and influence to
inspire positive change.
Goals and highlights
Responsible supply chain
|Goal*||Status||Progress to date|
|Goal*: Achieve more than 90% compliance rate with our social and environmental expectations across our top-tier suppliers||Status:
Progress to date:
|Goal*: Engage with at least 50% of our top-tier suppliers on environmental sustainability opportunities||Status:
Progress to date:
|Goal*: Increase engagement with all suppliers on social and environmental topics through assessment, training, and capacity building||Status:
Progress to date:
|Goal*: 80% of top direct suppliers by spend set science-based targets by 2025 and 95% by 2030||Status:
Progress to date:
- Adopted supplier engagement platform
- Featured ESG in our virtual Supplier Day
- Developed net zero supplier engagement strategy
*We aim to achieve goals by 2025, unless otherwise stated.
Lam’s business is part of a complex global supply chain that propels technology forward. Over the past few years, surging consumer demand has led to shortages of integrated circuits and sub-tier components throughout the semiconductor ecosystem, as well as increased cost pressures. As we meet these challenges, we continue to prioritize a responsible supply chain and continually monitor and manage risks. We are committed to fostering a supply chain that is ethical, resilient, and diverse. Our focus on critical issues in our supply chain include human rights, conflict mineral sourcing, and the environmental impact of climate change. As part of our commitment to driving industry collaboration, we are an active participant in several multi-stakeholder organizations such as the Responsible Business Alliance.
In 2021, we established a new foundational supply chain strategy and began our engagement with suppliers to make progress toward our 2050 decarbonization goal. As we begin this journey, we are committed to providing ongoing support and resources to suppliers that create shared value for our business, our value chain, our customers, and the world. When our suppliers succeed, Lam and our customers succeed, too.
Supply Chain ESG Strategy
Embedding ESG across our global supply chain
A responsible, ethical supply chain is integral to our business strategy. It builds resilience, makes us more competitive, and supports workers throughout our value chain. Over the past several years, we have refined our approach to ESG management and performance in our supply chain. In 2020, we introduced a strategic framework with six pillars:
Building upon this framework, 2021 was a year of establishing baselines, planning resources, and aligning around our 2025 goals and ambitions. For example, we:
- Created a baseline of current supplier performance using ESG criteria
- Leveraged advanced technology solutions for supplier surveys, risk assessment, and engagement
- Implemented an engagement strategy for communicating compliance, regulatory, and ESG challenges and trends
- Established a cross-functional approach to supplier diversity
- Identified opportunities within key commodities to address environmental impacts
Supply chain management
Proactively managing our
With a supply chain footprint that spans over 25 countries on six continents, Lam has a robust and active approach to engaging with suppliers, which begins with strong supply chain oversight and governance.
Our ESG Supply Chain team leads our compliance and risk assessment efforts to drive continuous improvement throughout our supply chain. We also maintain a cross-functional Supply Chain Committee comprised of representatives from our direct and indirect supply chain teams; environmental, health, and safety; ethics and compliance; and ESG. The Committee meets regularly to identify opportunities, develop plans, and provide input on the implementation of responsible supply chain initiatives throughout our business.
2021 Country of origin
direct material spend
We expect all third-party suppliers and contractors to operate in a legal, ethical, and compliant manner and abide by our Global Supplier Code of Conduct, which covers topics such as ethics, integrity, transparency, anti-corruption, conflict minerals, human trafficking, environmental sustainability, and social responsibility. Suppliers are required to acknowledge and agree to the Code during the onboarding process, and our standard terms and conditions of supplier purchase orders and purchasing contracts stipulate the Code as a contractual obligation. We expect our suppliers to adhere to the Responsible Business Alliance (RBA) Code of Conduct. This code is a set of standards that address labor and wages, environment, health, safety as well as ethics and management systems expectations in our supply chains. We expect adherence to our code of conduct and encourage our suppliers to become active RBA members and complete an annual RBA self-assessment questionnaire (SAQ).
