Case study: How Saab shows zero tolerance for corruption
Like many other companies that do business in large parts of the world, Saab, as a global defence and security company that develops, manufactures and sells some of the world’s most advanced military and civilian solutions, sometimes comes across attitudes that are inconsistent with its ethical values.
This case study is based on the 2014 Sustainability Report by Saab published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate that CSR/ sustainability reporting done responsibly is achieved by identifying a company’s most important impacts on the environment and stakeholders and by measuring, managing and changing.
Saab strives to be a reliable long-term partner that promotes an open and transparent market. Tweet This! Thus, zero tolerance for corruption is a priority issue. After measuring and setting targets, Saab took action to implement rules and processes to prevent corruption and handle gifts and hospitality, conduct a corruption risk analysis in connection with each deal, apply a special process for hiring marketing consultants and other partners in the selling process, make sure all employees at Saab receive anti-corruption training, create a new whistleblowing system, actively participate in international collaborations to prevent corruption in the industry and, also, continuously improve anti-corruption work through established and extensive organisation.
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With this case study you will see:
- Which are the most important impacts (material issues) Saab has identified;
- How Saab proceeded with stakeholder engagement, and
- What actions were taken by Saab to show zero tolerance for corruption
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What are the material issues the company has identified?
In its 2014 Sustainability Report Saab identified a range of material issues, such as responsible supplier relationships, information security, reducing Saab’s environmental impact, developing leaders and employees, occupational health and safety, products that contribute to increased security. Among these, as a global defence and security company striving to be a reliable long-term partner that promotes an open and transparent market, ensuring zero tolerance for corruption stands out as a key material issue for Saab.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Saab engages with:
| Stakeholder Group | Method of engagement |
| Owners and investors
| · Separate meetings with investors on sustainability issues · Annual General Meeting · Sustainability surveys from investors and analysts · Continuous engagement with investors and analysts |
| Employees | · Annual employee survey · Sustainability survey among Saab’s trainees |
| Students and potential employees
| · Career days and similar events · Workshops with Saab’s student ambassadors · Interviews with students · Collaborations with universities and institutes of technology · External surveys on students’ expectations of future employers |
| Customers
| · Stakeholder engagement with focus on Saab’s sustainability strategy with the largest customer in Sweden · Customer surveys · Personal meetings, trade shows and conferences |
| Society in general, including decision-makers and interest groups
| · Participation in defence forums and debates, such as Almedalen and Folk och Försvar (Security and Defence) in Sälen · Collaborations with public organisations and authorities, such as the EU and UN |
| Suppliers and partners | · Sustainability as a theme at Saab’s procurement day · Continuous contact with suppliers and partners |
How stakeholder engagement was made to identify material issues
To better understand the expectations on its sustainability work, Saab engaged during the year with various stakeholder groups, both internally and externally. The results of this engagement were taken into account in the materiality analysis that served as a basis for selecting the key issues for Saab’s sustainability work and the contents of the sustainability report.
The focus leading up to this first sustainability report has been on internal consultations, which then served as a basis for discussions with representatives of stakeholder groups. The aim in 2015 was to further improve stakeholder engagement based on the 2014 sustainability report. Dialogues with stakeholders confirmed that the areas Saab had chosen to focus on were relevant.
What actions were taken by Saab to show zero tolerance for corruption?
In its 2014 Sustainability Report Saab set the following targets for showing zero tolerance for corruption, based on the company’s approach to materiality – on taking action on what matters, where it matters:
- Implementing rules and processes to prevent corruption and handle gifts and hospitality
Saab is guided by its fundamental values, the company’s Code of Conduct, current industry-wide codes of conduct and clearly defined internal processes in preventing corruption risks. The basic rule is simple: Saab has zero tolerance for corruption.
