Sustainable Business governance

With Sandvik’s Sustainable Business strategy, Code of Conduct and Supplier Code of Conduct as the basis, risks and opportunities are analyzed and managed. Objectives and targets are adopted by the Group Executive Management to address the material areas to efficiently manage related risks and leverage opportunities.

The Group Executive Management adopts the Sandvik Sustainable Business strategy and the business areas are responsible for the implementation and follow-up. The business areas are also responsible for the assessment and management of sustainability risks in their operations.

The Sustainable business function manages Sandvik’s overall sustainability strategy and provides support to the business areas. During the year, a new Sustainable Business Council has been established. The Council comprises representatives from the three business areas and group functions such as Human Resources, Environment Health and Safety, and Compliance.

The Board adopts the Code of Conduct, and each business area assumes responsibility for ensuring compliance with it. All members of the Board of Directors as well as the Group Executive Management have undergone training in Sandvik’s Code of Conduct, including anti-corruption. 94 percent of the employees have been trained in the Code of Conduct. Employees and other stakeholders are encouraged to report any deficiencies or breaches of Sandvik Code of Conduct through the Speak Up system. This facilitates rapid identification of risks and enables corrective remediation to take place. The sustainability work is also evaluated through performance against our targets (see Sustainability targets: our offerings and our operations) and through external performance ratings. KPIs are consolidated and reported to follow up objectives and targets at Group and business area levels. Each year we evaluate our performace, as well as set targets and focus actions for the coming year.

Managing our group material aspects

Compliance

Compliance includes four areas: anti-corruption compliance, competition law, trade compliance and data privacy. The purpose is to ensure a well-functioning structure with control over Sandvik’s international business and to manage compliance risks in all countries in which Sandvik operates. Compliance programs, including risk identification, policies, training, controls, etc., are implemented by each business area and overseen by the Sandvik Compliance Functional Council which sets requirements, reviews performance and provides assurance of satisfaction to the Board of Directors through the Audit Committee. The Functional Council comprises business area and group Compliance Officers and the Head of Business Integrity. During 2018 Sandvik received no significant fines or non-monetary sanctions for non-compliance with laws or regulation related to our four areas. See Compliance for more information.

GRI Topic: Anti-corruption. Material inside and outside Sandvik.

Sustainable supplier management

A sustainable supply chain and strong supplier relationships are central to Sandvik’s commitment to provide customers with the best and most innovative offerings. It is important for us to partner with suppliers who understand and embrace our sustainability standards regarding areas such as environment, labor, human rights and anti-corruption. Our requirements, which are the same for all types of suppliers, are outlined in our Supplier Code of Conduct. The responsibility of implementation and follow-up of the Supplier Code of Conduct is decentralized and lies within each business area. See Sustainable supplier management for more information about our Sustainable Supplier Management Program.

GRI Topics: Supplier Environmental Assessment, Supplier Social Assessment, Child Labor (boundary: supply chain), Forced or Compulsory Labor (boundary: supply chain). Material in Sandvik’s supply chain.

A diverse and inclusive organization

A diverse and inclusive organization improves Sandvik’s business outcomes in that it reflects a global, diverse customer base, it creates a culture of innovation, and it enables Sandvik to secure the right competence. Diversity and inclusion are integral parts of a modern society and, for Sandvik, a strong competitive advantage. The purpose is to have a workforce with the right mix of people that reflects Sandvik’s markets, which will support the business and our ambition to meet the needs of global and local customers.

Diversity and inclusion are vital parts of our people strategy and part of our People Policy. The responsibility for implementing and communicating the policy lies within the business, including securing resource needs and taking appropriate measures when a breach of the policy has been confirmed. Sandvik has a diversity and inclusion forum with representatives from Group as well as business areas with the purpose to work collaboratively to develop a diverse organization and a culture of inclusion. The Forum develops and sets the statement, vision and mission, shares experiences, reviews KPI’s and collaborates on diversity and inclusion initiatives.

GRI Topics: Employment, Diversity and Equal Opportunity. Material within Sandvik.

Environment, Health and Safety

Sandvik’s Environment, Health and Safety (EHS) Vision is for Zero Harm to our people, the environment we work in, our customers and our suppliers. Precautionary measures are taken when there is reason to believe that an action could harm the environment or human health. The Sandvik EHS Council has a responsibility to drive and promote the vision and to ensure that Sandvik manages EHS in the most effective way. While EHS activities are decentralized within the business areas, the EHS Council is the forum for identifying, reaching consensus on and implementing common initiatives and procedures. In addition, the Council drafts documents, such as the EHS Policy and objectives and targets, for the Group Executive Management to consider and approve. The council can appoint working groups to work on specific EHS issues, for example environmental working groups.

