BETTER Company
Drive supply chain sustainability
Our products are to be made in the same way throughout our global supply chain – with respect for the people who made them and care for the environment.
Our promise
Electrolux will take its sustainability leadership agenda into the supply chain. We will work with suppliers so they can live up to our high expectations, no matter where they are located, and we will drive and support the transition to more sustainable practices.
Roadmap 2020 to 2030
- Secure compliance to Electrolux principles among our direct suppliers of components, finished goods, licensed products and services. Engage in high-priority geographies and topics further up the supply chain.
- Ensure transparency in mineral and material supply chains from high-risk areas, working towards a conflict free supply chain by 2025.
- Drive the environmental performance of all strategic suppliers on key metrics, aiming to help them to be climate neutral by 2030 - toward a carbon neutral supply chain by 2050.
- Build partnerships with suppliers of all categories to contribute toward the Electrolux sustainability priorities.
- Halve our transport emissions by 2025 and make our logistics climate neutral by 2030.
The case for action
Our industry is dependent on complex supply chains and our overall sustainability impact often depends on decisions made in our supply chain. As a sustainability leader, we have an obligation to take ownership and see our suppliers as an extension of ourselves.
This means that we expect suppliers to support our sustainability agenda by actively working to improve their own performance. This promotes progress, not only in our own supply chains, but for supply chains around the world.
Logistics is also a key area in our supply chain as Electrolux emits more CO2 in distributing its goods than is emitted through the energy consumed in Group operations. Around 300,000 metric tons are annually emitted through the global transportation of our goods via sea, air and land.
Our approach
Our experience shows that enhanced sustainability performance can be a competitive advantage, particularly in energy use, and health and safety, which improves the bottom line. We pass on this knowledge by working together with suppliers to strengthen relationships, and ultimately create mutual benefit.
We work to form special partnerships with our most strategic suppliers. Such suppliers are identified by the Electrolux Purchasing and sourcing teams and may play an essential role in our supply chain by supplying fundamental components or due to their size. Establishing long-term partnerships is fundamentally important to our strategies as it enables us to ensure a responsible and sustainable supply chain in the future.
Responsible sourcing
We work together with our direct suppliers as an active partner to ensure they abide by our requirements and have the performance targets to continuously improve. Our +2,000 direct suppliers are required to live up to our Supplier Workplace Standard and Workplace Directive, which are equivalent to the Workplace Policy and Workplace Directive that apply to our own entities. They cover our environmental, health and safety and human rights requirements for suppliers to follow.
In close cooperation with the Electrolux Purchasing and sourcing organizations, we demand high standards of performance among our suppliers. This involves proactively screening prospective suppliers to ensure they can live up to our high standards and contribute to our ambitions. We also want to reward suppliers based on their performance by enabling good performers to win more business - to increasingly build our supply chain on our best performing suppliers. We drive our initiatives further up our supply chain by working more closely together with our tier one suppliers and by directly including selected tier two suppliers.
More on our Responsible sourcing here
Conflict minerals
The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is embedded into our policies and activities to avoid sourcing conflict minerals. Our objective is to ensure conflict free smelters by 2025 and we work actively to drive this agenda throughout our supply chain by working with our direct suppliers.
Supplier environmental footprints
We work to implement and drive environmental programs that reduce the environmental impacts of our suppliers. These programs involve reducing greenhouse gas emissions, energy consumption and water use within our value chain. We share our knowledge with suppliers, provide tools to assist them in evaluating their environmental footprint and define suitable improvement activities, and reward progress and proactivity. We request our most strategic suppliers to report their climate impact through CDP.
Logistics
Approximately 300,000 metric tons of CO2 are emitted through the distribution of our goods by sea, air and land transportation in Europe, North America and Brazil each year.
We use our purchasing power to influence the logistics industry by developing more sustainable transport solutions together with our logistics partners. We also set environmental requirements in the tender process, and all shipping companies must be members of the BSR Clean Cargo initiative.
