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.
2021 Highlights
- Sustainability performance integrated into purchasing and sourcing decisions.
- Improved our Supplier Workplace Standard performance through partnerships and collaboration with suppliers despite the pandemic.
- Successful implementation of the CDP supplier program in our supply chain.
Our Goal
Drive supply chain sustainability
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 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 toward 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
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.
By better aligning our suppliers with our environmental and social standards, we can significantly enhance the sustainability performance of our value chain. We partner with suppliers that have an essential role in supplying fundamental components or due to their size, as identified by the Electrolux Purchasing, Sourcing and Licensing teams. Our long-term partnership with them is key to implement our strategy and to help ensure a responsible and sustainable supply chain.
Responsible sourcing
We work together with our suppliers to ensure they abide by our requirements and set the performance targets to continuously improve. Our 1,700+ 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 operations. They cover our environmental, health and safety and human rights requirements for suppliers to follow. In 2021, we updated our Workplace Directive, which increased the standards that our suppliers are requested to comply with.
In close cooperation with the Electrolux Purchasing, Sourcing and Licensing, organizations, we demand high standards of performance. This involves proactively screening prospective suppliers. We also reward suppliers based on their performance by offering good performers more business. We drive our initiatives further up our supply chain by working more closely with our tier one suppliers and by directly including selected tier two suppliers.
Read more about our work with responsible sourcing.
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 with our suppliers to drive this agenda throughout our supply chain.
Supplier environmental footprints
We work to implement and drive plans to reduce the environmental impacts of our suppliers. This involves reducing greenhouse gas emissions, energy consumption and water use within our value chain. We share our knowledge with suppliers, provide tools to evaluate their environmental footprint, define suitable improvement activities and reward progress and proactivity. We request our strategic suppliers to report their climate impact through CDP.
Logistics
We use our purchasing power to influence the logistics industry by developing more sustainable transport solutions together with our partners. We also set environmental requirements in the tender process - i.e. 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 1,700+ direct suppliers.
- Suppliers lacking access to renewable energy and more sustainable modes of transport struggle to meet our low-carbon objectives.
- Local politics and differences in work culture can be obstacles to working with sustainability topics.
The progress on our Goal
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.
Responsible Sourcing Program
Our focus in 2021 was on supplier compliance with the Electrolux Supplier Workplace Standard. We also promoted collaboration between the Electrolux Purchasing, Sourcing and Licensing teams to integrate sustainability topics throughout our value chain. A responsible sourcing scoring model was rolled out globally to be used in purchasing decisions that rewards and promotes suppliers that have the best sustainability performance.
In 2021, 669 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, health and safety conditions. Migrant labor management has been another focus area in 2021, with spearhead activities in Thailand where an analysis of the supply chain, training and supplier dialogue was conducted.
Responsible sourcing auditing
The global pandemic continued to impact businesses and supply chains all around the world in 2021. In response, our monitoring and auditing processes have evolved to enable both on-site and remote supplier assessments and we have rolled out more e-learnings.
In 2021, 237 (261) supplier audits were conducted, of which 23 were conducted virtually. A total of 41 audits were made by third party auditors.
In addition, 32% (30) of our critical suppliers were audited, which included verifying that our expectations were communicated to Tier 2 suppliers.
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 5 (12) zero-tolerance findings were uncovered in 2021. The most common zero-tolerance findings were related suppliers denying access to documentation requested during the audit process. There was one case where the supplier withheld original employee documentation and another related to discriminatory practices during the hiring process, by asking job candidates about their pregnancy status. Some of the findings were related to poor governance within the supplier. Although serious in nature they can be quickly amended. In all instances, management practices at the respective supplier were amended.
Findings related to the management of authorized young workers remained stable in 2021, but issues related to young workers continue to represent an area of concern. Most of the findings regarding authorized young workers in 2021 were related to inadequate health examinations. In 2021, there were 0 (0) cases of under-age labor identified.
All zero-tolerance cases are reported to senior management of our Purchasing, Sourcing and Licensing departments, which also monitor remediation actions or ultimately take the decision to phase out a particular supplier.
The graph above shows the non-compliances in initial audits and subsequent follow-up audits conducted in 2021.
