Eliminate child labor
Our goal is the elimination of child labor in the Company’s value chain.
The scope of this focus area is mainly upstream in our value chain.
Our commitment
At Swedish Match, 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 source materials from. In our efforts, we put special emphasis on child labor and related human rights issues. Swedish Match does not consent to child labor anywhere in our value chain. We acknowledge the fact that child labor is not a stand-alone issue and tackling the issue requires a holistic approach. Our efforts are continuous, and the timeline and goal of this focus are long term.
Assessing risk of human rights violations
In the assessment of risk of human rights violations in our value chain we have identified child labor as a specific issue to address in our efforts to promote respect for human rights. We are dependent on raw material from agriculture and forestry for our products. According to ILO, approximately 168 million children are involved in child labor worldwide; 59 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.
During 2016, we have assigned external expertise to advance the risk assessment of human rights and in particular child labor. We have reassessed the major risk landscape in relation to all suppliers of direct materials based on manufacturing country or origin of raw material, known category and industry risks1) as well as spend. We have pursued a more in-depth social impact assessment at industry-level, to identify potential and specific human and labor rights risks, for a limited number of higher risk categories of direct materials. The results of the work thus far show that 56 suppliers of direct material may be classified as high risk based on industry risk and country of origin. The clear majority are suppliers of raw tobacco, the remaining part are suppliers of lighter components or finished products sourced in Asia or Africa. These results confirm our initial 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 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. This risk assessment forms the basis for our efforts to assess and mitigate specific risk in dialogue with prioritized suppliers in 2017.
Identifying, preventing and mitigating child labor in our value chain
The risk of child labor is low within our own operations. To ensure that this remains the case, we continuously keep human rights high on the agenda and will continue to train our employees on the subject as well as conduct internal audits.
To identify specific risk upstream in our value chain, we will continue to work with tools and processes as described on the page Sustainable Supply Chain. For our suppliers of direct materials other than raw tobacco we will further systemize our work to assure compliance to our Supplier Code of Conduct. We will intensify the dialogue on specific risk with prioritized suppliers. The STP is our major tool to conduct due diligence and to mitigate child labor and child risks in our supply chain for raw tobacco. The general findings for tobacco growing and processing in the risk assessment complemented with identified areas for improvement within the STP will further our progress towards increased knowledge-building of the tobacco value chain, which improves our ability to identify, prevent and mitigate child labor and child risks.
Building knowledge and tracking progress
We will build further on our in-depth knowledge concerning the people and conditions in our raw tobacco value chain and confirm it in third party reviews in the coming two years, as described on the page Sustainable Supply Chain. This will be done in cooperation with our suppliers. We will identify parameters and indicators to track and find effective ways to work proactively towards our goal.
1) Classification of risk has previously been done mainly based on geographical location and the Corruption Perception Index of Transparency International (CPI). In this refined assessment, the CPI has been cross-referenced with Maple Croft’s Human Rights Index and complemented with specific industry-related risk of human and labor rights violations.
Developing performance indicators
We will continue to develop indicators and measure our efforts on sustainable supply chain management and child labor issues in 2017.
The table Supply chain management presents indicators identified at present.
| Supply chain management | 2016 |
|---|---|
| Number of raw tobacco suppliers1) | 61 |
| Share of raw tobacco suppliers included in STP, % | 67 |
| Number of 3rd party audits performed on raw tobacco suppliers | 8 |
| Number of farms visited by Swedish Match Leaf Operations | 122 |
| Number of audits for child labor issues performed on suppliers of other direct material | To be reported |
1) Raw tobacco suppliers are viewed as individual suppliers per country.
