Code of Conduct
The SCA Code of Conduct is the Group’s key social management policy. A number of systematic activities, such as risk analyses, training, audits and monitoring processes, are closely aligned with the Code of Conduct to ensure compliance. The implementation of the Code is a continuous process.
SCA’s Code of Conduct
SCA’s Code of Conduct was first introduced in 2004, and most recently updated in 2015. The Code is a tool to transform SCA’s core values of respect, responsibility and excellence into action. SCA’s Code of Conduct applies to all employees within the Group.
SCA’s Code of Conduct is based on international standards, including the UN Declaration of Human Rights, the ILO Core Conventions, the OECD Guidelines for Multinational Enterprises, the UN Global Compact Principles and related legislation. All employees are provided with the necessary knowledge and other prerequisites to comply with SCA’s values and Code of Conduct.
Code of Conduct training
SCA implements its Code of Conduct and verifies compliance through training, audits and business practice reviews. All employees are regularly trained in Code of Conduct compliance, including guidelines on business practices, human rights, how to counter corruption, unethical behavior and how to deal with ethical dilemmas that may arise. In 2014, SCA launched a Group-wide training initiative aimed at all employees. Employees were able to participate either online or via face-to-face training. At year-end 2014, 93% of employees had undergone training in SCA’s Code of Conduct.
In 2015, all countries completed their roll-out of the training program, and SCA’s Code of Conduct training is included in all induction programs for new employees. By year-end 2015, 91% of all new employees had completed the training. SCA is currently working with external partners to further develop and deepen its training methodology and content.
The database provided by Sedex (the Supply Ethical Data Exchange) has been central to SCA’s internal risk management and Code of Conduct monitoring since 2011. SCA and other Sedex members use the database to store, share and report on information pertaining to working conditions, health and safety, the environment and business ethics. Thanks to SCA and other companies sharing information with each other, efforts related to workplace inspections and audits are made more efficient, at the same time as transparency increases.
The Sedex system includes an extensive self-assessment questionnaire (SAQ) and a risk assessment tool. The tool has been developed by Maplecroft and is based on a balance between risk data at the country level and in the relevant industry, and on responses to the SAQ.
SCA’s facilities perform the self-evaluation in Sedex. The answers are then used for the purpose of risk classification of the units. In the 2015 Sedex assessment, all of SCA’s main facilities received a low to medium risk classification and no facility was classified as high risk. The Sedex system has enabled SCA to assess its own operations, and the results help determine the focus of the company’s audits and other initiatives aimed at improving conditions at our facilities. Many customers also request information about SCA’s supply chain via the Sedex system and this enables them to compare SCA with other companies in the industry.
69 SCA facilities, as well as three facilities in joint ventures in Tunisia and Algeria, use the Sedex system to report information.
Updated complaint procedure
SCA offers its employees a number of channels for reporting breaches of the Code of Conduct, such as through their line manager, HR Director, legal counsel or union representative. In addition, there is a dedicated e-mail address and, in the UK and Mexico, there are third-party-operated hotlines. This way, employees are able to file anonymous reports.
In 2015, further improvements were made to SCA’s process for investigating complaints and potential violations, such as development of new guidelines and training, to ensure all complaints are handled in a fair, professional and efficient way.
Reported breaches in 2015
In 2015, there were a total of 89 reported cases of potential breaches of the Code of Conduct, of which 16 were still under investigation at year-end (of which eight were related to anti-trust). Among the reported complaints, the most common types were alleged discrimination and harassment (34), corruption and misuse of assets (21) and labor practice grievances (7). The remainder of the complaints involved conflict of interest, health and safety and various other company policies (27). The most common source of complaints was from identified company employees (67%). 20% of the reported cases came from external stakeholders, such as a customer, supplier or contractor. 11 percent of the complaints were made anonymously.
Following review and investigation, a total of 73 cases were closed and a total of 28 cases resulted in a verified breach of SCA’s Code of Conduct or company regulations. Out of the confirmed violations, 11 cases referred to harassment and bullying, ten cases of corruption and fraud incidents, two cases of undisclosed conflict of interest and the remaining six cases were related to other SCA policies. Disciplinary action was taken in all cases of verified violations. During 2015, a total of 17 employees were dismissed, 11 received a warning and four were subject to other outcomes (e.g. resignation or other corrective actions). SCA takes all complaints seriously, which is why preventive measures are taken in most cases even when a breach cannot be proven. In the event of allegations that employees have been subject to harassment in the company, training initiatives are often arranged to raise awareness of personal behavior and the behavior of others.
Code of Conduct audits
SCA uses audits to monitor compliance with the Code of Conduct. Audits are carried out to satisfy customer requests, as well as to improve SCA’s operations.
The facilities to be audited are determined by such factors as the social and environmental risks in the country of operation, whether the facility is a recent acquisition or if there are any indications of non-compliance with SCA’s policies.
The content of the audits emanates from SCA’s Code of Conduct, while the approach and methods are based on the SA8000 standard. The audits are conducted by cross-disciplinary teams from SCA, and include representatives from the internal audit, human resources and sourcing functions. The audits involve a review of documentation, inspection of the facility with a focus on health and safety, and interviews with managers, employees and union representatives. SCA dedicates a great deal of time to interviewing employees, since these conversations are highly relevant to understanding how SCA’s policies are perceived and put into practice.
Every audit results in a report and action plan for the audited unit, which are followed up. In the event deviations are identified, these are to be corrected immediately and measures taken to prevent future deviations. The results of the audits are reported to SCA’s Board via the Audit Committee.
