Our products are to be made in the same way throughout our global supply chain – with respect for the people who made them and care for the environment.
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.
We have a duty to drive improvements in our supply chain, particularly as more of our business is conducted in emerging markets. Our experience shows that enhanced sustainability performance, particularly in health and safety and energy use, improves the bottom line. We pass on this knowledge by working together with our suppliers to strengthen relationships, and ultimately create mutual benefit.
Logistics is also a key area in our supply chain as Electrolux emits more CO2 in distributing its goods than is emitted through the energy consumed in Group operations. Around 315,000 tonnes are emitted through the global transportation of goods via sea, air and land.
Our over 3,000 direct suppliers are required to live up to our Code of Conduct and Workplace Standard. Our Responsible Sourcing Program provides both online and face-to-face training for suppliers in every region to support suppliers' own development, and supplement supply chain auditing and performance monitoring. Our direct suppliers are responsible for communicating The Group's standards to Tier 2 suppliers and beyond, where we have limited influence.
Non-compliances are addressed through mandatory corrective actions, as well as beyond compliance support activities such as training and capacity building. Serious non-compliances are reported to the top management in each region.
We also work to reduce carbon emissions throughout our value chain, by promoting our internal approach to monitoring and reducing energy consumption among key suppliers.
We engage with suppliers that source 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.
We use our purchasing power to influence the logistics industry by developing more sustainable transport solutions together with our logistics partners. We also set environmental requirements in the tender process, and all shipping companies must be members of the BSR Clean Cargo initiative.
Ensuring high sustainability performance throughout our value chain beyond direct suppliers remains a challenge
Adopting a collaborative approach with industry peers to bring about greater positive change among our shared suppliers
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 |
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Monitor and secure minimum performance at our direct suppliers of components, finished goods, licensed products and services. Engage selectively further up the supply chain and promote responsibility among all suppliers toward their own supply chain. |
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Screen prospective suppliers to ensure they can live up to the Groups's expectations. |
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Increase awareness and capabilities among our prospective and existing suppliers through training and dialogue. |
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Drive the improvement of supplier ecological footprints. |
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Leverage our influence over logistics companies to improve the CO2 efficiency of our transportation by 15% by 2020. |
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On track
Additional effort is required
Off track
Work has not yet begun
With our 2020 Sustainability targets in mind, we renewed our Global Purchasing strategy in 2016 to place additional focus on supply chain sustainability. Just under 700 of our suppliers were considered ‘critical’ and were the focus of our Responsible Sourcing Program in 2017. These include suppliers located in regions, or using production processes, that pose higher risks for environmental, labor and human rights violations or corrupt practices.
During 2017, the program was fully deployed in Southeast Asia with extensive auditing and training activities primarily in Thailand. The Responsible Sourcing program was also implemented in North America.
In total, 387 (471) supplier audits were performed, including 351 (396) by internal auditors and 36 (75) by third-party assurers. This year, 50% (60) of our critical suppliers were audited. As part of our audits, we also verify that our expectations are communicated to Tier 2 suppliers.
Through our audits, we see that health and safety as well as environmental governance continue to be the areas with the greatest challenges. Deviations related to our policy on working hours is a persistent problem and connected to this also findings related to compensation and benefits.
A total of 45 (44) zero-tolerance findings were uncovered in 2017. The most common zero-tolerance findings were related to inconsistent working hour records and legal violations. These two types of findings represent 33% and 25% of the severe findings respectively. There were 3 cases of forced labor in Mexico involving mandatory overtime and restriction of movement related to this. Eight cases involving discrimination were found, including seven findings of pregnancy-testing in China and Thailand. In all instances, management practices at the respective supplier were amended. All zero-tolerance cases are reported to senior Purchasing management, who also monitors remediation actions or ultimately makes the decision to phase out the supplier. There were no cases involving under-age labor during 2017, and the number of less severe findings related to the management of young workers decreased but is still an area of concern.
