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, Code of Conduct audits and business practice audits. All employees are regularly trained in Code of Conduct compliance, including guidelines on business practices, human rights, anti-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, 91% of employees had undergone training in SCA’s Code of Conduct.
In addition, we are also making sure that the Code of Conduct is included in all on-boarding programs across the company. By year-end 2016, 93% of all new employees had completed the training.
To further develop and deepen the understanding and importance of the Code of Conduct, SCA launched a new training concept in 2016. The purpose of the training is to make compliance and integrity a leadership and company culture topic. More about the initiative can be found in chapter The Code shows the way.
The database provided by Sedex (The Supplier 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 2016 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.
65 SCA facilities and one joint-venture facility in Tunisia and Algeria, respectively, use the Sedex system to report information.
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. There is also a dedicated e-mail address managed by the Group’s corporate sustainability function. In 2016, SCA decided to further expand the availability of third-party-operated reporting hotlines, where employees can file anonymous reports through a confidential channel outside SCA. Hotline services are being made available in many locations such as the Nordic and Baltic countries, Russia, the UK, several countries in Central and Eastern Europe and Latin America. The aim is to successively expand its availability to all SCA employees.
Reported breaches in 2016
In 2016, there were a total of 82 reported cases of potential breaches of the Code of Conduct, of which 16 were still under investigation at year-end. Among the reported complaints, the most common types were alleged discrimination and harassment (37), corruption (12) and misuse of assets (11). The remainder of the complaints involved anti-trust, management practice grievances, conflicts of interest, health and safety and various other company policies (22). Approximately 70% of complaints came from identified company employees, 20% from external stakeholders, such as a customer, supplier or contractor and 10% were made anonymously.
Following review and investigation, a total of 66 cases were closed and a total of 28 cases were defined as a breach of SCA’s Code of Conduct or company regulations. Of the confirmed violations, 15 cases related to harassment and discrimination, ten cases related to corruption and misuse of company assets, two cases related to labor practices and the remaining case related to other SCA policies. Disciplinary action was taken in all cases of verified violations. A total of 12 employees were dismissed. 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 that 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 2016, Code of Conduct audits were conducted at one site in each of the following countries: Spain, Mexico, Germany and India. In Spain, the site was instructed to make improvements with respect to overtime and improve the frequency of fire drills. In Mexico, employment forms contained information that was deemed discriminatory, aspects that were immediately removed from the recruitment form. Documentation and implementation of fire drills was lacking and the site needs to improve its handling of overtime and conflicts of interest. The German site showed deficiencies in worker safety adherence and needs to improve its process for monitoring Code of Conduct training. The site in India 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, updated and adopted its code of conduct in 2015. In 2016, all employees received training in the Code.
In 2015, SCA joint-venture partner Sancella in Tunisia adopted a new code of conduct. A comprehensive training program has been launched to raise awareness about the code of conduct and by year-end 2016, about 80% of Sancella’s employees had received training. The remainder will be trained in 2017.
In addition, Vinda, in which SCA is a majority shareholder, has adopted a new Code of Conduct with the support of SCA. Vinda’s new Code of Conduct is similar to SCA’s Code and was adopted by the Board of Directors in April 2016. A majority of Vinda’s employees were trained in 2016 and the Code has become a central tool within the Vinda policy framework.
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 11% (11, 12) of SCA’s revenues are generated in countries with a relatively high risk of human rights violations. About 30% (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 based on the United Nation’s Guiding Principles on Business and Human Rights (UNGP). The UNGP stipulates that as part of their commitment to respect human rights, companies must exercise due diligence in understanding and managing the actual and potential negative impact on human rights of their 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.
In 2016, an operational human rights risk mapping methodology was developed and piloted in Latin America, see chapter The Code shows the way. 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.
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 which has been implemented in onboarding programs. In 2016, about 700 new employees completed the training program.
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. In 2016, about 900 employees completed the EU competition e-learning course and 800 completed the US anti-trust e-learning course.
Ongoing anti-trust cases
During 2016, the Colombian competition authority (SIC) issued its final decisions concluding that Productos Familia S.A., the joint venture in which SCA owns a 50% equity stake, was involved in cartel activities related to tissue products and baby diapers. SIC fined Familia approximately SEK 170m in the tissue products investigation and SEK 100m in the baby products investigation. Familia has appealed both decisions to the courts.
The competition authority of the Andean Community of Nations (CAN) has launched its own independent investigation into the tissue products market in Ecuador and Colombia. Familia is actively cooperating with CAN in that investigation.
At present, competition authorities are reviewing SCA’s wholly owned businesses in Chile and Hungary. In all instances, SCA is cooperating with the authorities and providing requested information.
The Spanish National Commission for Markets and Competition (CNMC) issued a decision and fined a number of companies, including SCA, for alleged improper market conduct between 1996 and 2014. The fine imposed on SCA amounts to approximately SEK 325m. SCA does not agree with the CNMC’s decision and has submitted an appeal to the Spanish courts.
SCA has also been part of an investigation by the Polish Anti-Trust Authority. The authority issued its decision in December 2016 and imposed a fine of approximately EUR 700,000 for alleged improper market conduct. SCA intends to appeal the decision.
Business practice audits
SCA’s business practice audits (BPA) are conducted by the internal audit unit. The audits focus on business ethics and SCA’s relationships with customers, suppliers and authorities. In 2015, the audit 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, 24 audits have been performed in 16 countries. In the past five years, 77% (41, 40) 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 2016, BPAs were conducted in Greece, Romania, Germany, Costa Rica/Nicaragua and Italy. The BPAs in Greece and Romania showed a need for improvement with respect to performance reviews with employees. The German business needs to improve its process concerning customer events and Code of Conduct training monitoring. Costa Rica/Nicaragua needs further refresher training on Group policies. The Italian operation needs to improve its risk assessment of third parties. Management in all countries agreed upon action plans to be completed in 2017. Additionally, the internal audit unit reviewed payments to suppliers in tax havens. The outcome was that SCA has relatively few suppliers active in tax havens, they involve only minor amounts and none of them, after controls by SCA’s global or business units, required further investigations.