Case study: How Elkem promotes responsible sourcing
Established in 1904, Elkem is one of the world’s leading companies for the environmentally responsible manufacturing of metals and materials. Elkem is committed to considering ethics, labour rights, and social and environmental issues when sourcing products and services across all its procurement categories and across all operations.
This case study is based on the 2019 Sustainability Report by Elkem published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Responsible sourcing is a strategic priority for Elkem Tweet This!, and it means looking at what it procures beyond traditional aspects such as cost, quality and delivery time. In order to promote responsible sourcing Elkem took action to:
- conduct supplier due diligence
- implement a code of conduct for business partners
- develop detailed requirements for high risk suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) Elkem has identified;
- How Elkem proceeded with stakeholder engagement, and
- What actions were taken by Elkem to promote responsible sourcing
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What are the material issues the company has identified?
In its 2019 Sustainability Report Elkem identified a range of material issues, such as occupational health and safety, energy efficiency, anti-corruption, diversity and equality, waste management. Among these, promoting responsible sourcing stands out as a key material issue for Elkem.
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 Elkem engages with:
| Stakeholder Group | Method of engagement |
| Employees
| · Regular meetings · Email/phone dialogue · Shift meetings · Annual meetings · Joint meetings for all · Employee satisfaction survey · Personal development conversations · Training and mentoring · Family day/visits at plant · EBS training |
| Customers and suppliers
| · Regular meetings · Email/phone dialogue · Conferences/ trade shows · Visits at plant and visit customers/supplier · Audits · Technical meetings |
| Local and national authorities | · Regular meetings · Planned and unplanned inspections/ audits |
| Corporate management team
| · Monthly/regular meetings · Workshops · Regular dialogue (phone/email/ meetings) · Internal board meetings · Reporting · Audits · Technical and commercial meetings |
| Local community and organisations (NGOs, clusters, research)
| · Community events · Sponsorships · Town hall meetings · Social events · Partnerships |
| Investors and shareholders
| · Regular meetings · Corporate reporting · Regular phone/email dialogue |
| Unions
| · Monthly/ weekly/ regular meetings · Labour committee · Informal contact / phone /email |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Elkem surveyed key internal and external stakeholders.
What actions were taken by Elkem to promote responsible sourcing?
In its 2019 Sustainability Report Elkem reports that it took the following actions for promoting responsible sourcing:
- Conducting supplier due diligence
- Elkem’s procurement function is responsible for carrying out pre-qualification and risk assessments of suppliers based on corporate requirements within environment, health and safety, social responsibility, anti-corruption and compliance with laws and regulations. A structured auditing programme is also in place, to make sure all suppliers receive regular audits. Where the risk is identified as high, additional due diligence (integrity due diligence) or on-site audits are required. In 2019, 73% (ex. China) of new suppliers of raw material were screened against environmental and social criteria. For high risk suppliers, additional due diligence was conducted (integrity due diligence). One supplier was excluded based on due diligence findings. In 2020/2021, Elkem is updating its supplier due diligence process, aiming for a harmonised approach to screening using social criteria. All new suppliers will be screened against the topics in the GRI 400 series.
- Implementing a code of conduct for business partners
- In October 2019, Elkem launched a code of conduct for its business partners (“the business partner code”). The business partner code sets out Elkem’s expectations of its suppliers with regards to ethics, labour rights and social and environmental issues. Elkem requires all new suppliers to endorse the business partner code and maintain their commitment throughout the relationship. The business partner code is considered an integral part of any agreement that regulates the relationship between Elkem and a supplier.
- Developing detailed requirements for high risk suppliers
- Elkem has developed detailed requirements for high risk suppliers and contractors regarding health, safety and environmental standards for operations like mining, transportation, storage and loading, and is actively involved in the promotion and monitoring of safe and decent working conditions. This includes health and safety training and providing correct personal protection equipment for suppliers’ employees when necessary. Age control to prevent child labour and ensure responsible working conditions for young employees is also carried out. Elkem requires suppliers and contractors to engage their employees with written contracts on fair terms, and to give them information about their right to organise and collectively bargain with management where this is legally possible. Elkem’s requirements are regularly discussed in meetings with suppliers. High-risk suppliers must document their understanding of legal requirements and hazards in their operations and present plans showing how risk will be eliminated or controlled while working for Elkem. Elkem performs audits and inspections, both in connection with routine visits for quality, technical and business follow-up, and as unannounced site visits. External auditors also conduct supplier audits on Elkem’s behalf. Violations of Elkem’s requirements are registered and addressed with verbal or written warnings in addition to requests for improvements when necessary. Repeated violations may lead to requirements for speedy implementation of improvement plans, financial penalties, or termination of contracts with immediate effect.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
1) This case study is based on published information by Elkem, 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) https://www.globalreporting.org/standards/gri-standards-download-center/
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