BETTER Society
Improve sustainability in the supply chain
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.
Our promise
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.
Read more about our progress on this Promise
Roadmap 2015 to 2020
- 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.
- Screen prospective suppliers to ensure they can live up to the Group's expectations.
- Increase awareness and capabilities among our prospective and existing suppliers through training and dialogue.
- Drive the improvement of supplier environmental footprints.
- Leverage our influence over logistics companies to improve the CO2 efficiency of our transportation by 15% by 2020.
The case for action
We have a duty to drive improvements in our supply chain, particularly as a substantial part of our business is conducted in emerging markets. Our experience shows that enhanced sustainability performance, particularly in energy use, and health and safety, 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 300,000 metric tons are annually emitted through the global transportation of our goods via sea, air and land.
Our approach
Responsible sourcing
Our +3,000 direct suppliers are required to live up to our Supplier Workplace Standard and Workplace Directive, which are equivalent to the Workplace Policy and Workplace Directive that apply to our own entities. They cover our environmental, health and safety and human rights requirements for suppliers to follow.
All of our critical suppliers are audited at least every other year by our internal teams or external auditing companies. The Electrolux Responsible Sourcing Program is managed by a team of in-house supply chain specialists and consists of four types of activities:
- Policy awareness and initial evaluations – to communicate our policies, conduct initial sustainability and risk evaluations of prospective suppliers, and potentially conduct an audit of each supplier as part of the initial sourcing decision.
- Regular supplier risk assessment – conducted annually with a focus on suppliers in high (and medium) risk countries (see Related content below) and based on our Responsible Sourcing criteria and sourcing data. The assessments help the Electrolux Responsible Sourcing team decide which suppliers should participate in audits or other activities. Prioritized suppliers should be subject to an audit at least every second year with follow-ups as needed to secure improvement. Audits are carried out by our internal team or external auditing companies.
- Supplier capacity building – online and in-person capacity building initiatives.
- Making performance count – supplier evaluations and audits are used in formal sourcing decisions, and disqualified and uncooperative suppliers are subject to an escalation process. This process involves reporting serious supplier non-compliances to Purchasing, and addressing non-compliances through mandatory corrective actions, as well as beyond compliance support activities such as capacity building.
Conflict minerals
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is embedded into our policies and activities to avoid sourcing conflict minerals.
Supplier environmental footprints
We work to reduce greenhouse gas emissions and water use within our value chain. We share our knowledge with suppliers, provide tools to assist them in evaluating their footprint and define suitable improvement activities, and reward progress and proactivity.
Logistics
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.
Challenges
- 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.
The progress on our promise
How we measure progress
- Proportion of critical suppliers audited in the last 12 months.
- Proportion of critical suppliers with an audit rating of ‘approved’, i.e. no serious findings.
- Proportion of critical suppliers participating in training in the last 12 months.
- Share of OEM partners engaged in activities to improve their environmental footprint.
- Transport emission intensity, CO2 emissions / m3km.
Responsible Sourcing Program
During the year, Electrolux reorganized its Global Purchasing team and increased focus on sustainability topics throughout its supply chain. This has involved nominating a dedicated Program Manager to drive sustainability efforts with suppliers.
627 of our suppliers were considered to be critical and were the focus of our Responsible Sourcing Program in 2019. 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 2019, the program was launched in our newly acquired company in South Africa, which involved training staff and setting up auditing activities.
Migrant labor management has been a focus area in 2019, with spearhead activities in Thailand where analysis of the supply chain, training and new policy deployment has taken place.
The 2019 Supplier Award Day celebrated the most innovative and efficient key suppliers and had sustainability as a main theme. Sustainability was also featured in two regional Supplier Day events.
Responsible sourcing auditing
In total, 351 (399) supplier audits were performed, including 282 (328) by internal auditors and 69 (71) by third party assurers. In 2019, 49% (66) of our critical suppliers were audited, which also included verifying that our expectations were 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 as well as findings related to compensation and benefits.
