We are committed to responsible entrepreneurship both within the Group and in our supply chain. STIHL aims to maintain a partnership with its more than 10,000 suppliers based on shared values and goals. In return, we expect high standards of cooperation, but also offer support to achieve this together.
In 2024, there were no material changes to the way procurement is organized at the STIHL Group. The STIHL founding company plays the leading role within the purchasing network and defines the strategy for the entire Group. By centrally managing our requirements, we ensure an efficient supply of raw materials and resources.
Internal guidelines and standards determine our purchasing strategy by specifying uniform processes and procurement principles. The Head of Purchasing, who reports to the STIHL AG Executive Board member for Manufacturing and Materials, works with the respective senior managers and the purchasing managers of the production companies to develop the strategy. Procurement teams from Purchasing, Quality Management, and Procurement Logistics are responsible for the Group-wide implementation of the strategy and for making sure that our procurement principles are followed.
Commodity managers control all activities relating to individual product groups. Our lead buyers maintain contact with suppliers. They work with the commodity managers to select suppliers for individual products from the product groups and negotiate prices. Commodity buyers round out the structure. They supplement the purchasing strategy for product groups with specific requirements and criteria for regional markets.
As a global organization, the STIHL Group also buys goods and services around the world. Within our production network, we strive to procure raw materials and upstream components on the continent where they are actually processed whenever possible to keep transport distances and CO2 emissions to a minimum.
(production companies only) – values rounded
STIHL sources a wide range of materials from suppliers, including raw metals and plastics, along with electronic and electromechanical components. STIHL manufactures many key components of its tools in-house. This above-average vertical integration enables us to safeguard our expertise in key areas of technology and our high quality standards. The lion’s share of our indirect purchasing needs is attributable to the operation, maintenance, and repair of our equipment, along with IT services and technical services.
by type of material¹ – values rounded
In production, we aim to use resources as sparingly as possible. In 2022, we initiated a strategy process for the use of raw materials that are critical from an environmental perspective. We have introduced targeted measures for implementation across our three product groups: magnesium, battery cells, and textiles. STIHL has joined the International Magnesium Association to broaden and share our knowledge and to network. We have also audited one of our magnesium suppliers, and audits are planned for other suppliers. With regard to battery cells, we are using the project findings to implement the EU Battery Regulation (EUBR) throughout the Group. New requirements for textiles will be implemented in our commodity strategy. We are currently working on a template for commodity strategies in all areas.
We have also addressed the requirements in connection with supply chain management, raw material procurement, and substance bans. We want to either replace environmentally critical raw materials or procure irreplaceable ones as sustainably as possible. In addition, we plan to reduce the use of potentially hazardous process chemicals in our production and, over the medium term, in our supply chain to the greatest possible extent. Our projects in this context include the establishment of a Group-wide chemicals management system for production processes.
The sustainability of our supply chain depends crucially on which suppliers we work with. STIHL has expanded the purchasing criteria (price, quality, and logistics) to include sustainability-oriented aspects. Quality Management laid the foundations for this in the “Sustainable supply chains” project from 2020 to the end of 2022. Sustainability has been an integral part of STIHL supplier management since the beginning of 2023.
One milestone of the project was a risk exposure analysis of all suppliers to identify the necessary precautionary measures. As part of the analysis, we classified suppliers into four risk categories: low, medium, high, and extreme. In addition, we introduced a cloud-based platform that we can use to check and monitor our suppliers’ conformity with the relevant sustainability and compliance standards. The platform is designed to increase our suppliers’ transparency. It is currently in use at the founding company and all production companies.
In the reporting year, the platform provider adapted the content of the questionnaires on environmental protection, human and labor rights, anti-corruption and anti-bribery, occupational safety, and responsibility in the supply chain so that they are better aligned with regulations such as the LkSG. STIHL has developed an internal reporting tool to provide all employees in procurement with access to the platform. We have invited all series production suppliers to join the platform, as well as nonseries suppliers for whom we exceed a certain purchasing volume and suppliers that we assign to a higher risk category. By the end of 2024, 80 percent of those invited had provided information on the platform.
Sustainability is already a core aspect in the (pre-)selection and onboarding of suppliers: The Code of Conduct for Business Partners is a mandatory component of all supplier contracts (see “Code of conduct for suppliers”). An international reporting system that takes into account input such as the information on our internal platform is in place for existing suppliers. We systematically audit suppliers and, if necessary, help them to meet our sustainability requirements. In cases where this is not successful, we first try to implement concrete changes in dialog with the supplier in accordance with the principle of “empowerment before withdrawal.” If this is not successful, STIHL may end the cooperation. We report violations by our suppliers to BAFA as part of the LkSG report.
Since 2021, STIHL has been involved in SustaiNet, a corporate network focusing on sustainability in the supply chain. In 2024, the focus was on regulation, such as the effectiveness review in accordance with the LkSG and the EU requirements for sustainability reporting, and how it can be efficiently integrated into the organization. Discussions were also held regarding sustainability audits of suppliers.
In 2024, our internal Sustainable Supply Chain (SSC) network was also further consolidated. A community of sustainability enthusiasts has formed in the SSC network to promote the topic in the procurement departments and production companies. The participants discuss the complex regulatory environment and other related topics at regular meetings. In the reporting year, those responsible also addressed relevant legislation such as the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR). Although some of these laws are already in force or will soon come into force, there is a lack of guidelines that enable companies like STIHL to implement them in a legally compliant manner. In addition, STIHL’s own sustainability audit was jointly developed further and assessment standards were defined.
Our supplier management contributes to achieving the UN Sustainable Development Goal “Decent work and economic growth” (SDG 8) by promoting minimum social standards and addressing issues such as respect for human rights, the prohibition of child labor, and the promotion of fair and safe working conditions.
When building a sustainable supply chain, we expect the active support of our suppliers. Our code of conduct for suppliers has been in place since 2015 and outlines STIHL’s principles for sustainable and responsible business practices. In 2021, we revised the code with regard to social, environmental, and governance aspects. It now includes clear standards that are essential for our partners and serve as our evaluation criteria.
The code of conduct is based on the principles of the United Nations Global Compact and the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, and has been adopted by the Executive Board. It not only requires our suppliers to respect human rights and ensure fair and safe working conditions, but also to commit to actively protecting the environment, for example by conserving resources. The code also contains provisions stating that suppliers are to prevent discrimination and corruption, and ensure data protection. We update the code regularly so that it always meets our own internal requirements as well as legal requirements.
By the end of the reporting year, all members of the SSC network had undergone training on the content and application of the code. The next step is to train all employees in purchasing and quality assurance for suppliers and to raise awareness among suppliers.
We monitor our suppliers’ commitment to sustainability in a number of ways. These include our internal platform, the code of conduct, and sustainability audits, each of which form a prerequisite in the approval process for new suppliers and are also part of the requalification audit for existing suppliers. STIHL also publicly honors the strong ecological and social commitment of our suppliers. In 2024, we named one of our partners as “Sustainability Supplier of the Year” for the second time.