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 (%)
| Chapter1) | Asia Pacific including South East Asia | Latin and North America | Europe, Middle East and Africa | TOTAL |
|---|---|---|---|---|
| 1. General requirements | 0.0% | 2.5% | 4.5% | 1.6% |
| 2. Laws and regulations | 0.2% | 7.5% | 0.4% | 1.0% |
| 3. Suppliers and subcontractors | 0.5% | 1.3% | 2.2% | 1.1% |
| 4. Corruption, bribery and business ethics | 0.1% | 0.0% | 2.5% | 0.8% |
| 5. Child labor | 1.1% | 0.0% | 0.4% | 0.8% |
| 6. Forced labor | 0.2% | 0.0% | 1.0% | 0.4% |
| 7. Security arrangements | 0.3% | 0.0% | 2.5% | 0.9% |
| 8. Worker H&S | 41.6% | 39.6% | 40.3% | 41.1% |
| 9. Non-discrimination | 0.1% | 0.6% | 0.2% | 0.2% |
| 10. Harassment and abuse | 0.1% | 0.0% | 0.4% | 0.2% |
| 11. Disciplinary actions and grievances | 1.2% | 0.0% | 2.9% | 1.6% |
| 12. Working hours | 25.6% | 15.1% | 7.0% | 19.2% |
| 13. Compensation and employment conditions | 12.8% | 13.2% | 16.6% | 13.9% |
| 14. Freedom of Association and collective bargaining | 0.0% | 0.0% | 2.2% | 0.7% |
| 15. Environmental governance and procedures | 15.6% | 17.6% | 13.9% | 15.3% |
| 16. Monitoring and compliances | 0.8% | 2.5% | 3.1% | 1.6% |
| Number of audits included in sample | 145 | 35 | 57 | 237 |
1) For more detailed information on the areas covered in each Chapter please see the Electrolux Workplace Directive.
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 continued to be suspended due to the pandemic. Instead, we focused on the virtual training of our Supplier Workplace Standard to a wider audience, including suppliers, internal and external auditors as well as other internal stakeholders. These trainings include a comprehensive explanation on each requirement of the standard and the importance of complying to support Electrolux sustainability Goals.
Through QuizRR, the digital learning platform we use to gain a wider reach of workers at our suppliers, we trained 2,009 (4,901) people on good workplace practices in 2021, bringing the total number trained with this tool to 12,687 at eight suppliers in China and Thailand. 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 have sustainability as a category, which reflects the need for suppliers to support all our For the Better 2030 Goals. The award invites suppliers to nominate initiatives that contribute to any of our Goals, and over 60 nominations were submitted during the year.
Submissions focused on four main areas:
- Electrolux Supplier Workplace Standard compliance.
- 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.
In 2021, the winner of the Electrolux Sustainability Award was CMA-CGM Group, a provider of ocean logistics services that has reshaped its sustainability strategy in recent years to fully integrate climate change into its roadmap. Its strategy is well developed with a clear path toward 40% CO2 reduction by 2030 and the target to become carbon neutral by 2050.
Conflict minerals
We focused our approach on our most relevant suppliers during 2021 and investigated 208 (284) suppliers in total. In addition, a pilot study was done on the use of cobalt among 23 suppliers. The report is inspired by US legislation and was conducted voluntarily by Electrolux to disclose where our key minerals are sourced from. Read our Conflict Minerals reports.
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.
Supplier environmental footprints
We reduce environmental impacts throughout our value chain by promoting our internal approach to monitoring and reducing resource consumption among key suppliers.
CDP Supply Chain Program
In 2021, we secured the commitment from 281 of our top direct material suppliers (corresponding to 78% of our direct material spend), as well as 14 global logistics companies (30% of total logistics spend), to disclose emissions and set targets through the CDP Supply Chain Program. CDP is 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. More than 95% of our invited suppliers disclosed, which is proof of the dedication of Electrolux suppliers to contribute to our targets.
In 2021, Electrolux was named a Supplier Engagement Leader by CDP, which was based on corporate governance, targets and disclosure as well as high response rates and strong efforts to engage suppliers.
Original Equipment Manufacturers
During 2021, we decided to include our strategic Original Equipment Manufacturers (OEMs) into the CDP Supply Chain Program, with a response rate of 95%.
In addition, 2021 was the eleventh year of dialogue and cooperation with key OEMs on resource management. We monitored energy and water data from suppliers – covering 87% (46%) of our global OEM 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.
Logistics
Approximately 375,000 metric tons of CO2 are emitted through the distribution of our goods by sea, air and land transportation in Europe, North America, Australia, Egypt and Brazil each year.
We have reduced CO2 emissions from our land and sea transportation by 12% and 29% respectively since 2015 - toward our objective to make our logistics climate neutral by 2030.
In 2021, 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 around the world.
During the year, we piloted electric trucks in order to reduce 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 year.
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 our CO2 transport 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 US Environmental Protection Agency-led SmartWay and the BSR Clean Cargo initiative with a commitment to decrease road and sea transport-related emissions respectively.
Next steps
| Roadmap 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. | |
Ensure transparency in mineral and material supply chains from high-risk areas, working toward a conflict-free supply chain by 2025. | Continue to improve supplier response rate in our annual surveys and promote a conflict-free supply chain. | |
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. | |
Build partnerships with suppliers of all categories to contribute toward the Electrolux sustainability priorities. | Expand the usage of supplier management tools for our main suppliers, set improvement targets and launch pilots at selected key suppliers. Continue work to integrate sustainability performance into supplier evaluations. | |
| 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. |
- On track
- Additional effort is required
- Off track
- Work has not yet begun