A total of 23 (20) zero-tolerance findings were uncovered in 2019. The most common zero-tolerance findings were related to inconsistent working hour records and lack of transparency around working records in general. These types of findings represented 43% of the zero tolerance findings. Harassment in the form of abusive behavior by single managers was found in four cases, representing 17% of these cases and three cases were found of discriminatory pregnancy testing practices. In another three cases, non-compliant processes around retaining worker passports were identified. In all instances, management practices at the respective supplier were amended. There was one case of under-age labor during 2019, involving construction workers temporarily working at one of our suppliers' sites in Egypt. The number of less severe findings related to the management of young workers has increased in 2019.
All zero-tolerance cases are reported to senior Purchasing management, who also monitor remediation actions or ultimately take the decision to phase out the supplier.
Responsible sourcing audit findings
The graph above shows the remediation of non-compliances, comparing follow-up audits conducted in 2019 with preceding audits.
There are large regional differences in the status of audited suppliers. The prevalence of serious findings is high in some markets, due to societal issues, such as working hours in Asia, and significant discrepancies between local legislation and Electrolux requirements – including environmental management findings in Latin and North America. See the distribution of findings per region table below.
Distribution of audit findings in each region (%)
| Chapter | Asia Pacific including SE Asia | Latin and North America | Europe, Middle East and Africa | TOTAL |
|---|---|---|---|---|
| 2. Laws and regulations | 0.1% | 6.0% | 1.6% | 2% |
| 3. Suppliers and subcontractors | 0.0% | 0.0% | 0.0% | 0% |
| 4. Corruption, bribery and business ethics | 0.0% | 0.0% | 0.0% | 0% |
| 5. Child labor | 2.6% | 0.0% | 0.0% | 2% |
| 6. Forced labor | 1.2% | 0.0% | 0.0% | 1% |
| 7. Security arrangements | 0.0% | 0.0% | 0.0% | 0% |
| 8. Worker H&S | 54.1% | 66.4% | 79.7% | 60% |
| 9. Non-discrimination | 0.7% | 0.0% | 0.0% | 0% |
| 10. Harassment and abuse | 0.0% | 1.8% | 0.0% | 0% |
| 11. Disciplinary actions and grievances | 2.8% | 0.0% | 1.6% | 2% |
| 12. Working hours | 27.4% | 11.1% | 7.8% | 22% |
| 13. Compensation and employment conditions | 3.5% | 1.8% | 3.9% | 3% |
| 14. Freedom of Association and collective bargaining | 0.0% | 0.0% | 0.0% | 0% |
| 15. Environmental governance and procedures | 7.5% | 12.4% | 3.9% | 8% |
| 16. Monitoring and compliances | 0.0% | 0.5% | 1.6% | 0% |
| Number of audits included in sample | 231 | 94 | 74 | 399 |
The distribution of significant findings represented above, expressed as a % according to our Supplier Workplace Standard chapter, varies between our different supply regions. Regional variations are due to differences in EHS legislation, legal enforcement as well as societal differences.
During the year, we provided classroom training in our Supplier Workplace Standard for 378 (299) supplier representatives from 216 (126) suppliers. Our purchasers are also trained on the Electrolux Workplace Policy and Supplier Workplace Standard, with 152 (209) trained in 2019. In addition, we began the launch of our updated Supplier Workplace Standard e-learning targeting a wider audience at our suppliers. In this new edition we bring in more examples of good practices from our own operations with the ambition of increasing awareness and knowledge on topics with many findings. 234 people from 185 suppliers completed the new training in 2019, and the roll-out will continue to all regions in 2020.
Through QuizRR, the digital learning platform we use to gain a wider reach of workers at our suppliers, we trained 3,620 people on good workplace practices in 2019, bringing the total number trained with this tool to 8,120 at nine suppliers in China. The tool is now being piloted in Thailand, with a module focusing specifically on migrant labor.