- Conducting a corruption risk analysis in connection with each deal
Saab’s operations are continuously exposed to corruption risks, and a corruption risk analysis is conducted in connection with each deal. Among the factors that affect risk are where a deal takes place, who the customer is, how the procurement is conducted, how Saab found out about it, the business model and the contract value. If the risks that are identified cannot be minimized and managed satisfactorily, Saab will withdraw from the deal.
- Applying a special process for hiring marketing consultants and other partners in the selling process
To gain entry to new markets, multinational companies often hire marketing consultants and other partners in the selling process. Saab does as well. Third parties are sometimes an important resource in the sales process, but can also mean increased exposure to corruption risks. Saab therefore applies a strict process whereby co-operations with marketing consultants and other partners in the selling process must be evaluated and approved by a central function that handles all such agreements. These partners also have to undergo special training and pledge to abide by Saab’s ethical values and guidelines. The agreements contain specific commitments with regard to business ethics and permit continuous monitoring of the partners through reporting requirements and audit rights. Saab’s aim is to reduce the number of marketing consultants and other partners in the selling process and instead increase its own staff in selected markets.
- Making sure all employees at Saab receive anti-corruption training
In addition to training on the Code of Conduct, all employees receive separate, web-based anti-corruption training. At year-end 2014, 74 per cent of all employees had completed the training. Employees in the marketing and sales organisation also receive mandatory in-depth training covering, among other things, general risk awareness and the company’s internal processes and tools for managing corruption risks. In total, 950 employees have completed the in-depth training on over 80 occasions since June 2011. The aim in 2015 was to broaden the target group for in-depth training to also include employees from other parts of the organisation. Business ethics and risks are a recurring theme at board and management team meetings, group-wide management conferences and meetings at the business area level.
- Creating a new whistleblowing system
Employees who become aware of or suspect non-compliance with laws or Saab’s Code of Conduct are expected to report this through Saab’s whistleblowing system. In 2014, Saab created a new whistleblowing system to be launched in 2015 and replace the previous system. The new system complements ordinary line reporting and provides the option of reporting online or by telephone. The system is managed by an outside party and guarantees employees anonymity.
- Actively participating in international collaborations to prevent corruption in the industry
Saab actively participates in international industry associations to develop common anti-corruption rules, sharing experiences and evaluating and improving their work.
- Continuously improving anti-corruption work through established and extensive organisation
Saab’s corruption prevention efforts are constantly developing and a number of functions are involved in the work.
- Through the Audit Committee, the Board of Directors is responsible for overseeing Saab’s Code of Conduct and has ultimate responsibility for monitoring and evaluating the business ethical work.
- The Ethics and Compliance Board leads and draws up guidelines for the work, makes decisions on business ethical issues and follows up whistleblowing cases. The board meets at least eight times a year and is led by Saab’s General Counsel, who reports the work to the Board of Directors’ Audit Committee.
- The Ethics and Compliance function is responsible for monitoring, co-ordinating and developing corruption prevention work and contributing expertise in the area. At year-end 2014, the function consisted of two people.
- Market Network Management (MNM) is a function consisting of ten employees that collaborates with the market and product functions to manage marketing consultants and other third parties. This process includes corruption risk analysis, due diligence, contracting and training business partners. MNM also provides training and develops tools for Saab’s anti-corruption work.
- Saab’s Internal Audit monitors implementation of the company’s corruption prevention processes.
Which GRI indicators/Standards have been addressed?
The GRI indicators/Standards addressed in this case are:
1) G4-15: List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses. – the updated GRI Standard is: Disclosure 102-12 External initiatives
2) G4-SO3: Total number and percentage of operations assessed for risks related to corruption and the significant risks identified – the updated GRI Standard is: Disclosure 205-1 Operations assessed for risks related to corruption
3) G4-SO4: Communication and training on anti-corruption policies and procedures – the updated GRI Standard is: Disclosure 205-2 Communication and training about anti-corruption policies and procedures
References:
1) This case study is based on published information by Saab, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page
3) https://g4.globalreporting.org/Pages/default.aspx
4) https://www.globalreporting.org/standards/gri-standards-download-center/
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