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 consent to child labor anywhere in our value chain.
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.
We are dependent on raw material from agriculture and forestry for our products. According to the International Labour 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, suppliers, governments and other manufacturers.
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.
Assessing risk related to business integrity and human rights1)
We assigned external expertise to refine our previous assessment of risk related to business integrity and human rights in our value chain in late 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 130 significant suppliers of direct material3) a total of 86 suppliers4) were classified as high risk based on industry and/or country of origin. The majority of resulting high risk suppliers in this assessment are suppliers of raw tobacco, the remaining part are suppliers of lighter components or finished products sourced in Asia and Europe. The results confirm our long term focus on suppliers of raw tobacco in our efforts to manage our supply chain more sustainably. The 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, followed by forced labor/debt bondage, hazardous exposure to chemicals and limited access to safe drinking water/sanitation, 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 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) This 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 Programme (STP) and associated procedures. The monitoring for direct material other than raw tobacco, has been enhanced through group-common procedures. We work to maintain a proactive dialogue on prioritized sustainability issues with relevant significant suppliers of direct material.
Raw tobacco
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 STP is a due diligence program for sustainability aspects in tobacco growing and manufacturing. It was jointly developed by the tobacco industry in 2015; implementation started in 2016 and the first review cycle was completed at the end of 2018. Through the STP, we assure adherence to the requirements on, for example, human rights, labor practices, health and safety, as well as environmental issues, set forth in our Supplier Code of Conduct. Our suppliers continuously perform risk assessments in relation to these requirements and establish action plans for continuous improvement, for both our suppliers and for the suppliers of our suppliers. Farmers are subject to regular training on relevant aspects of the program with the purpose of improving conditions on the farm, yields and livelihoods.
Several criteria relating to child labor and child risks in the tobacco growing and manufacturing supply chain are 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 (tier one); employment of children on supplying farms (generally tier two), 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.
Swedish Match has 57 suppliers of raw tobacco. The STP covers raw tobacco for the production of snus, moist snuff and US chewing tobacco. The STP covers 47 percent of our purchased raw tobacco volumes and 47 percent of raw tobacco suppliers.
During 2018, some raw tobacco suppliers for cigars participated in a pilot review conducted by a third party supplier. The review mapped several principles and criteria used within the STP against Swedish Match sustainability focus areas.
Assessment and review through STP
Our tobacco suppliers for the production of snus, moist snuff and US chewing tobacco perform annual self-assessments with regard to adherence to the requirements in the STP, for their own part as well as for the farmers from whom they purchase. This forms the basis for dialogue between our Leaf Operations departments and suppliers, as well as for the third party reviews. Our suppliers’ field technicians train and assist farmers in their daily work to assure compliance with the STP requirements and to optimize crop yield. The field technicians continually monitor farm operations. If matters require immediate attention, actions will be taken to resolve the matter.
On a three-year basis, suppliers are audited and rated by a third-party auditor, AB Sustain. During the past three years 29 reviews have been conducted by AB Sustain. The Leaf Operations departments participated in three of these reviews to better understand how the STP affects the work and procedures of our suppliers and to build on the review results.
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 proactivity and structure in this dialogue varies between the inflows of raw tobacco to Swedish Match. We have worked on systemizing, and structuring documentation on, this dialogue in a consistent way for raw tobacco covered in STP. We have defined a procedure on how to interpret, take action and follow up on STP results which has been implemented on a larger scale during the year.
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 suppliers. 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.
Swedish Match has 73 significant suppliers of direct material other than raw tobacco. During the year we have continued implementation of the group-common procedure, developed in 2017, to 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 dialogue has been conducted during the year with the 29 of our 31 suppliers assessed in late 2017. Some of these suppliers have also been subject to light audits conducted by Swedish Match. Results from these dialogues and light audits provide input to prioritizing suppliers subject to further reviews during 2019.
| Supply chain management1) | 2018 | 2017 | 2016 |
|---|---|---|---|
| Total number of significant suppliers of direct material | 130 | 118 | 136 |
| Raw tobacco | |||
| Number of raw tobacco suppliers2) | 57 | 51 | 61 |
| Number of farms visited by Swedish Match Leaf Operations | 119 | 123 | 122 |
| Share of raw tobacco volumes included in STP, %3) | 47 | 53 | 59 |
| Number of self-assessments performed by raw tobacco suppliers | 27 | 24 | 26 |
| Number of third party reviews performed on raw tobacco suppliers during the 2016–2018 review cycle | 29 | 12 | 8 |
| Direct materials other than raw tobacco | |||
| Number of high risk suppliers of direct material other than raw tobacco | 29 | 19 | N/A |
1) Data excludes facilities acquired in 2017 and 2018; V2 Tobacco, House of Oliver Twist, and Gotlandssnus.
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) For cigars, 11 third party reviews have been conducted outside of STP, corresponding to 80 percent of purchased raw tobacco volumes.
