Eliminate child labor
Our goal is the elimination of child labor in the Company’s value chain.
Our commitment
Swedish Match respects the rights of the child, including the right to education, the right to rest and play and the right to have the child’s basic needs met, in accordance with the UN Convention on the Rights of the Child. Swedish Match does not accept child labor anywhere in our value chain.
We respect universal human rights and support internationally proclaimed human rights conventions and guidelines. We recognize the role we play in respecting these rights and in making sure that they are upheld and respected for the people impacted by our business, in the areas where we operate and from which we source materials.
Consistent with the UN Convention on the Rights of the Child and the ILO Convention 138 on the minimum age for admission to employment and work, Swedish Match adheres to the principle that the minimum age for work should be above the age for finishing compulsory schooling, which is generally 15 years of age, or 14 years according to exceptions for developing countries. If relevant national legislation has set a higher age, this age applies. Work that is likely to be hazardous or harmful to the child’s health as well as physical, mental, spiritual, moral or social development or that interferes with the child’s education shall not be performed by young workers – children between 15 or 18 years of age. In the case of family farms, children of farmers between the ages of 13 and 15 years or above the minimum age for light work as defined by the country’s law, whichever affords greater protection, can do light work on their own family’s farm, as long as it does not threaten their health and safety, or hinder their education or vocational orientation and training.
The scope of this focus area is our own production facilities and our suppliers and, for tobacco, the farmers who provide tobacco to suppliers.
Our goal
Our goal is the elimination of child labor in the Company’s value chain.
- Improve our ability to identify, prevent and mitigate child risks and other sustainability risks in our supply chain.
- 100 percent child labor free tobacco.
Our approach
Assessing risk related to business integrity and human rights1)
Swedish Match is dependent on raw material from agriculture and other sources for our products. According to the International Labor Organization, ILO, approximately 152 million children are involved in child labor worldwide; 71 percent of these children are found in agriculture. With tobacco being an agricultural product, there is a significant risk of child labor. The issue of child labor is extensive and complex; it requires commitment from us as well as from farmers and suppliers that contract with farmers, other suppliers, governments and other manufacturers.
We assigned external expertise to refine our previous assessment of risk related to business integrity and human rights in our value chain in 2016. This risk assessment forms the basis for our efforts to assess and mitigate specific risk in dialogue with prioritized suppliers. The risk landscape in relation to all suppliers of direct material was reassessed based on manufacturing country or origin of raw material, known category and industry risks2) as well as annual level of spending. A more in-depth social impact assessment was pursued at industry-level, to identify potential and specific human and labor rights risks for a limited number of higher risk categories of direct material.
Out of our 124 significant suppliers of direct material3) a total of 73 suppliers4) are classified as high risk based on industry and/or country of origin. The majority of resulting high risk suppliers are suppliers of raw tobacco. The remaining part are suppliers of lighter components or finished products primarily sourced from Asia. These results confirm our long-term focus on suppliers of raw tobacco in our efforts to manage our supply chain more sustainably. These results also confirm our continued focus on child labor and child rights, with child labor and women and child risks rated as the top specific human rights risks for the tobacco category.
1) Data excludes facilities acquired in 2017 and 2018; V2 Tobacco, House of Oliver Twist, and Gotlandssnus.
2) Classification of risk has been done based on geographical location and the Corruption Perception Index of Transparency International (CPI), cross-referenced with Maple Croft’s Human Rights Index and complemented with specific industry-related risk of human and labor rights violations.
3) A significant supplier of direct material is defined as a supplier with which Swedish Match has an annual spend of above 400,000 USD. Suppliers below this spend limit that belong to an industry classified as high risk in relation to business integrity and human rights violations have been included regardless of spend. This includes all suppliers of raw tobacco.
4) Includes all suppliers of raw tobacco regardless of country of origin.
Supplier due diligence
We have systems and procedures in place to monitor adherence to our Supplier Code of Conduct. The monitoring is most advanced and proactive for the raw tobacco purchases for our snus products. For the raw tobacco for other smokeless products, the monitoring is more compliance oriented. The major due diligence tools for the raw tobacco supply chain are the Sustainable Tobacco Program (STP) and associated procedures. Swedish Match sources its raw tobacco primarily from global suppliers (such as Alliance One, ITC and Universal Leaf) who in turn source tobacco from individual farmers. The monitoring for direct material other than raw tobacco, has been enhanced through standard group procedures. We work to maintain a proactive dialogue on prioritized sustainability issues with relevant significant suppliers of direct material.
