Electrolux will ensure that all suppliers live up to our high expectations, no matter where they are located and we will support the transition to more sustainable practices.
| The roadmap to 2020 | Next steps | |
|---|---|---|
| Focus on our direct suppliers of components, finished goods and licensed products and services, and engage selectively further up the supply chain. |
Cover a larger regional scope including Thailand and in North America. Develop a program with manufacturers licensing the Electrolux brand. |
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Screen supplier candidates to check that their standards are in line with ours, and audit critical suppliers at least every second year. |
Introduce a new KPI on the number of re-audits that were completed within six months. Speed up supplier improvements. |
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| Increase awareness and capabilities among our potential and existing suppliers through training and dialogue to help them improve their own sustainability performance, including energy and water management. |
Track the energy-saving efforts of major OEM suppliers against set targets, and implement water reporting. |
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| Through our power as a transport buyer, improve the CO2 efficiency of our transportation by 15% over five years and increase our use of alternatives to road transportation, year on year. |
Begin implementation of an environmental scorecard in the tendering process for dedicated transport services from 2016 onwards. Proactively contribute to the BSR Clean Cargo initiative, which aims to improve the environmental performance of marine container transport. |
On track
Additional effort is required
Off track
Work has not yet begun
Electrolux has over 3000 direct material suppliers across its markets, more than 150 OEM (original equipment manufacturing) suppliers as well as a large number of indirect material partners.
It’s important that we choose suppliers that reflect our own high standards. Sustainability performance has been part of the vetting process for new suppliers for many years. As of this year, our Responsible Sourcing team is represented in sourcing boards in all Group organizations, which facilitates integration in decision-making processes for each regional purchasing organization. Purchasers are trained on the Code of Conduct; 255 took part in 2015.
Some 700 suppliers are considered ‘critical’ and have had a central role in our responsible sourcing program this year. These include suppliers located in regions – or working in operations – that pose high and medium risks for environmental, labor, human rights and corruption practices.
These companies are reviewed on their sustainability performance at least every second year. In total, 427 (361) audits were performed among suppliers, 366 (350) by internal auditors and 61 (11) by third-party assurers. This year, 51% (46%) of our critical suppliers were audited.
As part of our audits, we check to see that our expectations are communicated to our Tier 2 suppliers as well. We conduct spot checks among some Tier 2 suppliers – for example those that pose environmental risks, such as battery suppliers.
Health and safety and environmental issues continue to be the areas with the greatest challenges, and non-compliance with our policy on working hours is on the rise. A total of 47 (31) findings of a serious nature were uncovered in 2015, and we worked to address them promptly, in partnership with our suppliers. The most common zero-tolerance findings relate to legal violations and inconsistent records connected to working hours stand for nearly a fifth of these findings. In China, two suppliers were found to employ three children. Also in Egypt, two instances of child labor were uncovered, involving three persons under our age-limit. Cases involving under-age labor are rare, but require careful management. In all cases, suppliers were required to stop the practice immediately and repatriate the minor. A payment process was set up with the suppliers to compensate the minors and their families for the loss of income, and contact kept with families and supplier until the cases were fully remediated.
One case of minimum wage violation arose in Thailand, where a labor agency used by one supplier failed not meet wage legislation. This malpractice was corrected.
From our audits, we know that we are making a difference. As an example, in Mexico, the Responsible Sourcing team uncovered 40 cases of pregnancy testing among 70 suppliers since the program was launched. Today, pregnancy testing is a rare finding.
Our promise to improve sustainability among suppliers means going beyond auditing and monitoring. We have been collecting data on the environmental performance of suppliers, representing 80% of our OEM spend, since 2011. During 2015, we trained 180 supplier staff members representing 80 companies. In 2016, we aim to further raise the bar on their environmental and human rights performance. We piloted an e-learning program on Code of Conduct requirements for suppliers, and we will tailor training to help suppliers deal with targeted issues. We’ve introduced a new energy report and suppliers are expected to set energy targets. We will also require that suppliers measure their water use.
Electrolux has joined the Conflict-Free Sourcing Initiative (CFSI), allowing us to influence those suppliers sourcing from countries affected by conflict. Our approach is based on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and is embedded in our policies and activities. Our tools and functions for managing chemicals play a crucial role in this work, gathering data on components and suppliers and identifying high-risk suppliers. In future, these suppliers are expected to demonstrate similar due diligence processes on their own actions.
We can use our purchasing power to support the trend towards more sustainable transport. Over five years, our efforts have resulted in a 30% CO2 emissions reduction deriving from our ocean transport. Our next goal is to improve CO2 efficiency across all modes of transport by a further 15% over five years, and annually increase the use of rail for transportation on land.
The Group’s standard supplier business contract requires that each supplier acknowledges and promises to fulfill our high expectations on sustainability. All suppliers, both local and global, are expected to live up to the Code of Conduct and Workplace Standard. Purchasing teams ensure that meeting these standards is a mandatory part of evaluating potential and existing suppliers. To support auditing and performance monitoring, the Responsible Sourcing Program provides training for global and local purchasers and suppliers in Latin America, Europe, the Middle East and Africa, and the Asia-Pacific region.
Serious non-compliances are reported to top management in each region. Purchasing is involved in remediation of audit findings and on-line training is available for staff and suppliers. Non-compliances are addressed through mandatory corrective actions as well as beyond compliance support activities such as training and capacity building.
We are rolling out a group-wide system for gathering and tracking transport data across our markets and survey road freight carriers to evaluate their environmental performance. As of 2014, all ocean transporters must be members of the BSR Clean Cargo initiative.
Note: Data encompasses global ocean freight, air cargo and land transport in Europe, North America, and Brazil.