In 2015, Code of Conduct audits were conducted at two sites in the US and one site in Sweden, Mexico and the UK, respectively. In the US, the sites were instructed to make improvements with respect to overtime and consecutive days worked. In Sweden, documentation and implementation of fire drills was lacking. In Mexico, employment forms contained information that was deemed discriminatory, aspects that were immediately removed from the recruitment form. The site in the UK demonstrated high standards and complied with the SA 8000 standard with only minor changes.
SCA encourages its joint-venture companies to adopt a code of conduct and policies that are in line with the principles stated in the SCA Code of Conduct. SCA’s largest joint-venture company, Familia in Colombia, has updated and adopted its Code of Conduct. SCA is assisting the company in strengthening the systems around the Code, including due diligence and handling of complaints.
In 2015, SCA assisted its joint-venture partner Sancella in Tunisia in drafting a new code of conduct to ensure it is aligned with SCA’s Code. The Sancella Board of Directors adopted the new code in December 2015.
SCA assesses and manages its operations to address social, environmental and other operational risks. SCA monitors the Code of Conduct through reporting systems and auditing of specific operations.
SCA’s human rights and corruption risk analysis is based on assessments carried out by Amnesty, Sedex and Transparency International. Approximately 18% (17) of SCA’s revenues are generated in countries with a relatively high risk of human rights violations. About 28% (27) derive from countries with a relatively high risk of corruption.
SCA’s risk assessments are also included in the Group’s audits in connection with acquisitions.
SCA regularly revises its business practices in various parts of the organization and these reviews contribute to SCA’s risk control.
SCA’s approach to human rights is informed by the United Nation’s Guiding Principles on Business and Human Rights (UNGP). UNGP stipulates that as part of its commitment to respect human rights, companies must exercise due diligence in understanding and managing its actual and potential negative impact on human rights of its various stakeholders. In 2014, SCA, together with the non-profit organization BSR, mapped and identified its human rights risks through a Group-wide human rights impact assessment process. The risks were graded not by the impact on business but the impact on the rights holder. The assessment revealed three salient issues:
- Labor-related risks, including occupational health and safety, discrimination, forced labor and right to equal work for equal pay in SCA’s direct and indirect operation (supply chain).
- Land rights risks associated with the sourcing of timber, fiber, and pulp – especially where indigenous communities are present.
- Risks related to water use by SCA operations located in water-stressed regions that may infringe on the rights of local communities to water and sanitation.
The review also identified some areas of improvements, such as a more holistic approach to the human rights risks in the supply chain. Following this recommendation, SCA’s global sourcing teams have been working to ensure that human rights risks are further integrated. All forms of violations of human rights are taken very seriously. These are reported and managed in the same way as other breaches of the company Code of Conduct, see above.
Committed to supporting and advancing children’s rights, SCA has also joined the Global Child Forum, a multi-stakeholder platform for leaders from business, governments, academia and civil society in a joint effort to implement children’s rights.
Due to the intensified focus on the elimination of forced labor, for example, on account of the Modern Slavery Act in the UK, one of the focus areas in 2016 will be to identify areas with elevated risks.
Anti-corruption is included in SCA’s Code of Conduct. In 2013, SCA introduced a new anti-corruption policy, aligned with legislation such as the UK Bribery Act, for increased focus and transparency. SCA must conduct all activities in accordance with applicable laws and regulations, and all corrupt activity is strictly prohibited.
SCA conducts regular corruption risk assessments. This includes due diligence audits of suppliers and other business partners.
SCA has developed an anti-corruption e-learning course translated into 21 languages. In 2015, we commenced implementation of the e-learning course in onboarding programs.
SCA is committed to full compliance with competition laws (also called “anti-trust” laws) as set out in the SCA Code of Conduct. These laws generally prohibit agreements or understandings between competitors that undermine competition, including price fixing, allocation of customers or geographic markets, bid rigging or abuse of a dominant position.
SCA has anti-trust programs in place and, in 2015, the Group launched an anti-trust e-learning training course with the aim of improving employees’ understanding of competition laws and how these impact their daily work. It is mandatory for specified groups of employees to complete the training, such as employees with an interface toward trade associations, customers and competitors. More than 2,000 employees completed the training course during the year and more will be trained in 2016.
Ongoing anti-trust cases
SCA conducts operations in about 100 countries and, in many cases, holds leading market positions. It is natural that SCA, like other large multinational corporations, is the subject of investigations by competition authorities. At present, competition authorities are reviewing the joint venture Familia’s operations in Colombia and Peru, as well as SCA’s wholly owned businesses in Chile, Spain, Poland, Hungary and Russia. In all instances, SCA and/or the joint venture is/are cooperating with the authorities and providing the requested information.
Business Practice Reviews
SCA’s business practice reviews are conducted by the internal audit unit. The reviews focus on business ethics and SCA’s relationships with customers, suppliers and authorities. In 2015, the review process was updated and the scope was extended. Additional interviews are performed to ensure the effectiveness of the control environment and greater consideration is given to challenges in the local environment.
Since the beginning of 2008, 18 reviews have been performed in as many countries. In the past five years, 29% (30) of SCA’s operations in risk countries have been investigated. The countries are selected on the basis of Transparency International’s corruption index in combination with SCA’s net sales in the country.
In 2015, business practice reviews (BPRs) were conducted in Taiwan, Poland, Mexico and Russia. The BPR in Taiwan showed serious deficiencies related to corporate governance. Management agreed upon action plans to be completed in 2016 and, in one case, in 2017. The BPRs in Poland, Mexico and Russia noted only minor deficiencies and action plans will be implemented.