETTE, melanie.combette@gmail.com

Flora GIMBERT, flora.gimbert@gmail.com

Presentation supervised by: Assoc. Prof. Dr. Elena M. BARBU, elena.barbu@univ-grenoble-alpes.fr

Introduction

Siemens is a global company focusing on the areas of electrification, automation and digitalization. Since many years, Siemens is involved in sustainability and has taken social and environmental commitments and has set up respectful business practices. Siemens has also developed many projects and programs to convey their values and commitments all around the world.

Sustainability is one of the most important value of Siemens, all its strategy is based on it and is represented by three words: responsibility, excellence and innovation. Their goals are directly in relation with the UN’s 2030 Agenda for Sustainable Development and try to balance people, environment and profit in their strategy.

In this analyze, we will see to what extent, Siemens perform so as to maintain a balance between their economic development, the environment and society.

First of all, we will talk about the social action of Siemens, then its involvement in the protection of the environment and to finish its positive business practices.

Presentation of the firm

Name: Siemens Aktiengesellschaft

Address (head office):

Werner-von-Siemens-Straße 1

80333 Munich Allemagne

Activity:

Siemens is a leading supplier of efficient power generation and power transmission solutions and a pioneer in infrastructure solutions as well as automation, drive and software solutions for industry.

Several elements of financial situation: Siemens stock exchange price is €110.72.

Turnover: Siemens generated revenue of 83.0 billion euro and net income of 6.2 billion euro.

Employee: the company has around 372,000 employees worldwide.

International activity: Siemens is present in 200 regions/countries of the world.

Innovative products: Our R&D activities are ultimately geared to develop innovative, sustainable solutions for our customers.

Style of leadership:

According to what we have read during our researches for this work, we think that Siemens tries through its leadership to convey its values like diversity, equality, and sharing. Indeed, they give the chance to all their employees to express themselves and to contribute to the evolution of Siemens. However, as the most important part of the global company, they keep a hierarchical structure with a CEO and a board of managing members.

They also share their experience in leadership with the CEO program which gives the opportunity to 6 talents each year to follow a leadership development program which is sponsored by the CEO of Siemens, Joe Kaeser.

Quality processes:

Quality is an essential component of the Siemens brand. Siemens vision of quality is this: “Siemens stands for world-class quality “ and it is based on the following principles:

    • Quality is determined by our customers.
    • Quality means understanding and exceeding customer expectations.
    • Quality starts at the top.
    • Quality is a value of all employees.
    • Quality needs to be integrated into products and processes at an early stage.
    • Quality is a matter of measurement and transparency.
    • Quality needs continuous improvement

People/ social actions (philanthropy)

Siemens bases its commitments on three pillars: access to technology, access to education and sustaining communities.

Health management

The company Siemens, thanks to its founder Werner Von Siemens is a pioneer in the field of health management. He understood that the motivation and performance of his employees, particularly their health, were fundamental to the operation and success of the company.

Siemens pursues this principle of managing the health of its employees by reducing workplace risks and creating healthy work environments.

Siemens in the health service as in all of its other services goes beyond what is required by law because in their eyes investing in the health and well-being of its employees is considered as an investment in the future .

Siemens decided to set up a company-wide program to constantly improve health management. The group even has a healthy label. This internal quality label for sustainable health management ensures the implementation of a set of measures.

Their ultimate goal in sustainable health management is to certify all the leading countries in the world by 2019.

Through this health management program, Siemens also tries to minimize psychosocial risks at work and strengthen the individual capacity of employees to cope with stressful situations in the workplace.

In parallel with and in addition to this health management program, they launched a “Life in Balance” program that allows countries to tailor the program to specific needs, which helps to manage stress more effectively.

This program has even been rewarded in Siemens company located in Belgium.

We can thus deduce that the Siemens group is concerned about the health and safety of its employees in their workplace. It promotes physical, mental and social well-being through a range of activities based on demand and the workplace. It wants to prevent health risks at an early stage and adopt healthy behaviors by addressing topics such as psychosocial well-being, physical activity, healthy eating and medical care.

Safety

Siemens is also well-known for the prevention of health risks as described above, as well as accidents and injuries. This is a key element of the company’s sustainable strategy.

In addition, workplace safety and technical risk management contribute to the protection of employees, thereby enhancing Siemens’ competitiveness.

To ensure the sustainability of success, Siemens verifies the implementation of international and regional regulations. Indeed, the Siemens group as part of its risk management, identifies and assesses the hazards and risk of the site and the user thus allowing to put in place risk mitigation concepts and strategies.