Challenges
- Ensuring high sustainability performance throughout our value chain beyond direct suppliers.
- Adopting a collaborative approach with industry peers to bring about greater positive change among our shared suppliers.
- Monitoring and auditing our +2,000 direct suppliers involves capacity challenges for Electrolux.
- Suppliers in some regions that lack access to renewable energy and more sustainable modes of transport will struggle to meet our low-carbon objectives.
- Local politics, and differences in work culture can sometimes resist and create obstacles to working with sustainability topics, which makes it difficult to bring about positive change.
The progress on our promise
How we measure progress
- The proportion of all direct suppliers that met our minimum supplier workplace standard requirements in the last 12 months.
- Suppliers/people trained and the proportion of critical suppliers trained in the last 12 months.
- The proportion of strategic suppliers that were engaged in initiatives to improve their environmental performance in the last 12 months.
- The proportion of our direct suppliers that are working toward climate neutrality or low-carbon objectives for their operations.
- Transport emission intensity, CO2 emissions / m3km.
The coronavirus impact
The global pandemic impacted on businesses and supply chains all around the world in 2020. In response, we quickly shifted our monitoring and auditing processes to be more digital. This involved making digital versions of our tools to enable remote supplier assessments and focusing on e-learning deployment. See the Case Story Driving digital auditing in supply chain sustainability.
Responsible Sourcing Program
Our focus in 2020 was on collaborating with the Electrolux Purchasing team to integrate sustainability topics throughout our supply chain. A scoring model was developed that will be used in purchasing decisions to reward and promote suppliers that have the best sustainability performance.
In 2020, 803 of our suppliers were considered to be critical and were the focus of our Responsible Sourcing Program. These included suppliers located in high-risk regions and using production processes that pose higher risks for environmental, labor and human rights violations or corrupt practices. Migrant labor management has been a focus area in 2020, with spearhead activities in Thailand where an analysis of the supply chain, training and supplier dialogue was conducted.
Responsible sourcing auditing
Due to the coronavirus pandemic, our responsible sourcing auditing included both digital and physical audits. During the year, 261 (351) supplier audits and were conducted, of which 38 were made in a virtual format. A total of 43 audits were made by third party assurers.
In 2020, 30% (49) of our critical suppliers were audited, which also included verifying that our expectations were communicated to Tier 2 suppliers.
Through our audits, we see that health and safety as well as environmental governance continue to be the areas with the greatest challenges. Deviations related to our policy on working hours is a persistent problem as well as findings related to compensation and benefits.
A total of 12 (23) zero-tolerance findings were uncovered in 2020. The most common zero-tolerance findings were related to harassment and abuse, with two cases in Mexico and one in Brazil. There were two cases each of missing legal documents, restrictions of movement and inconsistent working hour records. Some of the findings were related to poor governance within the supplier company, and although serious in nature can be quite easily amended. Others were more related to the environment in which the company operates, and require more long-term engagement to solve. In all instances, management practices at the respective supplier were amended. There were zero (1) cases of under-age labor identified during 2020. The number of less severe findings related to the management of young workers remained stable in 2020, and it represents an area of concern and further attention.
All zero-tolerance cases are reported to senior Purchasing management, which also monitors remediation actions or ultimately takes the decision to phase out the supplier.
Responsible sourcing audit findings
The graph above shows the non-compliances in initial audits and subsequent follow-up audits conducted in 2020.
There are large differences in the status of audited suppliers. Certain types of serious findings are prevalent in some markets, due to societal issues and significant discrepancies between local legislation and Electrolux requirements. Such an area is working hours in Asia and environmental management findings in Latin and North America. See the distribution of findings per region table below.