Sustainable Tobacco Program (STP)
The STP is a due diligence program for sustainability aspects in tobacco growing and manufacturing. It was jointly developed by the tobacco industry in 2015 and includes annual supplier self-assessments and compliance oriented third-party reviews in a three-year cycle. The first review cycle was completed at the end of 2018. The program covers our tobacco suppliers for the production of snus, moist snuff and US chewing tobacco, 55 percent of our purchased raw tobacco volumes, and includes known sustainability aspects for the agricultural value chain, such as human rights, labor practices, health and safety, as well as environmental issues.
Several criteria relating to child labor and child risks in the tobacco growing and manufacturing supply chain have been under assessment and review through the STP. These include, but are not limited to, employment or recruitment of child labor and performance of dangerous or hazardous tasks within the supplier facilities; employment of children on supplying farms, identification of dangerous and hazardous work on supplying farms, exposure to hazards on supplying farms for persons below the age of 18 years old, and farmer’s children helping out with light work on supplying family farms as well as their school attendance along with the identification of prompt action issues and procedures to address them.
During 2019, Swedish Match and six other manufacturers have been engaged in the development of an STP 2.0 Platform with the aim to move towards a focused and impact oriented STP based on relevant assessments. Read more under section Going forward on the next page.
Sustainability audits on tobacco leaf suppliers for cigars
During 2018, several raw tobacco suppliers for cigars participated in a pilot review conducted by a third-party supplier. The review mapped principles and criteria used within the STP, which are applicable for Swedish Match sustainability focus areas. Dialogue with tobacco suppliers is ongoing and all suppliers audited have been provided a risk reduction plan and corrective action plan based on their results and specifically targeting Swedish Match’s six sustainability focus areas. In 2020, we plan to visit all the key leaf suppliers for cigars and continue with the audit and assessment process.
Conducting dialogue with suppliers
Our Leaf Operations departments evaluate risk and tailor the continued dialogue on the basis of self-assessments, third party reviews and resulting action plans for improvement. Suppliers and farmers are visited regularly to strengthen relationships and to pursue a proactive dialogue, including follow-up on action plans. The proactive nature and structure of this dialogue varies depending on vendor location and size. We have worked on systemizing, and structuring documentation of, this dialogue in a consistent way for raw tobacco covered in STP and have defined a procedure on how to interpret, messure, take action and follow up on STP results.
Direct material other than raw tobacco
The due diligence for direct materials other than raw tobacco builds on our Supplier Code of Conduct. At present this process primarily covers tier one suppliers1). The tier one suppliers are continuously screened for compliance and risk in relation to ethical business practices, including child labor issues. In addition to this, we encourage our suppliers to develop their own supplier standards and monitoring procedures.
During the year we have continued implementation of the standard group procedure, developed in 2017. Our significant suppliers base is identified and monitored, and we continuously assess supplier adherence to requirements set forth in our Supplier Code of Conduct. The procedure includes self-assessment and desktop screening. Based on the assessment results, further dialogues have been initiated during the year and suppliers have also been subject to audits conducted by a third party auditor. These audits cover child labor, employment and labor practices and ethical business practices.
1) Suppliers referred to here are suppliers who provide products directly to Swedish Match, without middlemen or other manufacturers.
ECLT Foundation
Swedish Match is a member of and represented on the board of the ECLT Foundation – Eliminating Child Labour in Tobacco Growing. The foundation is committed to pursuing collaborative solutions for children and their families that combat the root causes of child labor in tobacco-growing communities. Founded in 2000, this multi-stakeholder initiative brings several stakeholders from different parts of the tobacco industry together toward a common goal. Since 2011, the ECLT Foundation has helped over 700,000 children, farmers and families in tobacco-growing communities and they are currently implementing projects in Guatemala, Indonesia, Malawi, Mozambique, Tanzania and Uganda.
Our involvement provides us with a platform to continuously keep the issue high up on the agenda, exchange experience and knowledge within this field, and follow projects to tackle the issue on the ground. For more information on ECLT Foundation, see the ECLT Foundation’s website, www.eclt.org.