To do this, Siemens company has designed a “Zero Harm Culture” program to change the way of thinking and behaving in a sustainable manner, thereby promoting a targeted cultural change. This program is framed by 3 principles: “Zero Accidents – It’s Possible! Health and safety – no compromises! We take care of each other! Our employees are our greatest asset. ”

At the same time, the group has developed the concept: “Zero Harm Culture @ Siemens Country” which makes companies and countries improve local security through various activities according to local needs and requirements.

The company is ready to make no compromises on workplace safety. As a result, it has implemented actions and programs tailored to companies, particularly on construction sites and in projects. The company is cautious when it uses subcontractors and sets very strict requirements for safety in the workplace. In order to ensure compliance with these requirements the company requires a risk assessment of each construction site and projects.

Diversity

Siemens is committed to ensuring the diversity of its workforce. Indeed, Siemens wants to set up an open work environment for all employees regardless of their ethnic, cultural, expressions and other backgrounds.

Siemens is very committed to promoting gender equality. This was accompanied by the signing of the United Nations Women’s Empowerment Principles (WEP) to strengthen the position of women in the workplace (Figure 1).

They are making different efforts to increase the share of women in the company, and we can see that the share of women in global management has almost doubled in the last ten years. Siemens wants to exceed the legal requirements in terms of employability of women at all levels of the company. Siemens AG intends to increase the percentage of women in its management positions.

The concept of diversity advocated by Siemens is not limited to gender equality. They want to promote diversity and want employees to be themselves. The Siemens company therefore tries to adapt to the different lifestyles of its employees by offering flexible hours or childcare services but especially spaces adapted for employees with reduced mobility.

The inclusion atmosphere created by Siemens improves the business climate. Employees feel more involved and motivated.

Education:

Siemens asserts itself as the most important provider of professional education through an investment of 239 million euros per year in training. For instance in 2016, they have served around 11 000 apprentices and students in 22 countries. They put the access to education as a starting point to guide their actions.

Their point of view of education in the company can be seen through Siemens Professional Education (SPE), a program to prepare future employees to adapt and improve digitization in the industry.

Each year, Siemens invites 30 promising young talents to integrate their apprenticeship program started in Berlin to offer them the opportunity to participate in some trainings for 3 years and a half in order to acquire high quality theoretical and technical knowledge for their future career. After their final exam, they go back to their home countries to represent Siemens in their local Siemens site and start their professional life.

It is a way for Siemens to reward the new generation and to encourage future talents.

The SPE also offers part time and distance learning opportunities. This program is intended for all european students. New training programs have also been launched in Egypt, Saudi Arabia and Indonesia.

Through this program they also support refugees, by preparing them for professional education. This innovative program offers six special training courses and three-month internship to enable them to find good job. They planned to allow 100 refugees to access this program in 2017. They also reserved a quota for people coming from disadvantaged backgrounds or for people with disabilities.

Siemens is also involved in partner school programs in Germany in order to ensure the interface between school and job.

The fact that Siemens builds more and more training centers abroad allows the company to expand its influence and to make people ready to face Siemens challenges all over the world.

To finish, we can say that Siemens put also an important budget in the training of the current employees generation in order to increase their skills and qualifications (270 millions euros invested in 2016 which represents 775 euros per employees). Besides, an intranet social-media enables the employee to share their knowhow with co-workers all around the world. Finally, two programs called “Learning Campus” and “Siemens Leadership Excellence” (SLP) allow Siemens’ employees and particularly current and future executives to have an access to seminars, workshops, coaching and train them to prepare global new challenges.

Corporate citizen

Since the birth of Siemens company, they try to contribute to sustainable development all around the world by supporting the access to technology and knowledge for everybody. To ensure this commitments, they donate 26 million euros annually in order to improve:

 The access to technology:

By improving the key competencies in digitization of each other.

 The access to education:

Through an important education program called Siemens Professional Education Program (SPE) which focuses on science, technology, engineering and mathematics as we said before. Siemens tries to make the education accessible to everybody since they are convinced that education will give us a better future and decrease the inequalities. That’s the reason why they

increase the number of employees in science and technology and also why they create the curiosity project which attract students to begin science studies.

They also promote technology among people coming from disadvantaged background by opening the Mandela School of Science and technology in Mvezo (South Africa) to combat inequalities and poverty.