Our supply chain at a glance
supplier families in
over 25 countries
from smelters in
human rights trainings
as stated in UK
Modern Slavery Act
How we evaluate suppliers
We use a risk-based approach to conduct due diligence assessments on our highest risk suppliers. Our due diligence activities may involve audits, inspections, and corrective actions where needed. We are committed to driving continuous improvement throughout our supply chain.
As our supply chain becomes larger, more complex, and faces new disruptions, we are enhancing the tools we use to support suppliers and evaluate their performance. In 2021, we onboarded a new supplier engagement platform that will make ESG communication, surveys, and progress tracking simpler and more accessible. We will be able to import many types of data to this platform, including survey findings on conflict minerals, GHG emissions, and human rights issues.
Another way that we assess our suppliers’ performance is through our Quality Management System Assessment (QMS). This comprehensive assessment covers several topics such as forced labor/child labor, information security, foreign trade, and more conducted via survey and onsite visits. QMS is required for every new supplier and we reassess existing suppliers regularly. In 2021, we conducted 16 QMS audits.
We utilize a monthly supplier scorecard and incorporate ESG components as bonus points. Currently designation as a diverse supplier, membership with the RBA, and ISO 14001 certification each count as a bonus point on the scorecard.
Ensuring our shared success
Lam works closely with suppliers to assess programs and policies, share best practices, and encourage collaboration to help them succeed. We host Town Halls with our top suppliers and hold an annual Supplier Day, an event designed to strengthen collaborative relationships and create opportunities to drive continuous improvements in the supply chain.
During Supplier Day 2021, Jami Haaning, Lam’s senior manager of ESG, spoke about our ESG commitment and expectations of suppliers related to these issues. We also announced the winners of our Supplier Excellence Awards, given since 2005, to companies demonstrating exceptional commitment to outstanding performance. The main award categories are for General Excellence, Ramp Performance, and Rapid Prototype Manufacturing Performance and Excellence. In 2020, we added an award for ESG. The 2021 winner of this award will be announced at our inaugural ESG Forum in 2022.
Driving Supplier Environmental Performance
Working together for a greener world: Our focus on supplier environmental performance
A critical issue on which we engage suppliers is their environmental performance, particularly their reduction of GHG emissions. Lam’s goal to achieve net zero emissions by 2050 is inclusive of the emissions in our supply chain. We have established interim goals to set us on the right track. By 2025, we aim for 80% of our top-tier suppliers by spend to set their own science-based targets for emissions reductions. By 2030, we expect 95% of top-tier suppliers to set these targets. Learn more about our goals for a responsible supply chain.
We are laying the foundation for future progress through technology, data collection, capacity building, and engagement. In 2021, we expanded our environmental survey to our top 100 suppliers. This survey focuses on GHG emissions, CDP scores, environmental goals, ISO 14001 certification, and RBA membership status. We prioritized our supplier engagement based on their tier and the amount of Lam spend. Using our new supplier engagement platform, we will gather more information about suppliers’ GHG baselines and then work with suppliers to establish SBTs. Moving forward, we will engage with suppliers on our evolving expectations and build incentives to motivate them to meet emissions reduction goals.
“We believe that engagement and collaboration with our supply chain is one of the most effective ways to make a meaningful and lasting impact on our greenhouse gas emissions.”
Protecting Human Rights
Acting with intention to uphold human rights
Dignified, safe work is a fundamental human right. Just as important as continuous improvement on environmental performance is ensuring the health and protection of workers in our extended supply chain. We are committed to upholding human rights in our operations and in our supply chain. We take action to prevent labor violations and promote better working conditions wherever we do business—this includes complying with laws such as the UK Modern Slavery Act of 2015, and the California Transparency in Supply Chains Act of 2010.
Our Global Supplier Code of Conduct lays out our expectations of suppliers, while our Global Employment Practices Statement declares our support of workers’ rights to freedom of association and collective bargaining, to the extent permitted under local laws. These documents are distributed via email, published through our intranet, and made publicly available on our external website.
