MANAGEMENT APPROACH
Protecting the rights and dignity of every individual is becoming increasingly important to business operations. For Electrolux the Code of Conduct is the key tool to address these issues.
For Electrolux, the most significant issues relating to human rights include providing a safe working environment where workers are free from harassment or discrimination, providing fair working conditions for employees and respecting freedom of association.
The Code of Conduct (CoC) guides efforts to assess, manage and mitigate risks of non-compliance in operations and helps define expectations within the Group’s sphere of influence. The revised CoC and Workplace Standard align Group expectations to new and emerging sustainability issues, including an increased focus on human rights.
For 2014 achievements and future objectives in regards to areas relating to human rights, see the performance reviews for People and Operations (Ethical business) and Stakeholders and Society.
Relevant codes include the Electrolux Code of Ethics and the Code of Conduct (CoC), supported by the Workplace Standard, which includes mandatory practices to ensure compliance. The CoC and Workplace Standard apply in equal measure to own operations and along the supply chain, as described in Management approach: Labor practices.
Our codes and policies express our commitments to respect and support labor rights as set out by the ILO Declaration on Fundamental Principles and Rights at Work, as well as the respect and support of broader human rights covered by the International Bill of Human Rights and the UN Global Compact.
With the UN Guiding Principles as its reference, Electrolux carried out a human rights impact assessment in 2012 and identified a number of areas for attention such as labor standards, conflict minerals and security practices. The revised CoC addresses these areas, aligns Electrolux more closely with international standards and also functions as the Electrolux human rights policy. Additions to the CoC have been made on anti-bribery and corruption, conflict minerals and security arrangements.
The Group’s approach to human rights due diligence builds on existing processes including CoC audits, the ALFA assessment, supply chain audits and evaluations, remediating action plans, and stakeholder dialog. These activities identify challenging areas that require further work at Group level. Please see Auditing and monitoring for more information.
Grievance mechanisms in the form of the Ethics Helpline, joint management-worker committees and collective bargaining processes are in place. During 2014, as part of the introduction of the updated Code of Conduct, a reporting mechanism was also implemented targeting the employees in the supply chain.
Each line manager has responsibility for active implementation of the CoC. Internal training and awareness is outlined in Management approach: Labor practices.
Corporate practices in implementing the UN Guiding Principles is evolving globally. That’s why engaging with peers, key stakeholders and networks such as the Swedish Network on Business and Human Rights and the UNICEF Corporate network for Children’s rights provides important opportunities to deepen the knowledge needed for developing human rights due diligence.
As an integrated part of the procurement process, purchasing teams ensure that high labor human rights and environmental standards are mandatory and non-negotiable parts of evaluating potential and existing suppliers. This management approach ensures that quality and cost are achieved, but not at the expense of Group standards. See Auditing and monitoring for a full description of audit procedures and activities in 2014.
To support auditing and performance monitoring, the Responsible Sourcing Program provides global and local purchasers and suppliers with training, and capacity building development activities in Latin America, Europe, Middle East and Africa as well as Asia/Pacific. The director of the program reports to the Vice President, Sustainability Affairs and works closely with the Chief Procurement Officer and the Purchasing Leadership team. The three regional managers work closely together with their respective regional Purchasing managements.
The objective of the Responsible Sourcing Program is fivefold:
Suppliers chosen for audit represent those at highest risk of Code of Conduct non-compliances within the supply base. Audit results should be viewed in this light.
Based on the 361 physical audits performed, zero tolerance non-compliances were discovered in 31 cases and these suppliers were graded as ‘disqualified’. Such non-compliances must be remedied immediately for the business relationship to continue. Cases are reported to regional senior purchasing management who are called upon to help restore compliance. In total, 275 (87%) suppliers were graded as ‘conditional’ at year’s end; serious findings that require re-audits had been identified. For 9% of suppliers, requirements were met on most counts, earning the suppliers ‘active’ status. Only 6 suppliers (approximately 2%) were found to entirely meet Group requirements. They were thereby rewarded with ‘preferred’ status. The aim is to gradually increase the share of ‘preferred’ suppliers.
Findings of 361 supplier audits. Health and safety issues continue to be the area of the most non-compliance. Environment is the second largest area of non-compliance since the requirements, more strict than legal requirements in many countries, were introduced in 2009. Working hour violations, primarily a problem in China, is the third largest category of findings.
New audit tools, developed during 2014 to align with the updated CoC, will be rolled out throughout the Group during 2015. These include tighter criteria for grading audit results.
During 2015 Electrolux plans to expand its resources in South-East Asia and Egypt.
As outlined in the Code of Ethics and CoC, Electrolux does not tolerate discrimination based on personal characteristics or beliefs such as age, race, ethnic group, religion, gender, political opinion, marital status, maternal/ paternal status or national or social origin. All Group and supplier employees are to be treated strictly according to his or her abilities and qualifications in any employment decision.
Electrolux does not permit harassment in any form. This includes physical, sexual, psychological or verbal harassment or abuse whether it takes the form of written and verbal remarks. Offensive language and bullying is not tolerated. Neither does Electrolux allow behavior in which people in authority abuse their position through insulting, intimidating or malicious conduct.
All of these provisions are monitored in CoC audits, employee engagement surveys and through ALFA assessments. Potential misconduct can be reported via the Ethics Helpline.
During 2014, a reporting mechanism was implemented targeting employees in the supply chain.
Under-age labor is still common in some parts of the world, particularly in developing countries with high rates of poverty and low law-enforcement levels. As a zero tolerance issue, Electrolux strictly prohibits the use of child labor and requires suppliers to commit to these same standards.
In 2014, 2 cases of child labor were found, affecting 2 children in total.
Unless local law stipulates a higher age limit, no person younger than the age for completing compulsory education, or younger than 15 is employed by Electrolux. The company adheres to accepted international laws and practices as set out by the Universal Declaration of Human Rights, the Children’s Rights and Business Principles and the UN Global Compact.
As in accordance with the ILO Minimum Age Convention, suppliers and local management are responsible for providing working conditions, working hours and wages that are appropriate for the authorized minors’ age. They must also be in compliance with applicable local law as a minimum.
If a case of under-age labor is discovered in Group operations or those of suppliers, the focus is on the welfare of the individual, which may include providing her with access to schooling and job training and paying an ongoing wage. The Responsible Sourcing staff is in continuous contact and dialog with the affected minor, family and responsible supplier until the solution to the situation has been agreed and implemented.
In accordance with the ILO Convention on the abolition of forced labor, forced or involuntary labor is not tolerated in any form. See Auditing and monitoring (link) for information about how this is monitored.
It is essential that security arrangements do not impose risks of breaches of human rights. The use of force shall never exceed what is strictly necessary and must be proportionate to the threat and appropriate to the situation.
The updated Code of Conduct and Workplace Standard include requirements for contractual agreements with security service providers, to ensure that the providers exercise due diligence in the selection of security guards, and that regular training is carried out.