 A humanitarian aid:

Siemens provided technical and financial aid to population after natural disasters. We can also talk about the Sanjeevan Mobile Clinic developed by Siemens which is a mobile healthcare clinic fully equipped with all the diagnostic facilities in poor countries. Since 2012, 3 mobile clinics have been created to serve around 80 000 patients in India.

CASE STUDY : ASHA PROJECT

In 2012, Siemens started a big project called Asha project which enhances that we can realize incredible things thanks to technology and will. This project improves daily life of 17 villages in India (figure 2).

Siemens comes to each village and brings materials and knowhow in order to help people to be independent and to progress. These initiatives can concern electricity, water conservation, income generating activities, health education sessions and trainings. For instance they set up solar panels in order to bring electricity, they install filters to allow the population to drink clean water and to improve agriculture, they install toilets and they enhance how it is important to go to school by allowing girls to have an access to education.

This project doesn’t only benefit to the village but to all the country

This table shows the expansion of the project between 2012 and 2016 since it benefits to more and more people and it allows to bring more services and knowledge to change life of population in need (Table 1).

Arts and culture

The Siemens Art Program has been created to link the freedom in technology and the freedom in the art. This program is based on three pillars:

 Visual Arts

They want to use contemporary art to show the challenges that our current society has to face but also the solution that can be proposed in order to answer positively these main issues.

Music

Siemens supports contemporary types of musical expression in order to encourage the next generation and the future innovative and creative talents all around the world through some competitions (Siemens Opera Contest) and institutions (Opera Garnier Paris, Carnegie Hall New York, etc.).

 Cultural education

This aspect is very important to encourage the intercultural dialogue. This is also a development program for future managers so that they cultivate intercultural dialogue, innovation in the management (Siemens Cultural Empowered for New Executives).

Environment

With its environmental portfolio, Siemens tackles major challenges, such as climate change, environmental pollution and resource scarcity. Somes figures of the environmental portfolio : the turnover of Siemens’ environmental portfolio amounts to approximately 39 billion euros and their customers saved 570 million tonnes of CO2 in 2017 through innovative solutions from Siemens’ environmental portfolio.

Decarbonization

Climate change is real. Siemens offers sustainable and innovative solutions.

Investments in technologies prove their effectiveness. Indeed, the competitiveness of Siemens Group customers has increased and contributes to the preservation of the environment.

Siemens is doing a lot of researches to make these technologies evolve towards more energy efficient and resource efficient technologies.

As a result, the environment and quality of life of individuals benefit from this.

Carbon neutral operation

In September 2015, Siemens has been the first global industrial company to commit towards carbon neutrality by 2030. To achieve this, it must invest about 100 million euros in energy efficiency projects in our production facilities and buildings until 2020.

Some figures of the carbon neutral operation:

    • 60% of German sites use green energy
    • around 25% of CO2 emissions reduced since the launch of Siemens CO2 neutral program.

Siemens leads the way towards a green business. It focuses on 4 levers: energy efficiency, decentralized energy systems, smart electric mobility solutions and green electricity purchases in order to be a carbon neutral company.

Conservation of resources

The environment protection

Siemens has put a lot of emphasis on protecting the environment since 1971. Environmental management is simply a standard for the Siemens group.

The group is trying to minimize its negative impact on the environment through the use of technological advances and innovative solutions. Similarly, the most valuable raw materials and therefore the most expensive are used economically: This allows the group to sustainably maintain its competitiveness.

The program “Serve the environment”

Through its “Serving the Environment” program, Siemens instills and reinforces the sense of responsibility and autonomy of employees and customers. We are all concerned with energy and water consumption, waste generation and emissions.

In this program, the group has defined objectives and activities in order to reduce the negative environmental effects on all Siemens sites.

Siemens aims for 4 targets in this program by 2020 to minimize the environmental impact of the group’s operations:

Waste

“Zero waste to landfill by consistent prevention of landfill waste and reduction of our material consumption”.

The Siemens site in Newcastle is an outstanding example as 100% of the waste on this site is recycled.

Air

“100% emissions controlled by replacing ozone-depleting substances and reducing solvents”.

Water

“100% local water strategies by implementing risk analyses and application of the Siemens Water program”.

Energy

“6% high energy efficiency by using energy management systems at sites and adaptation of the purchasing strategy”.

The Siemens group has a very high recycling rate exceeding the legal requirements since it is 90%.

Siemens makes smart waste management. Indeed, the group is committed to preserving resources and materials over the long term. He does not want to contribute anymore to the burial of the waste. It reuses, regenerates and recycles products that sustainably preserve planet resources. It makes the “closing cycles of materials”. This allows them to develop profitable business models such as renovation, energy contracts and 3D printing.