There are large regional differences in audited suppliers’ status. In selected markets our share of disqualified suppliers is still high, some due to societal issues, such as in Egypt, and some due to the program being recently launched, such as in South East Asia. See distribution of findings per region table below.
We also monitored the environmental performance of suppliers – covering 80% of our Original Equipment Manufacturer spend. In 2017, this work included organizing an energy summit for key supplier partners in Shenzhen, China.
During the year, we have expanded our Code of Conduct e-learning program with an additional language version and encouraged suppliers to train more of their staff. The program reached over 499 (100) key decision makers at over 250 (98) of our suppliers. Additionally, we have provided classroom training for 152 (117) supplier representatives from 59 (91) suppliers. Our purchasers are also trained on the Code of Conduct, with 154 (79) trained in 2017.
A new approach to training is being tested in China, together with suppliers and with the help of an external e-learning company. To support and facilitate supplier improvement, tablet-based training is made available to a large number of workers and supervisors on topics such as H&S, fire safety and workplace dialogue. During 2017, three supplier pilots were launched and so far over 900 workers and mid managers have passed through the training program, which will be further expanded and evaluated during 2018.
We track country of origin for specific critical minerals throughout our supply chain. In 2017, we have also joined the Responsible Mineral Initiative, allowing us to influence beyond tier-one suppliers, and map supplier compliance in line with the related OECD due diligence guidance. This work highlights that we want to work proactively with conflict minerals by going beyond compliance, minimizing supply chain risk and helping us to improve our supply chain. See table Responsible sourcing audit findings reduction.
Over five years, our efforts have resulted in an improvement of CO2 efficiency of almost 35% in our sea transportation. In 2017, we have also improved our CO2 efficiency for land transportation by more than 3.5% compared to 2016. Our goal is to improve CO2 efficiency across all modes of transport by 15% in 2020 compared with 2015.
We launched a dashboard to make it easier to track our transportation CO2 emissions and make optimal transport decisions. The dashboard can be used to identify where the CO2 impacts arise and can compare the benefits of using rail and intermodal (when more than one mode of transport is used) transport.
We are rolling out a Group-wide system for gathering and tracking transport data throughout our markets and evaluating the environmental performance of road freight carriers.
Note: Data encompasses global ocean freight, air cargo and land transport in Europe, North America, and Brazil.
Chapter | Asia Pacific including SE Asia | Latin and North America | Europe, Middle East and Africa | TOTAL |
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1. General requirements |
2 |
7 | 8 | 4 |
2. Laws and regulations | 1 | 2 | 3 | 1 |
3. Suppliers and subcontractors | 2 | 4 | 2 | 2 |
4. Corruption, bribery and business ethics | 1 | 2 | 0 | 1 |
5. Child labor | 1 | 0 | 0 | 1 |
6. Forced labor | 1 | 0 | 0 | 1 |
7. Security arrangements | 2 | 0 | 0 | 1 |
8. Worker H&S | 42 | 38 | 54 | 42 |
9. Non-discrimination | 1 | 0 | 0 | 1 |
10. Harassment and abuse | 0 | 1 | 0 | 0 |
11. Disciplinary actions and grievances | 1 | 0 | 1 | 1 |
12. Working hours | 15 | 7 | 7 | 12 |
13. Compensation and employment conditions | 11 | 10 | 9 | 11 |
14. Freedom of Association and collective bargaining | 0 | 0 | 0 | 0 |
15. Environmental governance and procedures | 19 | 24 | 15 | 20 |
16. Monitoring and compliances | 1 | 5 | 1 | 2 |
Number of audits included in sample: | 231 | 87 | 69 | 387 |
The distribution of significant findings, expressed in % and viewed per Code of Conduct principle, varies between the different supply regions. Regional variations are caused by differences in EHS- and labor legislation, legal enforcement as well as societal differences.