We are on a journey to develop our understanding of the human rights risks associated with our activities, and to establish the tools and processes to manage these risks. We always aim to minimize any risk of harm to people, caused by our operations.
Building on our previous experiences, we adopted a more systematic and comprehensive approach in 2012. We started out by conducting a corporate level impact assessment in 2012 and 2013, identifying risks of human rights impacts throughout our value chain. Key functions within the company as well as external expertise contributed to the process. We used the results to update the Code of Conduct in 2014, emphasizing our commitment to human rights and mitigating human rights risk areas such as disciplinary action and grievances, security practices, and corruption.
Following extensive internal and external stakeholder engagement, human rights was singled out as one of the priorities in the company’s updated sustainability framework ‘For the Better’ in 2015. Human rights are at the core of our Promise ‘Always act ethically and respect human rights’. As a consequence, the Human Rights Reference Group was established as a temporary working group to oversee the development of a joint Group approach.
During 2016, we developed a methodology to identify and assess human rights impacts, and piloted it at the corporate level. The methodology is in line with the UNGP (UN Guiding Principles on Business and Human Rights) and emerging practices for human rights impact assessments. The method considers the likelihood and severity of the potential harm to people, rather than to the company. The assessment involved around 40 representatives from all sectors, regions and key functions within the Group, and was conducted using online surveys and workshops. The assessment incorporated input from employee representatives, customers, investors and NGOs. We will continue to integrate stakeholder perspectives more directly in local human rights assessments, planned for 2017 in two of our high-risk locations.
The corporate assessment resulted in a list of the company’s salient human rights issues1 .
The human rights impact assessment conducted in 2016, resulted in a list of six issues, covering seven human rights. Additionally, the assessment pointed to three business processes that entail specific risks to impact on people. The six issues and three business processes constitute Electrolux's salient human rights issues. Actions for each salient issue is being developed, alongside the establishment of ownership for each action. This action plan will be implemented throughout 2017.
Additional severe potential impacts on human rights are linked to health and safety in our operations and product safety. These are outside the scope of salient issues, as they are assessed to be well-managed by existing programs.
Related reading
Always act ethically and respect human rights:
-Our promise
-Progress 2016
Improve sustainability in the supply chain:
-Our promise
-Progress 2016
| Right | Issue(s) |
Potential impact on people |
Context |
|---|---|---|---|
| Right to freedom of association | Industrial relations |
Employees not being able to impact working conditions or negotiate compensation Discouraging/preventing employees from joining or forming unions, or participate in union activities Conflict/strike leading to loss of income and affecting standard of living |
With a high number of employees in countries where the level of maturity in labor relations is low, there is risk of conflict, and a resulting harm to people and to company operations/reputation. |
| Right to decent conditions at work Right to adequate standards of living |
Working hours and wages |
People being unable to provide for themselves and their families as a result of low wage levels (e.g. lack of food, education, medical services etc.)
People suffering from inadequate living standards due to low wages.
People suffering from a lack of free time and family life as a result of extensive overtime and forced overtime, which also increases the risk of accidents. |
Overtime is an issue in some parts of the organization.
Fair living wages is a topic increasingly in focus of customers and media.
Both issues have an impact on people and are a potential reputational risk. The impact assessment identified risk for overtime at middle management levels.
Wages and overtime is a high-risk in all regions except from Western Europe, Canada, Australia and New Zeeland. |
|
Equal rights and non-discrimination |
Diversity and non-discrimination |
Individuals being discriminated in recruitment, promotion and in other ways within Electrolux, in part as a result of discriminating structures in the societies we operate in. Violates the basic human right of equal treatment/opportunities and has additional social and economic consequences.
Individuals’ quality of life and self-esteem suffer from not enjoying equal opportunities in life. |
Some level of discrimination occurs as a result of discriminating structures in the societies where we operate. A higher level of diversity will benefit both people and the company. |
| Right | Issue(s) |
Potential impact on people |
Context |
|---|---|---|---|
| Right to privacy | Privacy and integrity |
Personal information mismanaged (e.g. employee data, consumer data, market research data). Privacy underpins human dignity and other key values. The right to be let alone, or freedom from interference or intrusion. |
The issue is increasing in importance as a result of digitalization, the Internet of Things, increased sophistication in collecting employee and consumer data. Processes to safeguard privacy must match the increased risk. data, data gathered in products. The risk is very high in Mexico, Egypt, Thailand, China, Colombia, Singapore, Ukraine, Malaysia, Russia, and high in USA, UK, Indonesia, Peru and Ecuador. |
|
Right to life
|
Purchase of sexual services during business travel/representation |
Exploitation of people as a result of employees’ actions during business travel and representation Causes severe harm to the victim. The damages also include the individual being mistreated or rejected due to stigmas.