Siemens is committed to responsible water management. Siemens focuses on water management in the present and the future. Climate change requires a management of water resources turned towards the future. Millions of people on earth are affected by floods and others by the scarcity of this essential resource. Siemens, for all of its sites, ensures that the production has the least impact on local water resources. The group exceeds the requirements expected in terms of law, by providing different solutions for access to clean water. Since 2008, Siemens has pledged to support the United Nations CEO Water Mandate

Siemens manages the emission controls. Siemens is also concerned about the quality of the air and more particularly the problem of emissions that deplete the ozone layer. The WHO finds that city dwellers, C02 emissions but also industrial have environmental effects.

For example, the Siemens group controls volatile organic compounds and substances. While leading a fight for the reduction of CO2 emissions. Siemens is therefore a contributor to the improvement of air quality. In parallel, Siemens has developed a new software that can accurately show the level of air pollution in cities.Siemens is committed to the way of biodiversity conservation. Siemens is trying to minimize the negative impacts of these activities and to promote projects for the recovery and protection of the environment. Siemens is constantly researching and developing new technologies to avoid unnecessary consumption of resources. Siemens being present in Australia is trying to provide solutions to better understand the complex processes of the Great Barrier Reef ecosystem, thereby contributing to the preservation of one of the natural wonders. Siemens emphasizes ecosystems as they play a key role in the purification of water and air, which directly impacts the health and well- being of all.

Product stewardship

Siemens tries to be as innovative as possible in the compliance and improvement of environmental standards as in the development of their products.

The program “Product Eco Excellence”

It is therefore implementing a program called “Product Eco Excellence”. The latter guarantees the safety of certified products safe for Human and the environment and the group tries to keep the consumption of materials and energy as low as possible (figure 3).

Their program aims to achieve the goals of minimizing the environmental impact of Siemens products by 2020:

Siemens is responsible for the management of chemicals

Many substances are used in the manufacture of products and Siemens ensures that humans and the environment are protected from the harmful effects of these substances.

Siemens lists the substances to be declared for each product, even those prohibited by law. Transparency about substances including their nature and quantity in products is important. And even more so when the group reuses and recycles these materials. All content must be identified.

Through its proactive management of chemicals, Siemens can ensure compliance with internal policies and customer requirements for substance reporting.

Siemens implicates these suppliers to ensure the implementation of legal requirements such as REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) or RoHS (Restriction of Hazardous Substances).

Siemens is concerned about its ecological footprint.

The group thus found a way to determine the environmental footprint of these products via Life Cycle Analysis (LCA). These are used to analyse and optimize the environmental impact of products and include all stages of the product life cycle (from design to application).

Siemens is committed to creating environmental product declarations for these customers to ensure the transparency of the content and the environmental impact of the products.

Siemens is interested in the scarcity of resources.

The company uses a lot of materials and substances in their products so making material selection is very important and these decisions can have an impact on future business risks such as scarcity of resources, legal requirements and environmental damages.

Siemens uses an evaluation method to help product developers assess the “critical” potential of materials and take them into account when developing the product.

Example of critical material:

Beryllium: critical material due to toxic hazards and availability risks.

Platinum: critical material due to availability risks.

Responsible business practices

Siemens is committed to encourage growth in some countries through the “Siemens-Business to society program” which measures their contribution at different scales in a country: economic growth, job creation, infrastructures and industry, environment, quality of life and socio- economic development for a more equitable global economy.

Siemens doesn’t only help the other countries to perform in order to create better societies, they also integrate responsible business practices in their production and daily behavior based on integrity, fairness, transparency and responsibility.

Sustainable supply chain

Siemens works with more than 100 000 suppliers on almost 160 countries, that’s why they have to create some rules in order to control them and to make sure that they can collaborate with transparency and trust in their supply chain.

That’s the reason why they impose their suppliers and partners to respect a Code of Conduct with some principles regarding :

 The legal compliance

They have to be in agreement with the actual law of the system.

 The prohibition of corruption and bribery Corruption and bribery are strictly forbidden.

 The fair competition, the intellectual property rights

Suppliers and third party intermediaries have to respect national and international competition laws and don’t have to fix the prices of the market with the competitors.

 The conflicts of interest

No conflicts of interest which can influence or destroy business relationships.

 The respect for the basic human rights of employees

The employees’ treatment doesn’t depend on their skin color, race, nationality, social background, sexual orientation or religious conviction. They are equals.

