Unlike for manufacturing companies, there is no comparable relevance for the supply chain, but rather the focus is placed on the quality of the services offered and the functionality of the infrastructure required for this. Irrespective of this, it is crucial that business partners and suppliers are selected carefully. The Group companies each have their own procurement management.
Fraport compels business partners and suppliers to comply with its Supplier Code of Conduct as part of its General Terms and Conditions (GTC), depending on the local conditions. The Fraport Supplier Code of Conduct details how to treat employees correctly, including respecting human rights, environmental and climate protection, and integrity in the course of business, for example the prohibition of corruption and bribery. A violation of this code may result in the termination of the business relationship. A contractual penalty may be imposed and a claim for lump-sum damages may be raised in the event of antitrust violations and serious misconduct. Business partners and suppliers must also undertake to observe these principles in dealings with their own suppliers.
Fraport AG undertakes to focus on sustainability criteria when purchasing products and services. In addition, the company was one of the first in Hesse to sign a target agreement initiated by the Hessian Ministry of the Environment, Climate Protection, Agriculture and Consumer Protection in 2016. Consequently, social and ecological criteria are considered in purchasing decisions in addition to economic criteria.
Fraport AG has a heterogeneous requirement structure. Its requirements range from architectural services to the construction of airport infrastructure including maintenance, office materials, and IT services to aircraft push-backs. More than 60% (approximately €528 million) of Fraport AG’s order volume of approximately €874 million was awarded to companies in the Rhine-Main region in 2018. Around 98% of the order volume was awarded to suppliers and service providers based in Germany, approximately 1% to those based in the EU and about 1% to those based in the US and Switzerland. As there are comparable legal standards in these countries, in particular in relation to respect for human rights (see page 29) and anti-corruption and bribery matters (see page 30), the first level of Fraport AG’s supply chain is not deemed critical. Although orders with business partners and suppliers based outside the aforementioned countries seem insignificant in relation to the total order volume, of which they make up less than one percent, business relationships with suppliers from risk countries, known as the “Primary Impact Countries” (in accordance with the FTSE4Good Index), in particular require particular care. For this reason, an examination of the first level of the supply chain by contractors’ country of origin is an essential part of regular monthly reporting for the “Central Purchasing, Construction Contracts” central unit.
If contracts for product groups that include suppliers or service providers from risk countries are to be put out to tender and awarded, the potential contractors will be reviewed depending on the order value. This also applies to orders for work clothes, for example. Fraport periodically checks in which countries production sites are located. If a business relationship is started with a supplier from one of these countries, sanction lists are extensively checked in advance. Sanction lists are official lists of people, groups or organizations subject to economic or legal restrictions. If there are irregularities, further checks are planned which may result in the withdrawal of an order.
Fraport AG has fulfilled the legally compliant assignment of external personnel based on independent service and work contracts, as opposed to temporary work, by implementing external staff compliance within the framework of a directive on assignment and deployment of external personnel. The directive includes a mandatory inspection process in determining different types of contracts and reduces the risk of false service or work contracts or covert contracts for temporary work. This review process also includes the assignment of external personnel by Group companies for Fraport AG. The Group companies independently ensure the legally compliant assignment of external personnel by implementing suitable processes.
A separate procurement process via the Group company Fraport Ausbau Süd was defined for the Expansion South project, in particular Terminal 3 in Frankfurt, due to the size and complexity of the project. By submitting an offer in this procurement process, building companies are obliged to comply with all requirements in the Posted Workers Act (Arbeitnehmer-Entsendegesetz, AEntG) and the Minimum Wage Act (Mindestlohngesetz, MiLoG), to make contributions to the collective bargaining parties’ joint facilities, and also to only engage subcontractors or other third parties that meet these requirements. The Fraport Supplier Code of Conduct also forms part of any agreement.
A due diligence review process was defined for purchases made for the construction of Terminal 3, which has since been carried out depending on the order value. In addition to mandatory checking of sanction lists and company information, this includes extensive research online on potential business partners before business relationships are started.
The five largest suppliers to Fraport AG according to order volume are the companies FraSec, FraGround, Total Mineralöl, FraCareS, and Lüftungsanlagen- und Gebäudetechnik LAG. Fraport AG wholly owns the Group companies FraSec, FraGround, and FraCareS. These mainly involve ground services and security services. As fully consolidated Group companies, they must adopt the Code of Conduct for employees and are also obliged to comply with the Group Compliance Management System (CMS) policy. These guidelines include instructions to make the Supplier Code of Conduct part of the General Terms and Conditions and to use it insofar as this is possible for the Group companies pursuant to national law. If such inclusion in the General Terms and Conditions is not possible, or is only possible if the Supplier Code of Conduct is modified, the local management shall inform the department dealing with compliance at Fraport AG. The company Total Mineralöl supplies the Frankfurt site with fuel and is subject to the aforementioned conditions, as is the case for Lüftungsanlagen- und Gebäudetechnik LAG.
The international Group companies must also comply with all components of the Group CMS policy. This applies in particular to large construction projects such as the new terminal at Lima Airport. In Lima, compliance with the Fraport Supplier Code of Conduct is an integral part of the contract with the general contractor and its subcontractors. Fraport Greece also obliges its business partners and suppliers to comply with the Fraport Supplier Code of Conduct, which is an integral part of the contract with the general contractor for the expansion and modernization of the Greek regional airports. The Brazilian Group companies Fortaleza and Porto Alegre also include the Fraport Supplier Code of Conduct as part of the contract with the general contractor.