Conflict minerals
Following a pilot assessment on conflict minerals in 2017, we investigated 400 suppliers during 2019 and the results have been made public. The report is inspired by recent U.S. legislation and was conducted voluntarily by Electrolux to disclose where our key minerals are sourced from.
We are also a member of the Responsible Mineral Initiative, which allows us to influence beyond our tier-one suppliers, and map supplier compliance in line with the related OECD due diligence guidance.
Our proactive work with conflict minerals demonstrates that we want to go beyond compliance – to minimize our supply chain risks and help us to further improve our supply chain.
Supplier environmental footprints
We reduce greenhouse gas emissions throughout our value chain by promoting our internal approach to monitoring and reducing energy consumption among key suppliers.
2019 was the ninth year of dialogue and cooperation with key Original Equipment Manufacturers (OEMs) on resource management. We monitored energy and water data from suppliers – covering 73% of our Original Equipment Manufacturer spend.
During the year, we launched a new checklist tool in China to help suppliers identify potential improvement opportunities to reduce energy and water use, and enable them to prioritize action. A workshop was conducted on energy and water management, bringing in 40 of our top OEM suppliers to provide further guidance and recognize the progress made.
Logistics
Approximately 300,000 metric tons of CO2 are emitted through the distribution of our goods by the global sea and air shipments and by the land transportation in Europe, North America and Brazil.
However, our efforts have resulted in an improved CO2 efficiency in our sea transportation of almost 22% since 2014. We have also improved our CO2 efficiency for land transportation by more than 11% compared with 2015. Our goal is to improve CO2 efficiency across all modes of transport by 15% by 2020 compared with 2015.
In 2019, Electrolux held a 'Logistics Sustainable Summit' that focused on land transport to bring together leading companies and transport providers to identify improvement actions throughout our logistics value chain. Areas for improvement were identified, divided into short, medium and long-term actions, and prioritized with KPIs to drive and follow up action. Such collaboration with our logistics partners is essential to drive change in our logistics value chain.
During the year, our latest intermodal truck-and-train solution in Western Europe reduced transport-related emissions. The project is part of a wider shift from road to rail and intermodal transport at Electrolux.
We continue to track and evaluate environmental performance through our logistics dashboard, which is also used as a tool to support our decision-making processes. The dashboard is 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.
In 2019, we continued dialogue with the logistics industry to share best practice in transport management. Electrolux is a member of the U.S. Environmental Protection Agency-led SmartWay and the BSR Clean Cargo initiative with a commitment to improve road and ocean transport-related emissions respectively.
Next steps
| Roadmap 2015 to 2020 | Next steps | Status |
|---|---|---|
| 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 in their own supply chain. | Leverage new Sourcing strategy and organization to increase coverage of supply base, and create more senior involvement on both sides in driving supplier performance. | dot2 |
| Screen prospective suppliers to ensure they can live up to the Group's expectations. | Update supplier screening methodology to promote and drive sustainability performance. | dot2 |
| Increase awareness and capabilities among our prospective and existing suppliers through training and dialogue. | Continue deployment of digital learning tools to reach more people working within our supply base. | dot2 |
| Drive the improvement of supplier environmental footprints. | Expand usage of self-assessment tools for our main suppliers and set improvement targets. | dot2 |
| Leverage our influence over logistics companies to improve the CO2 efficiency of our transportation by 15% by 2020. | Continue the implementation of an environmental scorecard in the tendering process for dedicated transport services in 2020. Set up supplier meetings to share/discuss best practice and action plans. | dot2 |
The next steps towards 2030 will be announced in the 2020 report.
On track
Additional effort is required
Off track
Work has not yet begun
Electrolux
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing experiences for millions of people around the world, always striving to be at the forefront of sustainability in society through our solutions and operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120 markets every year. In 2019 Electrolux had sales of SEK 119 billion and employed 49,000 people around the world.
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