 The prohibition of child labor

The employment of workers under the age of 15 and 14 for developing countries is strictly forbidden.

 The health and safety of employees

Suppliers are responsible for the safety of their employees, they have to provide some trainings to educate them from the potential issues. Suppliers have to take the precautionary measures adapted against accidents or health issues.

 The environmental protection

Suppliers have to use a reasonable occupational health and safety management system and to decrease their impact of their environment.

 The transparency in the supply chain

Siemens has to promote the Code of Conduct among its suppliers and to ensure non- discrimination regarding the supplier selection and treatment.

 The conflict minerals

They have to be sure that the purchase of raw materials by their suppliers doesn’t finance armed groups (by obtaining certifications).

Siemens puts some effort to make sure that suppliers respect the Code of Conduct and stays in relation with their main values through a team involved in the supplier selection and qualification. After their selection, they realize regularly the supplier evaluation (including for instance audits at Siemens’ suppliers sites) and reward them by encouraging supplier development.

In the case that an audit shows that the supplier doesn’t respect some parts of the Code of Conduct or some commitments, Siemens can engage corrective actions or end the supplier relationship in case of major offences.

Compliance

Compliance is the fact that Siemens ensure that its activities, internal rules and a business respect the law and particularly the business conduct guidelines. They create a compliance system based on three levels: prevent, detect and respond (Figure 4).

Indeed, Siemens use many tools and channels to be sure that their business is clean:

First of all, they have different reporting channels with internal and external whistle-blowers.

They also use the “tell us” compliance reporting system, which is a hotline to inform about potential compliance violations online, by phone, anonymously, in several languages and available all day long.

For instance, in 667 allegations reported have dropped investigation which represent around 217 disciplinary measures for compliance violations.

The last channel to detect misconducts among Siemens company and its suppliers is the “ombudsman” that enables employees and the third parties to confide anonymously improper business practices that they can observe around them in the company.

Siemens has a special directive which protects employees that give the alert in case of misconducts to protect them from retribution. This huge system for compliance ensure transparency and clean business which is an important value of the company.

Human rights

The diversity is one of the most important value that Siemens protects and claims as a wealth. People that work together for Siemens are considered equal and free. Each of them have to respect personal right and personal dignity of everyone, this principle is written in their Business Conduct Guidelines and is the same for employees, partners, third parties, clients, etc.

As Siemens has took part in the Global Compact since 2003, it is now responsible for the diffusion of the ten principles of the United nations Global Compact among its sphere of influence concerning human rights, environment, anti-corruption, and labor.

Negative aspects

In November 2017, the medias like “Le Monde” announced the removal of around 7000 employees in the energy department. Indeed, the decrease of the competitiveness of their gas power plants forces Siemens to delete some jobs. The big issues is the fact that Siemens has signed in 2010 a guarantee against the layoff that ensure Siemens’ employees to keep their job. Unfortunately, the group announced that because of the economic situation of the company, they will not be able to respect this guarantee given to each employee 8 years ago, this new caused an important social movement and agitated discussions between the HR department and the union representatives.

Another question can be ask concerning the promotion of education in Siemens. Indeed, the SPE program offers trainings to acquire professional skills to apprentices which come from all around the world. In reality, we may wonder if this program is not only made to benefit for the most important part from Siemens (training centers are built all around the world each years). Is it really to educate people and to enable them to face the professional world or it is to expand and ensure Siemens influence in the future? The future will help us to answer this question in order to know if it was a business strategy or a real philanthropic action.

Conclusion

Siemens which is one of the world’s largest producers of energy-efficient, resource-saving technologies, has decided to use innovation to serve equality in a better world.

Siemens is a leading supplier of systems for power generation and transmission as well as medical diagnosis.

The company works on philanthropy on different pillars like diversity, education and health management through different actions, projects and programs with the common aim to ensure equality, better life, and development for everybody. Siemens attaches an importance to environmental problems too and tries to limit their emissions by offering sustainable and innovative solutions.

It integrates also responsible business practices in their production and daily behavior based on integrity, fairness, transparency and responsibility.

Even if we can be a little lost in actions because of their huge number of commitments and types of involvements all around the world, they are a real example of a global company that manages to balance business and responsible behavior.

Appendices

Figure 1: United Nations Women’s Empowerment Principles

Figure 2: Asha project,

Table 1: Expansion of Asha project

Figure 3: Product Eco Excellence Program

Figure 4: Compliance system

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