Contributes to a system that perpetuates harm to the victims. |
Estimates indicate that around one third of all purchases of sexual services take place during business travel. Electrolux need a clear zero-tolerance policy, actively communicated to employees.
|
|
Equal rights and non-discrimination
Right to adequate standards of living |
Corruption or bribery |
Corruption fuels inequality, diverts expenditure away from health, education, holds back economic development, and hurts the most vulnerable in society. Bribery undermines the rule of law and the principle of fair competition. Corruption distorts the division of economic resources and hinders social and economic development. |
We operate in high-risk markets such as South East Asia, Latin America, Middle East, Egypt and Russia, and need to constantly educate our employees and monitor risks. Risk areas include obtaining licenses/certificates, sales, purchasing, gifts and events. |
|
Right to life
|
Purchase of sexual services during business travel/representation |
Exploitation of people as a result of employees’ actions during business travel and representation Causes severe harm to the victim. The damages also include the individual being mistreated or rejected due to stigmas.
Contributes to a system that perpetuates harm to the victims. |
Estimates indicate that around one third of all purchases of sexual services take place during business travel. Electrolux need a clear zero-tolerance policy, actively communicated to employees.
|
|---|---|---|---|
|
Equal rights and non-discrimination
Right to adequate standards of living |
Corruption or bribery |
Corruption fuels inequality, diverts expenditure away from health, education, holds back economic development, and hurts the most vulnerable in society. Bribery undermines the rule of law and the principle of fair competition. Corruption distorts the division of economic resources and hinders social and economic development. |
We operate in high-risk markets such as South East Asia, Latin America, Middle East, Egypt and Russia, and need to constantly educate our employees and monitor risks. Risk areas include obtaining licenses/certificates, sales, purchasing, gifts and events. |
| Business process | Human rights risk |
|---|---|
| Supply chain management |
Risk linked to Electrolux supply chain – first tier suppliers and beyond Non-compliance with labor standards such as: health and safety, working hours, wages, forced labor and child labor, freedom of association.
|
| Acquisitions |
Inheriting' human rights issues and sub-standard operations as part of making an acquisition: |
| Market entry and partners |
Harm to people by distributors, agents and other business partners (e.g. labor conditions, health and safety, environmental impact negatively affecting people, land rights and expropriation, corruption, etc). |
The corporate human rights assessments conducted in 2012/13 and 2016 drew upon results from existing assessment processes and audit programs, including for example Code of Conduct audits of operations in high-risk countries, and supplier audits.
We map our operations using tools such as Verisk Maplecroft, Freedom House for civil and political rights, Human Development Index, Transparency International’s Corruption Perception Index and the WWF Water Risk Assessment for water risks.
Our risk classification is subject to annual review, and includes the facility’s location and past performance, number of employees, types of activities, Ethics Helpline records and customer requests. This classification also helps to guide our auditing.
In 2016, of all the countries where Electrolux has manufacturing operations, Argentina, Brazil, Chile, China, Egypt, Mexico, Thailand and Ukraine were deemed as high-risk countries. Our facilities in China, Egypt, Mexico and Thailand were the focus for audits. The plan for 2017 is to apply the human rights impact assessment methodology at the local level in two of these high-risk locations. The local assessments will encompass both human rights and corruption risks.
Additionally, we have suppliers in a wider range of risk countries.
To mitigate human rights risks, Electrolux updated the Code of Conduct in 2014, and established the Industrial Relations Strategy. We launched a company-wide training initiative to emphasize the line manager contribution to respecting labor and human rights. We also aligned the initiative with the Group's industrial relations principles within the line manager areas of responsibility. In addition to the internal program, an e-learning targeting select suppliers was launched in 2016.
Human rights was part of the screening in connection with the acquisition of a new Professional manufacturing site in China in 2015. During 2016, one deal was closed, but the human rights risks were deemed to be low. However, relevant topics such as labor standards and EHS was part of ongoing due diligence efforts of potential acquisitions during the year. With the ambition to further strengthen the procedures for the integration of human rights in due diligence, 'acquisitions' has been listed as one of the salient human rights issues.
During 2016, we established a governance structure for human rights. The ultimate responsibility for adherence with Group policies on human rights, including the Code of Conduct, always resides with line managers, from Group Management and down. To support efficient management, we established the Ethics & Human Rights Steering Group, by extending the remit of the existing Ethics Steering Group.
The Steering Group is responsible for evaluating the effectiveness of our human rights approach and our ethics program, including approving priorities and plans for human rights. The Ethics and Human Rights Steering Group consists of the General Counsel SVP, the SVP Human Resources & Organizational Development, the SVP Management Assurance & Special Assignments (MA & SA), the SVP Corporate Communications, and the VP Sustainability Affairs.
A Human Rights Coordination Group is responsible for identifying and assessing risks, and for developing human rights action plans. The process of developing action plans was initiated in 2016. The CEO and the Heads of the Business Areas reviewed and approved the outcomes of the pilot human rights assessment process throughout December and January 2017. The Coordination Group’s work have developed a plan for local assessment pilots in select high-risk locations, and will continue to develop actions for mitigating the risks identified in the corporate level assessment.
We currently monitor our performance in response to salient human rights issues through audits conducted by both our own and supplier units, our Ethics Helpline, management-labor dialogue, health and safety committees, local grievance mechanisms and the Code of Conduct mailbox for suppliers.
The local human rights impact assessments, will provide further details about the risks of negative impacts on people. We will continuously plan local and Group level assessments to ensure that salient human rights issues are reviewed to reflect the main risks for harm to people within our sphere of influence.
1A company’s salient human rights issues are those human rights that are at risk of the most severe negative impact through its activities or business relationships.