Human rights in our supply chain
Our goal is the elimination of child labor and other human rights violations in the Company’s supply chain.
On this page:
- Our rationale for inclusion
- Our commitment
- Our approach
- Our progress
Our rationale for inclusion
With tobacco being an agricultural product, there is a risk of human right violation in the supply chain especially related to child labor. According to the International Labor Organization, ILO, approximately 160 million children are involved in child labor worldwide; with the vast majority found in agriculture.
By implementing targeted initiatives, and developing strong working relationships with farmers, suppliers and other stakeholders, Swedish Match can have a significant socioeconomic impact on people and tangible benefits for economies and societies in which we operate, meanwhile mitigating reputational and operational risks.
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 for the people impacted by our business, in the areas from which we source materials.
Elimination of child labor is the center of focus in our efforts. Swedish Match does not accept child labor anywhere in our supply chain. We respect 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.
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 is the elimination of child labor and other human rights violations in the Company’s supply chain.
- 100 percent child labor free tobacco.
- 100 percent of our raw tobacco suppliers covered by STP or Swedish Match’s due diligence program.
- Robust systems to identify, prevent and mitigate child labor and any other human right related issues in our entire supply chain.
- With tobacco being an agricultural product, there is a risk of human right violation in the supply chain especially related to child labor
Traceability of tobacco is not always possible due to various market conditions and government regulations.
Minimum age of employment
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.
Our Supplier Code of Conduct
Our Supplier Code of Conduct reflects Swedish Match’s Code of Conduct and specifies what we expect and require from our suppliers in terms of employment and labor practices, workplace practices, ethical business practices and environmental management practices. Requirements are based on and comply with international conventions and guidelines1). The Supplier Code of Conduct forms the basis for our relationship with suppliers and is an integral part of most of our significant business agreements.
Swedish Match strives to work with suppliers who have a healthy long-term financial position and chooses suppliers who also support Swedish Match’s requirements regarding ethical business practices and other sustainability aspects.
We are in frequent and recurring dialogue with our suppliers on our fundamental values. Activities include communication of requirements in the Supplier Code of Conduct, follow-up on adherence through supplier assessments and audits as well as further dialogue on priority issues to ensure continued improvement. The overall aim is to proactively increase our further dialogue with suppliers on topics with regard to sustainability.
1) The international conventions and guidelines referred to here are the UN Universal Declaration of Human Rights, the UN Convention on the Rights of the Child, the ILO Conventions (No’s. 001, 014, 029, 030, 087, 098, 100, 105, 106, 111, 138 and 182), and the OECD Guidelines for Multinational Corporations.
Smokefree tobacco due diligence
We purchase a vast majority of tobacco from global suppliers who in their turn purchase tobacco from a large number of farmers. Most of these farms are located in developing countries. They are often small and family owned, and crops are rotated between tobacco and other agricultural products.
All of our suppliers monitor farmers as part of their due diligence process. The monitoring process is primarily based on announced and unannounced visits by field technicians, often several times throughout the growing season. The field technicians audit the farmers on numerous areas, including labor practice standards and crop quality. If a noncompliance is recorded, required actions are taken by the supplier, which may entail training, remediation, or if necessary, non-renewal or termination of the contract. We audit the suppliers’ efforts through self-assessment, validation and third parties review governed by the STP .
The STP covers nearly all of our tobacco suppliers for smokefree products. The Human and labor rights theme in the STP, together with the Livelihoods theme, address components which are fundamental to the well-being of people involved with the production of tobacco. Topics under assessment and review include child labor, fair treatment, freedom of association, income, work hours and benefits, modern slavery, and safe working environment. These themes align with the United Nations Guiding Principles on Business and Human Rights and contribute to six UN Sustainable Development Goals.1)
1) UN Sustainable Development Goals: Goal 1: No poverty; Goal 2: Zero hunger; Goal 5: Gender equality; Goal 8: Decent work and economic growth; Goal 10: Reduce inequalities; and Goal 16: Peace, justice and strong institutions.
