The supplier's reporting obligation
Here we explain what suppliers must do if they have reasonable grounds to assume that there is or has been a severe deviation in their own operations or in the supply chain.
After the introduction, you will find the sections on:
Introduction
You are obliged to report severe deviations in your own operations and in the supply chains, if you have reasonable grounds to assume that such is occurring or has occurred. Forced labour, child labour, working conditions that pose a danger to life, serious environmental harm, grand corruption and attacks on environmental and human rights defenders are severe deviations.
Excerpt from the contract terms
If Supplier has reasonable grounds to assume that there is or has been a severe deviation in its own operations or in its supply chains, Supplier shall within [two (2)] weeks report the actual circumstances and the implemented and planned measures in accordance with clauses 2.1.1 - 2.1.7, to the [contracting organisation].
Severe deviations refer to forced labour, child labour, working conditions that pose a danger to life, serious environmental harm, grand corruption and attacks on environmental and human rights defenders. The severe deviations are defined in Appendix 1: Code of Conduct for suppliers.
How are serious deviations defined?
The serious deviations are defined in Appendix 1: Code of Conduct for suppliers.
Excerpt from the code of conduct
Severe deviations
Forced labour, child labour, working conditions that pose a danger to life, serious environmental harm, grand corruption and attacks on environmental and human rights defenders are severe deviations.
Serious environmental harm is defined as damage caused by polluting activities that have a severe adverse impact on people, water areas or ground water, species and habitat.
Grand corruption is defined as involvement in bribery, embezzlement, trading in influence, abuse of functions, illicit enrichment, laundering of proceeds of crime, concealment or obstruction of justice:
a) as part of a scheme that involves a high-level public official, and
b) that results in or is intended to result in:
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a gross misappropriation of public funds or resources, or
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grave or systematic violations of the human rights of a substantial part of the population or of a vulnerable group.
As forced labor and child labor are described in point 2.2 and point 2.3 of Appendix 1: Code of Conduct for suppliers, they are not further defined in the section on serious deviations.
Excerpt from the code of conduct
2.2 The employment is freely chosen
a) There is no forced labour, bonded labour or involuntary prison labour.
b) Workers are not required to lodge “deposits” or their identity papers with their employer and are free to leave their employer after reasonable notice.
Excerpt from the code of conduct
2.3 Child labor may not be used
a) There shall be no new recruitment of child labour. Child labour is any kind of activity or work which is harmful to the intellectual, physical, social and moral development of persons under 18 and undermines their education, preventing them from going to school, constraining them to abandon schooling too soon or requiring them to work and study at the same time.
b) The employer develops or participates in and contributes to policies and programmes which provide for the transition of any child found to be performing child labour, to enable him or her to attend and remain in education until he or she is no longer a child.
c) A worker under 18 may nonetheless have the right to work if he or she meets the age requirements for the type of work in question:
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For general work, the minimum age is 15.
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For non-hazardous work, the minimum age may be temporarily set at 14 in countries whose school-leaving age is lower than 15.
d) Persons under 18 shall not be employed at night or in hazardous conditions.
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How to carry out a risk analysisStep 1: Mapping the supply chain The first step in a risk analysis consists of mapping the supply chain to find out its structure. This includes identifying in which countries the work is carried out, and if possible also in which regions. This is particularly relevant if the work is carried out in any region known to have high risks. Within certain industries such as food, textiles and IT there is a lot of information. For other industries such as pharmaceuticals, however, transparency is low. To obtain this information, you can ask the category manager, the category councils, ask questions of suppliers, find out import data, read audit reports and market analyzes for specific industries. It is also important to identify what type of work is carried out and what type of actors in the supply chain that performs it. Is it, for example, an industry characterized by low wages and health-hazardous processes? Does the workforce consist of migrant workers or seasonal workers? Is the supply chain complex with many subcontractors and a lack of transparency? This type of information is important as both geographical risks, industry risks and product risks need to be taken into account. Step 2: Gather information from credible and independent sources Once you have mapped the origin and the supply chain, the next step is to gather information about the situation of human rights, workers' rights, the environment and business ethics in the relevant countries where the work is carried out, that is, both for final manufacturing, component manufacturing and raw materials. For this you need to turn to credible and independent sources such as international organizations, authorities, voluntary and civil society organizations and global trade unions. Sources Step 3: Identify and assess negative impacts The last step involves assessing the actual and potential negative impact the supply chain is associated with, based on the information that has been compiled in steps 1 and 2. This is to be able to determine which concrete measures need to be taken to manage the risks. Often several risks have been identified and to prioritize them you need to make a seriousness assessment. The most significant risks are prioritized based on probability and seriousness ( read more under point d in process requirement 2 )
What does reasonable cause to assume mean?
Reasonable cause to assume means that you have good reason to suspect that there is a severe deviation. Information about the severe deviation can, for example, be revealed during audits, in reports from civil society and research institutes or in the media.
Below are some examples which, if current contract terms had applied, would have given the suppliers of the products in question reasonable cause to assume that severe deviations existed.
Forced labor
In 2018, international media and human rights organizations reported that migrant workers from, among others, Bangladesh and Nepal were forced to work in slave-like conditions in glove factories in Malaysia. The factories supplied medical gloves to Sweden, among others.
Child labor
In 2007, the organization Swedwatch drew attention to the fact that child labor was occurring in the manufacture of surgical instruments in Pakistan. Images of child laborers received great coverage in the media, and Sweden's regions were criticized for tax funds going to activities that violated human rights.
Working conditions that endanger life
In 2022, the organization Electronics Watch reported on a mining cooperative in Bolivia where the lack of water during drilling and insufficient ventilation increases the risk of the lung disease silicosis. Inadequate fortifications mean that head injuries are common. The workers are exposed to dangerous materials, gases and dust during blasting. The cooperative sells its tin to a smelter that is in the supply chains for most IT brands sold in Sweden.
What does the supplier's reporting obligation cover?
You must report the actual circumstances as well as the implemented and planned measures in accordance with clauses 2.1.1–2.1.7 of the contract terms, i.e. the process requirements.
This means that you must:
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Investigate the actual circumstance. This includes drawing attention to particularly vulnerable groups and, where possible, consulting in a meaningful way with the affected rights-holders.
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Cease activities that cause or contribute to the severe deviation, if it occurs in your own operations or if you contribute to it in the supply chains.
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Establish and follow up action plans to prevent and mitigate the severe deviation, if possible in meaningful consultation with affected rights-holders or their representatives.
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Promote purchasing practices that do not make it difficult for the sub-supplier to comply with the commitments, if the severe deviation occurs in the supply chains.
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Enable affected rights-holders, their representatives and environmental and human rights defenders to make complaints related to the severe deviation.
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Establish and implement remedial plans, if you have caused or contributed to the severe deviation. If you are only linked to the severe deviation you should develop a plan for how you will use your leverage to get the party that caused or contributed to the severe deviation to remedy it.