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.
Poverty is one of the main causes which influence farmers’ ability to achieve acceptable levels of socioeconomic wellbeing. It expedites the risk of child labor on tobacco farms because farmers may be unable to hire workers or afford school costs for their children. Farmers who can support their families are more likely to apply good agriculture practices and send their children to school. These are the farmers Swedish Match prefers to source from. This not only helps to safeguard high quality tobacco supply necessary for our GOTHIATEK® quality standard, but also in so doing, increases the likelihood that risks of incidences of child labor and other human rights violations are mitigated. 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.
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.
Smokefree tobacco due diligence
We purchase a vast majority of tobacco from global suppliers who in their turn purchase the 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 farmers on numerous areas, including labor practice standards and crop quality. If a noncompliance is recorded, then required actions are taken by the supplier, which may entail training, remediation, or if necessary, non-renewal or termination of contracts with farmers. We audit the suppliers’ efforts through self-assessment, validation and third parties review governed by the STP, as well as our own annual farm visits.
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.2) The due diligence cycle under the STP is described as below.
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.
For the tobacco used in the body of our cigars as filler, we source from global suppliers, with farms located all over the world. We believe we can deliver more impact through industry leverage when performing the due diligence, therefore 95 percent of filler tobacco is covered by STP.
For tobacco used as wrapper for our cigars, we source from a limited number of suppliers and farms. The largest suppliers account for more than 90 percent of total purchases and the locations of the farms are more concentrated than our smokefree raw tobacco farms. Thus, we believe it is more efficient to run our own due diligence program. Nearly all of our cigar leaf tobacco volumes are monitored through the Cigar Leaf Audit Program. The program is founded on Swedish Match’s sustainability focus areas. The continuity of compliance with the requirements in the program is verified through annually submitted supplier’s self-assessment and evidence validating the answers. Documentation is reviewed and opportunities and non-conformances detected will be added to the supplier’s risk reduction plan and followed up in dialogue with the supplier, on site or digitally, to define necessary actions going forward.
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. Since 2011, the ECLT Foundation has supported over 1,035,000 children, farmers and families in the fight against child labor and are currently active in 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 the ECLT Foundation, see www.eclt.org.
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 suppliers3). 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 Index4) 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) 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.
2) 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.
3) Suppliers referred to here are suppliers who provide products directly to Swedish Match, without middlemen or other manufacturers.
4) 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.
- Traceability of tobacco is not always possible due to various market conditions and government regulations.
- According to ILO, a large body of evidence affirms that due to the COVID-19 pandemic, families in low-income countries may turn to child labor as a coping mechanism.
- 100 percent of significant suppliers of direct materials have committed to the principles of Swedish Match Supplier Code of Conduct.
- 95 percent of our raw tobacco volumes included in STP or in Swedish Match’s due diligence program.
- Suppliers’ self-assessments for 2021 were completed and verified in the STP platform by the STP Secretariat. Three suppliers have been identified for an in-depth assessment anticipated to be conducted in 2022.
- 99 percent of our suppliers’ farmers under STP have been monitored for child labor.
- We were able to conduct 80 farm visits. Independently, our suppliers also continued to conduct their own site-visits in the countries wherever allowed.
During the past year, we have continued to participate in the Sustainable Tobacco Program (STP) and have made efforts to integrate our own due diligence program for cigars into the same digital platform as STP. This step will enable us to improve how we consolidate and track human rights KPIs, both in the areas of traceability and monitoring for our raw tobacco suppliers. With both STP and our own internal reporting performed in the same system, we hope to improve our capabilities of tracking suppliers’ progress in a more systematic way, and also to improve transparency in our external reporting.
In 2021, 95 percent of our raw tobacco volumes were included in STP or in Swedish Match’s due diligence program. For the suppliers reporting in STP, the first cycles of self-assessments were completed and verified by the STP secretariat. Based on the validation of the evidence, three suppliers were identified for an in-depth assessment anticipated to be conducted in 2022. All of our raw tobacco suppliers for cigars, which are covered by the internal Cigar Leaf Audit Program, have completed self-assessments in 2021. 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 digitally.
All of our suppliers 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, 99 percent of our suppliers’ farmers have been monitored for child labor and 97 percent of all prompt action issues, including child labor, recorded by our suppliers of smokefree tobacco were resolved. In addition to suppliers’ monitoring, our Leaf Operations teams have conducted 80 farm visits to validate the efforts made by the suppliers.
Traceability of tobacco remains a crucial part of preventing human rights issues in the supply chain. In 2021, 84 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.
In 2021, the ECLT Foundation remained committed to strategic investment and collaborative efforts to support children, farmers and families in areas where tobacco is grown. During the year, ECLT also provided urgent relief funds to raise awareness about COVID-19, provide masks and other needed health supplies, support families, and keep children connected with their studies during school closures.
During 2021 we have continued to monitor our significant suppliers in accordance with Group Procedures. Ten third party audits have been performed in 2021 and we are now in line with set targets. 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||2021||2020||2019|
|Share of raw tobacco volumes sourced from global tobacco suppliers, %||91||93||N/A|
|Share of raw tobacco volumes included in STP or Swedish Match’s own due diligence program, %||95||961)||N/A|
|Number of farms visited by Swedish Match||80||47||138|
|Share of raw tobacco volumes sourced from contracted raw tobacco farmers, %2)||84||N/A||N/A|
|Share of our suppliers’ farmers monitored for child labor under STP, %2)3)||99||N/A||N/A|
|Share of prompt action issues related to human rights and child labor recorded by field technicians on suppliers’ farms that have been resolved, %2)3)||97||N/A||N/A|
|Direct materials other than raw tobacco|
|Number of significant suppliers4) of direct material other than raw tobacco||80||75||66|
|Number of significant suppliers of direct material other than raw tobacco that are viewed as high risk||17||17||15|
|Number of third party audits performed on high risk suppliers of direct material other than raw tobacco||10||0||5|
1) Figures restated due to refined data collection.
2) New KPIs added in 2021.
3) This KPI measures our suppliers of smokefree tobacco.
4) A significant supplier of direct material is defined as a supplier with which Swedish Match has a significant level of spend.
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.
|Review the results of the in-depth assessments under the STP and take necessary actions on potential findings.|
|Review the results of the next cycle of self-assessment under STP.|
|Continue Swedish Match due diligence program for our cigar suppliers.|
|Continue third party review of high risk suppliers of direct materials other than raw tobacco and necessary actions on potential findings.|