Overall Risk & ESG Scorecard

Purpose

The purpose of the supplier overall risk & ESG score is to clearly communicate the Nexteer expectations, summarize suppliers’ risk & ESG performance and is a tool to identify high risk suppliers. The scorecard is broken down into 6 major categories (Financial Risk, Quality Risk, Operational Risk, Delivery Risk, ESG Risk and Emissions) and is calculated.

F*25% + Q*20% + O*20% + D*10% + ESG*10% + E*15% = Total Risk & ESG Score*

Scorecard Period

The Nexteer Supplier Risk & ESG Score is updated daily. There will be a maximum of 100 points. The Overall Risk & ESG Score will be available online for Nexteer internal users.

Supplier Risk Levels

The Nexteer Supplier Risk & ESG Score levels are used as a measurement tool to identify high risk suppliers. The Risk & ESG level scores are measured daily.

Green – Low
Yellow – Medium
Red – High*

*If Financial Risk is above 80 or Quality Risk is 100 from TFS (red) Triggers or Operational Risk is 100 or ESG Risk is 100 then Overall Risk & ESG Score = 100

SCORING RULES

Financial (25%)

Financial Risk is measured using the Elm Financial Rating (EFR) scoring.

Formula: (10 – EFR)*10

Scoring details:
Green = 0 – 40
Yellow = 41 – 80
Red = 81 – 100

Quality (20%)

Quality Risk is measured using the quality score in the balanced scorecard & TFS duration.

Formula: (40 – Quality Score from Balanced Scorecard)*2.5

If TFS and red is true and number of months is 9+, the Quality Risk Score will be 100

If TFS is true and number of months is 18+, regardless of TFS Performance, the Quality Risk Score will be 100

Scoring details:
Green = 0 – 14
Yellow = 15 – 100
Red = 100 for 18+ & 9+ months TFS (red status)

Operational (20%)

Operational Risk is measured using (Sphera) balanced risk score (financial stability country, logistics performance, natural hazards, pandemic outbreaks, political situation country)

Formula: Financial Stability Country*0.25 + Logistics Performance*0.25 + Natural Hazard*0.2308 + Pandemic Outbreaks *0.0192 + Political Situation Country*0.25

If Natural Hazards is 100, the Operational Risk Score will be 100

Scoring details:
Green = 0 – 40
Yellow = 41 – 79
Red = 80 – 100

Delivery (10%)

Delivery is measured by supplier’s performance rating from Nexteer Enterprise Resource Planning (ERP) systems using delivery on time, correct quantity, delivery shipping documents, communicating electronically.

Formula: (15 – (Delivery On Time + Delivery Electronically communicated + Delivery Quantity + Delivery shipping Docs +Net Deduction)) *6.66

Scoring details:
Green = 0 – 14.99
Yellow = 15 – 53.32
Red = 53.33 – 100

ESG (10%)

ESG is measured using (Sayari) balanced risk score (adverse media, export controls, forced labor, political exposure, regulatory action, relevancy, and sanctions)

Formula: Max score taken from all Sayari categories – adverse media, export controls forced labor, political exposure, regulatory action, relevant, and sanctions

Scoring details:
Green = 0 – 25
Yellow = 26 – 75
Red = 76 – 100

Emissions (15%)

Emissions is measured by data collected from suppliers response to Nexteer’s request to supply scope 1 & 2 carbon emissions & improvement plans for the previous calendar year.

Formula: If supplier has submitted required emissions data, supplier will be given a score of 0 – Green. If supplier has not submitted required emissions data, supplier will be given a score of 100 – Red.

Scoring details:
Green = 0
Yellow = N/A
Red = 100

Be aware, the Overall Risk & ESG Scorecard is used in parallel but separate from the Balanced Scorecard. To see the Balanced Scorecard rules please click here.