Cigar tobacco due diligence
For the cigars tobacco supply chain due diligence, we rely on both the STP and our own Cigar Leaf Audit Program to monitor adherence to our Supplier Code of Conduct.
The tobacco used in the body of our cigars as filler is sourced from global suppliers, with farms located all over the world. Due diligence is most effectively accomplished through participation in the STP, resulting in 94 percent of filler tobacco is covered by STP.
The tobacco used as wrapper for our cigars is sourced from a limited number of suppliers and farms who specialize in the type and grade of tobacco necessary for a quality wrapper leaf. These suppliers operate in a concentrated area and on a smaller scale than some of the larger global suppliers. Historically, monitoring these suppliers has been more efficiently accomplished through our Cigar Leaf Audit Program, which is founded on Swedish Match’s sustainability focus areas. Compliance with the requirements in the program is verified through annual supplier self-assessment and evidence validating the answers. Documentation is reviewed and any opportunities and non-conformances detected are added to the supplier’s risk reduction plan. The supplier’s risk reduction plan is communicated to the supplier with regular follow-up, both on-site and virtual, to ensure action plans are implemented.
Traceability of tobacco
The STP defines traceability as the ability to identify and trace the history, distribution, location and application of products, parts, and materials, in the areas of human rights, labor (including health and safety), the environment and anti-corruption. Traceability enables us to follow the raw tobacco through the supply chain stages, including who grew the tobacco, how much was grown, how it was grown and what impacts growing activities had on people involved and the environment.
We encourage our suppliers to implement Integrated Production Systems (IPS) and have the contracts signed ahead of the growing season, without involvement of intermediaries. A core component of IPS is an upfront commitment from our suppliers to contracted farmers. A benefit of IPS is to enable greater supply chain transparency and traceability. This enables opportunities to identify issues or adverse impacts during the growing season and provides us with the leverage to address those issues or impacts to effect change in the supply chain.
Engaging in IPS is not always possible due to various market conditions and government regulations. Therefore, we encourage our suppliers to seek alternatives and to work with relevant stakeholders to establish a clear chain of custody for tobacco in their supply chain and to verify that farmers are upholding set standards.
Swedish Match is a member of and represented on the board of the ECLT Foundation – Eliminating Child Labour in Tobacco Growing Foundation. 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. 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 the ECLT Foundation, see www.eclt.org.
Sustainable Tobacco Program (STP)
The STP is an industry-wide initiative, jointly developed by tobacco manufacturers and experts, to provide guidance in agricultural practices as well as environmental management and key social and human rights areas. Through industry leverage the program delivers impact and continuous improvement in the tobacco supply chain.
The STP is developed in line with relevant UN SDGs as well as global standards, guidelines and reporting frameworks. The program is governed by the STP Steering Committee, which consists of representatives from the industry, and managed by the STP Secretariat, an external party that holds a secretarial, project management and advisory role.
The STP addresses eight common industry priority themes: Governance, Crop, Climate change, Human and labor rights, Livelihoods, Natural habitat, Soil health, and Water. An industry guidance is defined for each theme, with specific goals and indicators to measure impact and track progress.
Direct material other than raw tobacco
For direct materials other than raw tobacco we rely on our own due diligence programs to monitor adherence to our Supplier Code of Conduct. The due diligence primarily covers tier one suppliers1). The tier one suppliers are continuously screened for compliance and risk in relation to ethical business practices, employment and labor practices, including child labor. In addition to this, we encourage our suppliers to develop their own supplier standards and monitoring procedures.
Swedish Match sources direct materials other than raw tobacco from a wide range of suppliers and regions, with the majority of our significant suppliers located in the US and Europe. We adopt a systematic approach to assess the risk related to business integrity and human rights in our value chain. The assessment is based on a combination of industry risk and country of origin. Classification of risk has been done based on geographical location and the Corruption Perception Index of Transparency International (CPI), cross-referenced with Maplecroft’s Human Rights Index2) and complemented with specific industry-related risk of human and labor rights violations. The suppliers classified as high risk are suppliers of lighter components or finished products primarily sourced from Asia.
