Case study: How LS C&S promotes ethical business conduct
LS C&S is a global leader in industrial electricity, electronics and materials, providing state-of-the-art products, including HV/EHV, superconducting, submarine and telecommunication cables to energy agencies and telecommunication companies. LS C&S’s management philosophy is that it should fully abide by principles, laws, and regulations, and be ethically responsible while doing business. Tweet This!
This case study is based on the 2018- 2019 Sustainability Report by LS C&S 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
Strengthening the foundation for ethical management and raising employee awareness, making sure employees work with diligence by complying with principles, standards and procedures, is a top priority for LS C&S. In order to promote ethical business conduct LS C&S took action to:
- implement a Code of Conduct
- operate a counselling centre
- maintain an ethical management website and Cyber Reporting Channel
- establish the Clean Company system
- provide ethical management training
- promote ethical management
- cooperate with suppliers
- carry out an ethics evaluation
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With this case study you will see:
- Which are the most important impacts (material issues) LS C&S has identified;
- How LS C&S proceeded with stakeholder engagement, and
- What actions were taken by LS C&S to promote ethical business conduct
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What are the material issues the company has identified?
In its 2018- 2019 Sustainability Report LS C&S identified a range of material issues, such as compliance management, respect for human rights and diversity, talent management, shared growth with suppliers, quality and product responsibility. Among these, promoting ethical business conduct stands out as a key material issue for LS C&S.
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 LS C&S engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Corporate disclosure system · Seminars for customers and meetings · Business reports |
| Employees | · Monthly morning assembly · Intranet · Cyber Reporting Channel · In-house training · Counselling office |
| Shareholders and investors
| · Corporate IR activities · Business reports · BOD Meetings · General shareholders’ meetings · Corporate disclosure system |
| Suppliers
| · Supplier satisfaction survey · Open discussion meetings · Shared Growth Council |
| Local Communities
| · Social contribution activities · Sharing activities by employees · Cooperation between industry and academia |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics, LS C&S engaged with its stakeholders through an employee survey.
What actions were taken by LS C&S to promote ethical business conduct?
In its 2018- 2019 Sustainability Report LS C&S reports that it took the following actions for promoting ethical business conduct:
- Implementing a Code of Conduct
- LS C&S established its Code of Conduct to provide a framework in which employees perform their work ethically and in compliance with laws and regulations and fulfill LS C&S’s corporate social responsibility. This is applied to LS C&S and all of its subsidiaries. The Code of Conduct consists of six categories: responsibilities and obligations toward customers; basic ethics for employees; fair competition; fair business transactions; corporate responsibilities for employees; and responsibilities toward the country and society. Additionally, implementation guidelines help employees understand LS C&S’s Code of Conduct and act upon it. The guidelines serve as criteria for making decisions and taking actions in ethically challenging situations at work. An ethics evaluation is also conducted annually, to assess the utilisation of the Code by employees and review the need for revisions or refinements to it and related guidelines.
- Operating a counselling centre
- LS C&S’s Ethics Secretariat is operating a counselling centre for employees who face ethical issues. Employees can not only have counselling on ethical conflicts at work but also get general information on ethical management and advice on how to interpret and apply the Code of Conduct through the Cyber Reporting Channel, phones or emails. Reports are received and handled confidentially, and the secretariat does not disclose the personal information of anyone reporting and the reported details without their consent.
- Maintaining an ethical management website and Cyber Reporting Channel
- To introduce ethics management and promote the implementation of its values, LS C&S maintains a dedicated website. Information, including a full text of the Code of Conduct and the pertinent programmes for its implementation, can be found on the website. It also features a Cyber Reporting Channel that allows employees and other stakeholders, including customers and suppliers, to report any unethical activities they witness or disadvantages they suffer. LS C&S keeps personal information and reporting details of all reporters confidential – their identities, evidence presented by them, any other information that could identify them, and measures taken based on the results are strictly kept confidential to protect reporters – and all reports received, including anonymous ones, are properly handled and addressed and results are delivered to reporters. In addition, to prevent unethical acts and create a sound organisational culture, those who report irregularities such as cases of bribery are offered a reward of up to five times the amount of the bribe (USD 4 thousand in maximum). Those who voluntarily report unethical acts are exempted from responsibility, and the money they received is used for volunteer activities.
- Establishing the Clean Company system
- LS C&S has established a system called Clean Company that helps employees voluntarily report any past acceptance of money or gifts. Once employees fill out a report form and submit it to the Ethics Secretariat, any money or gifts received are returned to the givers with an explanation regarding LS C&S’s ethical management policies. If there is a situation in which the received items are difficult to return, they are donated to social welfare facilities or to religious groups under the name of the giver.
- Providing ethical management training
- To prevent any possible violation cases of the Code of Conduct, ethics training is provided to LS C&S employees from the head office and subsidiaries to be dispatched overseas before leaving. Training programmes include the concept of ethical management, internal ethical management system and the Code of Conduct, and violation cases. In 2018, four ethical training sessions (7 hours) were carried out, for 86 employees.
- Promoting ethical management
- LS C&S’s Ethics Secretariat posts articles on ethical management, including news, the Code of Conduct, ethics systems, implementation guidelines and cases on LS C&S’s In 2018, articles on whistleblowing systems, win-win management, and inclusive organisational culture were posted and received a total of 2,764 hits.
- Cooperating with suppliers
- LS C&S has sent an official document asking suppliers for cooperation in eradicating practices of giving and receiving gifts, entertainment, and money and informing them of its Code of Conduct and reporting channels. After the document was sent, it was also posted on LS C&S’s purchasing intranet so that all suppliers could check the information.
- Carrying out an ethics evaluation
- Since 2010, LS C&S has been carrying out an ethics evaluation for all employees on an annual basis to identify improvement areas for its ethical management activities. The evaluation survey consists of 25 questions in three categories: the basis of ethical management, implementation of corporate ethics, and ethics being practiced in LS C&S’s The results are reflected in the next year’s activities.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 205-2 Communication and training about anti-corruption policies and procedures
2) Disclosure 205-3 Confirmed incidents of corruption and actions taken
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
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References:
1) This case study is based on published information by LS C&S, 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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