Governance
Cultivating a responsible, inclusive, reliable, cost-effective and low-carbon supply chain is a priority for Equinix. We hold ourselves to high standards, and as industry leaders, we believe we are in a unique position to share our expertise with our suppliers. Reporting to the Chief Procurement Officer, the Senior Director of Supply Chain ESG & Corporate Services directs our supply chain ESG program. The Procurement team works closely with the Sustainability Program Office and with senior leaders across Operations to advance our supply chain ESG priorities.
In year three of our 5-year plan, our strategy focuses on six topics: Human Rights, Supplier Diversity, Ethics & Compliance (which includes Supplier Risk Management), Supplier Relationship Management, Climate Risk and Supplier Resource Use.
Ethics & Compliance
Our global supply chain consists of thousands of suppliers, service providers, resellers, integrators and consulting partners. Through a comprehensive framework of policies, procedures and standards, we believe we have developed a resilient supply chain to meet our requirements. As outlined in our Business Partner Code of Conduct and echoed in our supplier contracts, we expect our partners and their employees, agents and subcontractors to maintain high standards of ethics and operate in an environmentally and socially responsible manner when conducting business with us.
Supplier Risk Management
Our supplier risk program, Know Your Supplier (KYS), identifies and mitigates supplier risk to protect Equinix and its customers. As part of our KYS program, we assess and monitor our suppliers across multiple risk domains including cybersecurity, privacy, environmental health and safety, commercial risk and ESG performance. Our due diligence processes and real-time supplier monitoring enable us to proactively identify and mitigate supply chain risks during the supplier lifecycle.
In FY23, we screened 10 new critical and non-critical Tier 1 suppliers for ESG performance. All 10 suppliers fell below our ESG performance threshold and received additional ESG risk assessments. Suppliers were subject to additional review meetings to ensure risks are addressed by the supplier, or to allow Equinix to take appropriate action (i.e. downgrade risks level, agree on corrective actions or choose alternative suppliers). In FY23 the number of suppliers with significant ESG risk requiring action plans is less than 1% of our active supply base.
Engaging Suppliers to Set Near-Term Science-Based Targets
We select suppliers who share our values and cultivate deep relationships to drive supplier action and broaden our impact. Aligned with the 1.5°C global warming scenario, Equinix’s near-term science-based target is to require the top 66% of its suppliers within the categories of Purchased Goods and Services and Capital Goods to set their own science-based targets by 2025. In 2023, we moved closer to achieving this goal, with 25% of suppliers setting their own carbon reduction targets.
We help suppliers understand how to set their own targets through education. We leverage tools and training materials from leading climate organizations, such as CDP Supply Chain, the World Resources Institute (WRI), the United Nations and the Science Based Targets initiative (SBTi). We invite suppliers who fall within our Qualified Emissions for our science-based target engagement program to disclose their strategies, targets and progress annually through CDP. In 2023, the total number of Equinix suppliers reporting to CDP increased 91.5% compared to 2022. We were also recognized as a CDP supplier engagement leader for the third year in a row.
Our Scope 3 supplier engagement target comes with many challenges, including coordinating with suppliers in industries that have not previously been engaged on sustainability and climate related issues. To drive broader progress within our sector, we support external initiatives such as the Bare Metal Project, which aims to empower the relationship between digital infrastructure end users and primary materials industries to accelerate decarbonization and reduce Scope 3 emissions.
Circularity: Responsible Electronics Disposal
A key way we can support circular economy principles is with hardware recycling programs. Equinix’s Responsible Electronics Disposal (RED) program is an integrated approach that combines sanitation and destruction, environmental responsibility and financial return on assets into a single framework. Our approach aims for alignment between employee responsibilities and embedded champions, together with a strong internal governance orientation that controls for and measures performance—including that of the suppliers in the program.
As a signatory of the Climate Neutral Data Centre Pact, Equinix and other EMEA data center operators are part of the working group to develop processes and embed circular economy principles into operations. The circular economy working group is focused on reducing natural capital consumption through the repair and reuse of equipment.
In 2023, we successfully completed the first Circularity audit under the Climate Neutral Data Centre Audit, a framework that independently verifies compliance with the commitment to make data centers climate neutral by 2030. Visit our Operational Sustainability webpage for more details on the Responsible Electronic Disposal (RED) program.
Protecting Human Rights in Our Supply Chain
We conducted our first triennial supply chain-facing Human Rights Impact Assessment (HRIA) in 2023. The assessment aimed to identify and understand inherent risks by market and category, assess the current effectiveness of our policy and controls and identify specific areas to further reduce residual risk across our supply chain.
Key Findings:
- Within our supply chain the HRIA revealed five rightsholder groups facing human rights risks and five categories within our supply chain where workers are vulnerable to some of the most severe, salient risks
- Of more than 15 sub-categories of human rights abuse, we identified forced labor and child labor; life and security; and health were the most significant risks facing our suppliers
- Environment and social management topics are converging; EU mandatory human rights due diligence regulations are now part of a broader framework of existing and emerging regulations, reinforcing the need for a global approach to human rights management
Informed by the outcome of our HRIA audit, in 2024, we will enhance our due diligence processes, further focusing our efforts on high-risk categories and geographies.
Our 2023 assessment confirms that the actions we defined in our five-year ESG Supply Chain strategy remain relevant and important. We plan to repeat our supply chain-facing HRIA assessment every three years.
Driving Supplier Diversity, Inclusion and Belonging
People power our business and that includes our suppliers. Our commitment to diversity, inclusion and belonging (DIB) is core to our values at Equinix. We seek opportunities for diverse businesses to be a part of our value chain and support the growth of suppliers and the communities surrounding our operations.
We measure and report on our direct spend with certified, diversely owned businesses in the United States. We report our direct diverse spend quarterly to many major customers, several of which have partnered with us to shape our program. We currently track four diversity categories: small business, woman-owned, veteran-owned and minority-owned.
In 2023, Equinix achieved 6%+ of our qualified U.S. spend with certified, diversely owned businesses. We also invested in new tools to track and report on Equinix’s direct spend and supplier diverse spend (indirect). To continue driving progress, we aim to increase our diverse supplier spend by 3% year over year until we reach our goal of 15% in 2026.
We continue our memberships with external organizations, such as National LGBT Chamber of Commerce, Western Regional Minority Supplier Development Council and Disability:IN, to support our efforts in creating a diverse and inclusive supply chain. Our memberships in these organizations provide us with valuable resources to identify diverse suppliers and support our diverse supplier development initiatives.
We encourage our suppliers and partners to adopt and achieve their own DIB goals, as stated in our Business Partner Code of Conduct.