A potential risk present in manufacturing supply chains is the exploitation of migrant workers who travel to places of work in different countries. We work with specific suppliers to understand workers’ journeys and require all suppliers to enact policies that prohibit forced and bonded labor in any form. To prioritize due diligence and risk mitigation, we use the Slavery and Trafficking Risk Template (STRT). We sent this survey to our top 100 suppliers located in countries identified as high risk for human trafficking in 2020. And in 2021, we followed up with suppliers based on their results, asking them to provide evidence of compliance with company policies, re-sign our Supplier Code of Conduct, and, as necessary, undergo training on Lam’s prohibition of forced labor.
Our suppliers and their employees are encouraged to use the Lam Ethics Helpline to report concerns related to human trafficking and forced labor, as well as any other ethical issues. We did not receive any reports from our suppliers regarding human rights issues in 2021.
Promoting supply chain excellence through RBA
Since 2019, Lam has been an affiliate member of the RBA, the world’s largest industry coalition dedicated to corporate responsibility in global supply chains. To ensure our own operations and supply chain adhere to RBA requirements, we conduct self-assessments to determine our greatest social, environmental, and ethical risks. We also encourage suppliers to join us in becoming RBA members.
In 2021, two of our top 10 suppliers, equating to 14% of our spend, joined the RBA. With these new additions, 31% of our total spend is now with RBA member suppliers.
Beyond general RBA membership, we participate in the multi-industry Responsible Labor Initiative (RLI) and RMI, which guide our approaches to protecting human rights and ensuring responsible sourcing of conflict minerals, respectively.
Conducting due diligence on conflict minerals
As part of a responsible and ethical raw material sourcing strategy, Lam is a member of the Responsible Mineral Initiative (RMI). The objective of this multi-stakeholder organization is to help address egregious human rights issues in the mining of tin, tantalum, tungsten, gold, and other minerals of concern.
Since 2012, we have used the Conflict Minerals Reporting Template developed by RMI to assess our suppliers. From our 2021 smelter due diligence exercise, Lam suppliers used RMI approved smelters in 54 smelter countries. In 2021, 92% of suppliers in scope responded to this survey. In 2022, we plan to update our due diligence efforts to include additional minerals of concern (such as cobalt and mica), as recommended by RMI. View our conflict minerals disclosures.
Fostering supply chain diversity
We recognize the value of building relationships with small and diverse suppliers, including minority-, women-, LGBTQIA+-, and veteran-owned businesses, and those owned by people with disabilities. These diverse businesses drive economic growth and stability in local communities, and our relationships with them help Lam build a more competitive and flexible supply base.
We use diverse suppliers that meet our company’s standards and customer needs and implement measures to identify diverse suppliers during the onboarding process. We include diversity performance in our supplier scorecard, and track and report spending with diverse direct material suppliers on a quarterly basis. We use this data to facilitate a cross-functional approach to supplier diversity.
The pandemic posed particular challenges with many of our suppliers globally. With KNT Manufacturing, Inc., with whom we’ve worked closely for many years, we were able to overcome many of those challenges together.
total spend with diverse
increase in diverse supplier spending over 2020
“As we all know, the impact the COVID-19 pandemic has had and is still having on how businesses operate, and how employees and their families respond, is unparalleled. We found our employees feeling more anxious, somewhat isolated and overwhelmed, but still courageously motivated even through the pandemic as we grew over 55% from 2020 – 2021. Our growth can be attributed to the constant partnership and business opportunities provided to us by Lam.
Although a lot of businesses felt the strain of the pandemic, we felt relieved as our customer-supplier relationship with Lam remained intact and is still as strong as ever. Lam has always fostered a culture of connection with KNT which has constantly been so inviting it left us no alternative but to respond with growth, productivity, and excellence to meet their business and product needs.”
senior director, business systems & compliance, KNT