Distribution of audit findings in each region (%)
| Chapter | Asia Pacific including SE Asia | Latin and North America | Europe, Middle East and Africa | TOTAL |
|---|---|---|---|---|
| 1. General requirements | 0.0% | 0.0% | 0.0% | 0% |
| 2. Laws and regulations | 0.5% | 6.9% | 2.4% | 1% |
| 3. Suppliers and subcontractors | 0.2% | 0.0% | 0.0% | 0% |
| 4. Corruption, bribery and business ethics | 0.0% | 0.0% | 0.0% | 0% |
| 5. Child labor | 4.1% | 0.0% | 0.0% | 3% |
| 6. Forced labor | 0.2% | 1.7% | 2.4% | 1% |
| 7. Security arrangements | 0.0% | 0.0% | 0.0% | 0% |
| 8. Worker H&S | 55.2% | 51.7% | 74.1% | 58% |
| 9. Non-discrimination | 0.0% | 1.7% | 0.0% | 0% |
| 10. Harassment and abuse | 0.0% | 5.2% | 0.0% | 1% |
| 11. Disciplinary actions and grievances | 0.5% | 0.0% | 3.5% | 1% |
| 12. Working hours | 29.9% | 19.0% | 4.7% | 25% |
| 13. Compensation and employment conditions | 2.9% | 3.4% | 5.9% | 3% |
| 14. Freedom of Association and collective bargaining | 0.0% | 0.0% | 0.0% | 0% |
| 15. Environmental governance and procedures | 6.3% | 10.3% | 7.1% | 7% |
| 16. Monitoring and compliances | 0.2% | 0.0% | 0.0% | 0% |
| Number of audits included in sample | 172 | 46 | 43 | 261 |
The distribution of significant findings represented above, expressed as a percentage according to our Supplier Workplace Standard chapter, varies between our different supply regions. Regional variations are due to differences in EHS legislation, legal enforcement as well as societal differences.
During the year, our classroom training activities were suspended. Instead, we focused on deploying our Supplier Workplace Standard e-learning targeting a wider audience at our suppliers. This e-learning edition, includes more examples of good practice from our own operations with the ambition of increasing awareness and knowledge of challenging topics. In 2020, 631 (234) people from 273 (185) suppliers completed the e-learning.
Through QuizRR, the digital learning platform we use to gain a wider reach of workers at our suppliers, we trained 4,901 (3,620) people on good workplace practices in 2020, bringing the total number trained with this tool to 13,021 (8,120) at seven suppliers in China. The tool is now being used in Thailand, with a module focusing specifically on human rights risks and migrant labor.
Electrolux Supplier Awards
The Electrolux Supplier Awards were reinvented in 2020, with sustainability added as a category, which reflects the need for suppliers to support all our 'For the Better 2030' promises. The award invites suppliers to nominate initiatives that contribute to any of our promises, and over 60 nominations were made during the year.
Submissions focused around three main areas:
- Recycled materials - the use of recycled materials, including plastic.
- More efficient appliances - the development of more efficient parts such as compressors and motors to reduce the environmental footprint of an appliance during its use phase.
- More efficient operations - improvement in operations to reduce emissions and waste.
The Sustainability Award winner was PreZero Polymers, which has supported Electrolux with its target to replace half of all plastics with recycled grades (read more in our Promise Offer circular products and business solutions). The company’s initiatives for improving the material efficiency of our products, and for facilitating our transition toward circularity has been essential in advancing our sustainability journey.
Conflict minerals
We investigated 284 (400) suppliers during 2020. In addition, a pilot study was done on the use of cobalt among 17 suppliers. The report is inspired by recent U.S. legislation and was conducted voluntarily by Electrolux to disclose where our key minerals are sourced from.
We are also a member of the Responsible Minerals Initiative, which allows us to influence beyond our tier-one suppliers, and map supplier compliance in line with the related OECD due diligence guidance.
Our proactive work with conflict minerals demonstrates that we want to go beyond compliance – to minimize our supply chain risks and help us to further improve our supply chain.
