Quality and safety throughout
Sustainability and Corporate Social Responsibility in the supply chain
Sustainability and corporate social responsibility in the supply chain covers suppliers’ relationships with ethical guidelines, human rights, workers’ rights, anti-corruption, the climate and the environment. Systematic and good collaboration on corporate social responsibility in the supply chain is part of our strategy for responsible business operations. This contributes to reduce risk and increase quality in the value chain.
KONGSBERG has more than 9,000 suppliers globally, with about half of them being Norwegian. This means we help to safeguard jobs and build competence, not only where we have operations, but also to a large extent where we use suppliers. The suppliers are an important part of our value creation, at the same time as we are important and, in many cases, essential to their value creation. We want to work with suppliers that share our values and requirements regarding responsible business conduct. This is specified in our “Supplier Conduct Principles”, which is part of our supplier agreements.
Our starting point is that we have an ethical responsibility to ensure that the entire value chain associated with our products, meets our sustainability and corporate social responsibility requirements, while the legal responsibility lies with the individual supplier.
Our challenges and opportunities
It is a challenge to ensure that all subcontractors, throughout the value chain, comply with our requirements. We follow up our responsibilities through clear requirements in our agreements with suppliers as well as risk-based follow-up and audits. Our suppliers are committed to making similar requirements to their sub suppliers.
COVID-19 and the supply chain
When the COVID-19 situation arised in February 2020, we established a preparedness for our global supply chain, with measures to deal with the escalating pandemic; such as monitoring demand, continuous risk assessments, communication with suppliers and enabling rapid response and sharing of information. We have not experienced significant delays in our value chain, and together with our suppliers we have managed to maintain our production and deliveries to our customers.
We have focused on that new risks may arise during such a crisis related to both the delivery aspect and the importance of securing various options for critical procurement, as well as the human side considering that HSE and human rights can be put to the test in such a situation. We have gained useful experiences and learning, and increased use of digital communication platforms throughout this crisis. This structure was maintained when the pandemic spread globally, and is still in place. The same approach will be utilised for potential negative effects as a consequence of Brexit.
A significant area of potential risk during this period has been the impact on logistics and transport of products across national borders. We have worked closely with our major freight suppliers, to identify and reduce risk and minimise negative impacts on the business, with measures such as early booking and flexible use of transport. In addition, buffer storage was established for some critical components to ensure deliveries.
Our focus during the period has been to monitor potential supplier risk and minimize any disruption to deliveries. We have been working with local authorities in countries that have been under lock-down to ensure that suppliers could operate during this period. Our supplier audit programme and self-assessments for corporate social responsibility have continued as far as possible during the pandemic, with ”desk-top” audits where travel has not been possible.
We have introduced access control, in cases where suppliers with confirmed access to our facilities have been required to comply with the respective country’s guidelines and recommendations for hand hygiene, keep social distance etc., and ensure that their employees are trained and followed this by working for us. We have required all external visitors to fill out a COVID-19 visitor declaration form before entering our premises.
Risk profile and risik assessments
Our 50 largest suppliers make up approximately 64 per cent of our total purchases of goods and services.
Of our 50 largest suppliers, European suppliers amount to approximately 77 per cent, of these the part of Norwegian suppliers make up about 44 per cent.
Our business areas have established processes and systems for carrying out risk assessing of our suppliers. We divide our total supplier portfolio into different risk classes where, among other things, volume of purchases, countries, and the extent to which we are dependent on the goods and services we purchase, constitutes assessment factors. The risk assessment includes existing and new suppliers and includes assessments of environmental conditions, human and workers’ rights, HSE, business ethics and anti-corruption. Based on the result of the initial risk assessment, the suppliers are followed up with further assessments and mitigating actions and audit visits. Suppliers who, due to initial risk assessments, were followed up more closely in 2020 accounted for about 15 per cent of our total supplier portfolio. All identified conditions that were categorized with high risk were clarified and concluded within given deadlines.
In 2020, five audits of our suppliers were carried out, this was fewer than planned due to the COVID-19 situation. For 2021 we have planned with 17 audits. We will continuously assess the development of the COVID-19 pandemic, and adapt the implementation to the situation.
Goals and activities
Securing a responsible supply chain, especially regarding environment, climate and human rights.
Goals for 2020 – what did we say?
- Distribute e-learning to our suppliers, with particular emphasis on the environment, climate and human rights.
- Arrange supplier conferences for our largest suppliers.
- Conduct internal training for purchasing organisations.
Goals for 2020 – what did we say?
- Establish specific criteria for environment and climate requirements in the selection and renewal of suppliers.