The “Let’s PLAY” After School Program
In complement to our due diligence we have supported an after-school program in the Philippines for two consecutive years. This is a project under Universal Leaf’s “Let’s PLAY” program, providing after school activities in selected communities where children have been observed to participate in harvest activities, giving children an alternative to working and allowing them to thrive in new activities. Along with conducting interesting alternative activities and improving the quality of the children’s health and education, the objective is also to increase awareness of parents, teachers and community leaders on child labor prevention. This project complements other activities, implemented by this supplier, to mitigate the risk of child labor. Swedish Match’s engagement in this project complements our own efforts to manage our supply chain sustainably. Learnings from participating in the program also provide us with enhanced understanding of conditions on the ground in areas from which we source raw tobacco. Assessment of the program has shown an increased community awareness of the tobacco industry fight against child labor as well as no incidences of child labor in the identified areas of the after-school activities. Swedish Match will continue to support the program in 2020.
Our progress
Highlights 2019
- Active participation in an industry-wide collaboration to move towards a focused and impact-oriented STP 2.0 based on relevant assessments.
- Co-funding of the “Let’s PLAY” After School Program by supporting three schools (449 pupils) in selected communities in the Philippines to mitigate the risk of child labor.
- Third party audit on high risk suppliers of direct material other than raw tobacco, covering regulatory and legal compliance on child labor, employment and labor practices and ethical business practices.
- Continued audit process with our most critical suppliers of raw tobacco for cigars resulting in risk mitigation and corrective action plans in place relative to our focus areas.
- Increased number of farm visits, thus strengthening the relationship with suppliers and farmers of raw tobacco.
Progress update
| Supply chain management1) | 2019 | 2018 | 2017 |
|---|---|---|---|
| Total number of significant suppliers of direct material | 124 | 130 | 118 |
| Raw tobacco | |||
| Number of raw tobacco suppliers2) | 58 | 57 | 51 |
| Number of farms visited by Swedish Match Leaf Operations | 2643) | 119 | 123 |
| Share of raw tobacco volumes included in STP, % | 55 | 47 | 53 |
| Number of self-assessments performed by raw tobacco suppliers | N/A4) | 27 | 24 |
| Number of third party reviews performed on raw tobacco suppliers during the 2016–2018 review cycle | N/A | 29 | 12 |
| Direct materials other than raw tobacco | |||
| Number of high risk suppliers of direct material other than raw tobacco | 15 | 225) | 19 |
| Number of third party audits performed on high risk suppliers of direct material other than raw tobacco | 5 | N/A | N/A |
1) Data excludes facilities acquired in 2017 and 2018; V2 Tobacco, House of Oliver Twist, and Gotlandssnus, with the exception of 2019 data on raw tobacco where V2 Tobacco and Gotlandssnus are included.
2) Raw tobacco suppliers are viewed as individual suppliers per country. All raw tobacco suppliers are classified as high risk regardless of country of origin.
3) Number of visits increased partly due to change in definition and the inclusion of V2 Tobacco and Gotlandssnus acquired in 2017 and 2018.
4) The information is not available due to ongoing development of the STP 2.0 Platform.
5) Figure restated following further analysis.
Going forward
- During 2019, Swedish Match has been involved in the development of the STP 2.0 Platform. The aim of STP 2.0 is to improve our environmental and social footprints, to contribute to the UN Sustainable Development Goals (UN SDGs) and to enable transparent communication of responsible practices across our supply chain. The process in STP 2.0 will follow a cycle of continuous improvement in five steps: identify, prioritize, respond, measure, and report.
STP 2.0 builds on the UN Guiding Principles on Business and Human Rights (UNGPs) as well as the five Step Framework for risk-based due diligence along agricultural supply chains set out by the OECD-FAO1) Guidance for Responsible Agricultural Supply Chains. A blueprint has been created and agreed upon. The overall goal of this platform is to improve the resilience of the leaf supply chain and to demonstrate positive impact in relation to the UN Sustainable Development Goals in a credible way. The new platform will include a technical system, a guidance integrated into the technical system, as well as a process with set stages following a standardized continuous improvement cycle. It is anticipated that the first self-assessments, using STP 2.0, will begin during 2020. - Continued support of the “Let’s PLAY” After School Program in the Philippines.
- Continued third party audits of high-risk suppliers of direct material other than tobacco and actions on potential findings.
1) OECD, Organisation for Economic Co-operation and Development – FAO, Food and Agriculture Organization of the United Nations.