CDP Supply Chain Program
In 2020, we secured the commitment from 192 of our top direct material suppliers (corresponding to 74% of direct material spend), as well as 11 logistics companies (16% of logistics spend), to disclose emissions and set targets through the CDP Supply Chain Program – a non-profit international organization that specializes in environmental reporting and ratings of which Electrolux is a member. This work plays a key role in achieving our target to ensure zero net carbon emissions throughout our supply chain by 2050. 92% of the invited companies chose to disclose, which is proof of the dedication of Electrolux suppliers to contribute to our targets.
Supplier environmental footprints
We reduce greenhouse gas emissions throughout our value chain by promoting our internal approach to monitoring and reducing energy consumption among key suppliers.
2020 was the tenth year of dialogue and cooperation with key Original Equipment Manufacturers (OEMs) on resource management. We monitored energy and water data from suppliers – covering 46% (73%) of our global Original Equipment Manufacturer spend. We continued to promote our checklist tool to help suppliers identify potential improvement opportunities to reduce energy and water use and enable them to prioritize action. 25% of our OEM spend is now using this tool.
Logistics
We have reduced CO2 emissions in our land and sea transportation by 11% and 23% respectively since 2015 - toward our objective to make our logistics climate neutral by 2030.
In 2020, we established a global forum to discuss progress and action to reduce our CO2 logistics emissions. We also started several pilot projects with logistics partners to test renewable fuel and electric trucks in Europe.
Our intermodal truck-and-train solution in Europe continues to reduce transport-related emissions. The project is part of a wider shift from road to rail and intermodal transport at Electrolux.
During the year, we piloted electric trucks in order to improve our climate footprint and gather experience. We are also planning to increase the proportion of our trucks powered by renewable fuel and electricity in the coming years.
We continue to track and evaluate environmental performance through our logistics dashboard, which is also used as a tool to support our decision-making processes. The dashboard is used to identify where the CO2 impacts arise and can compare the benefits of using rail and intermodal (when more than one mode of transport is used) transport.
During the year, we continued dialogue with the logistics industry to share best practice in transport management. Electrolux is a member of the U.S. Environmental Protection Agency-led SmartWay and the BSR Clean Cargo initiative with a commitment to improve road and sea transport-related emissions respectively.
Next steps
| Roadmap 2020 to 2030 | Next steps | Status |
|---|---|---|
Secure compliance to Electrolux principles among our direct suppliers of components, finished goods, licensed products and services. Engage in high-priority geographies and topics further up the supply chain. | Leverage our new Sourcing strategy and organization to increase the coverage of our supply base, and create engagement on both sides - to drive supplier performance through dedicated supplier improvement projects. | dot2 |
Ensure transparency in mineral and material supply chains from high-risk areas, working towards a conflict free supply chain by 2025. | Improve supplier response rate in the annual survey and promote a conflict-free supply chain. | dot2 |
Drive the environmental performance of all strategic suppliers on key metrics, aiming at helping them become climate neutral by 2030 - toward a carbon neutral supply chain by 2050. | Increase the proportion of suppliers that commit to reporting to CDP. | dot2 |
Build partnerships with suppliers of all categories to contribute toward the Electrolux sustainability priorities. | Expand the usage of self-assessment tools for our main suppliers, set improvement targets and launch pilots at selected key suppliers. Continue work to integrate sustainability performance into supplier evaluations. | dot2 |
| Halve our transport emissions by 2025 and make them climate neutral by 2030. | Piloting renewable fuel and electrification of the fleet. Continue the implementation of environmental scorecards in the tendering process for dedicated transport services. Collaborate with logistic partners to share/discuss best practice and implement initiatives to reduce transport emissions. | dot2 |
On track
Additional effort is required
Off track
Work has not yet begun
Electrolux
Electrolux is a leading global appliance company that has shaped living for the better for more than 100 years. We reinvent taste, care and wellbeing experiences for millions of people around the world, always striving to be at the forefront of sustainability in society through our solutions and operations. Under our brands, including Electrolux, AEG and Frigidaire, we sell approximately 60 million household products in approximately 120 markets every year. In 2019 Electrolux had sales of SEK 119 billion and employed 49,000 people around the world.
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