All of the high risk suppliers are required to perform a self-assessment. Based on the assessment results, further dialogues are initiated. Third party audits are conducted on suppliers based on their risk score and cover ethical business practices, employment and labor practices. The audit generates a report, including a corrective action plan which is followed up by the auditor. Immediate action is taken in case the audit report includes major exceptions on legal and/or regulatory compliance on matters audited.
1) Suppliers referred to here are suppliers who provide products directly to Swedish Match, without middlemen or other manufacturers.
2) The index assesses key elements of the human rights and development environment, including labor rights, civil and political rights, human security, poverty, education, and health.
In 2022, 95 percent of our raw tobacco volumes were included in STP or in Swedish Match’s due diligence program. For our suppliers reporting in STP , the annual self-assessments were completed and validated by the STP Secretariat. The in-depth assessments conducted within STP are performed by a third party with subject expertise and include interviews, farm visits, and field assessments. It is a qualitative assessment focusing on improvements and enabling positive impacts on prioritized topics. In 2022, three in-depth assessments were conducted on Swedish Match suppliers in two geographies identified by the STP Secretariat and manufacturers as geographies with elevated risk. Two assessments covered Human and Labor Rights’ practices and one assessment covered Water management. Supplier dialogues on improvements are ongoing and action plans created and communicated to STP Companies.
All of our suppliers within STP monitor their farmers, primarily through announced and unannounced visits by field technicians. In case a prompt action issue1) is recorded, we encourage our supplier to confront and cease it immediately. Field technicians are empowered to address a prompt action issue directly on the farm. Where the technician does not have the necessary skills, the issue would be referred to an agricultural labor practices (ALP) manager or, in some cases, through an independent third party. Based on the latest STP self-assessments, 94 percent of our suppliers’ farmers have been monitored for child labor and 99 percent of all prompt action issues, including child labor, recorded by our suppliers of smokefree tobacco were resolved.
Our raw tobacco suppliers for cigars, monitored through the internal Cigar Leaf Audit Program, have completed self-assessments in 2022. Based on the result, all suppliers evaluated were provided a risk reduction plan based on non-conformities identified in the audit. Swedish Match conducted follow-up reviews and dialogue with the suppliers either in person or digitally.
Traceability of tobacco remains a crucial part of preventing human rights issues in the supply chain. In 2022, 83 percent of our total raw tobacco volumes were sourced from contracted raw tobacco farmers. Establishing traceability is not always possible in various markets due to government regulations, therefore we continue to encourage our suppliers to seek alternatives and establish a clear chain of custody for tobacco in their supply chain.
To complement our due diligence, Swedish Match decided to rejoin and support an after-school program in the Philippines in areas from where we source our tobacco. 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.
We have continued to monitor our significant suppliers of direct material other than raw tobacco in accordance with Group Procedures. Five third party audits have been performed on high risk suppliers in 2022 and we have followed up on the corrective action plans from suppliers that underwent audit in 2021. The audits covered child labor, employment and labor practices and ethical business practices. All audit results were reviewed by Division Presidents and corrective action plans are followed up, on site, by a third party auditor.
1) Prompt action issues are defined by STP as situations where, through negligence or ignorance, an individual’s actions are deemed an immediate or prolonged risk to themselves or others around them. All prompt action issues are considered a human right violation.
|Supply chain management||2022||2021||2020|
|Share of raw tobacco volumes included in STP or Swedish Match’s own due diligence program, %||95||95||96|
|Share of our suppliers’ farmers monitored for child labor under STP, %1)||94||99||N/A|
1) New KPI added in 2021 and measures our suppliers of tobacco for smokefree products.