Our EHS Management systems are based on ISO 14001, ISO 45001 or equivalent standards. Management of individual topics follows the criteria of these frameworks but can go beyond. We have a common EHS Policy for the company and Group Procedures in areas where Sandvik wants to set standards that go above and beyond the requirements of our certified management systems. Any specific issues of a more local nature, e.g. effluent discharge limits or environmental permits, if not covered in legal requirements or in our certifications or Group procedures already, will always be local initiatives adapted to the specific needs at each production unit or business division. Furthermore, the scope of our EHS Management systems includes relationships outside the company boundaries, and includes a clear responsibility to ensure high standards for all work situations where we as a company are in control of the work environment. This includes working with risk identification and mitigation in order to prevent any incidents of work-related injuries or occupational illnesses.

Use, reuse, recondition and recycle

The global raw material shortage is an impediment for a successful business. Recycling results in less virgin raw material used, lower energy consumption and reduced emissions of acidifying substances and wastewater discharge, in addition to less waste. These factors are important to Sandvik, the Group’s customers and society at large. Sandvik’s sites are working to reduce the consumption of raw materials and the amount of waste going to landfill.

About 90 percent of our manufanuturing activities take place in areas where there is an abundance of water. Nonetheless, water is circulated, particularly cooling water, to reduce the consumption of fresh water at several of our production units.

The EHS policy, which is valid for the entire Group, is supported by a number of internal environmental standards for our operations. Major sites with production, services and warehouses have certified management systems according to ISO 14001 (99 percent). Environmental issues are included in the process for sustainable supplier management and both environmental and safety issues form part of the process for developing new products. Lifecycle assessments are carried out for selected products, mainly within Sandvik Materials Technology. Read more about our work on environmental issues under Environmental footprint.

GRI Topics: Materials, Water and Effluents, Effluents and Waste. Material inside and outside Sandvik.

Health and Safety

Maintaining a safe work environment is always a top priority out of respect for both Sandvik’s employees and customers. The Group’s performance is meeting growing expectations from its customers and other stakeholders. Health and Safety is a significant competitive advantage for Sandvik.

Sandvik has an EHS Management System that is certified according to ISO 45001 (or OHSAS 18001 until switched over). At the end of 2018, 99 percent of sites in scope were certified. All locations with a minimum of 25 employees are required to be certified according to the standard. On top of the minimum requirement Sandvik has introduced a number of EHS procedures to go above and beyond the scope of an externally verified management system. These procedures handle hazard identification and risk management; incident reporting, investigation and injury management; EHS performance measurement and monitoring; Training and Competence; Small sites and offices procedure. Sites with a lower risk profile do not have to go through the process of external certification. However, these sites will be covered by the requirements in the Group procedure for Small sites and offices, to be covered in a systematic way when it comes to EHS management.

Each Sandvik-controlled location will implement and maintain formal systems and processes for risk assessments that:

• Systematically identify all significant health and safety hazards and potential environmental impacts, including for all routine and non-routine work (e.g. maintenance work and contractor work)
• Include work processes such as ergonomics, chemicals, machinery, tools and equipment as appropriate to the type of work being done.
• Have appropriate involvement from or in consultation with relevant employees, managers, subject matter experts, EHS professionals, etc.
• Assess the Inherent risk level (i.e. without any Sandvik-initiated control measures in place).
• When appropriate, apply comprehensive risk assessment processes and methodologies appropriate to the nature and scale of the risks. (e.g. HAZOP, Bowtie, FMEA, etc.)

Based on the above risk assessments, each Sandvik-controlled location will:

• Implement appropriate control measures to ensure that EHS risks are managed to a tolerable level through the effective use of the hierarchy of control.
• Implement ongoing monitoring to ensure that, as a minimum, those controls which are deemed as ‘critical’ remain effective.
• Maintain an up to date risk register that contains the significant risks for the location. This shall be reviewed and updated at least annually or when circumstances or events change the risk profile of the location.
• Ensure Location Management review, on a periodic basis of the risk management systems and processes to ensure that they remain relevant and appropriate to the nature and extent of the associated risks.

All employees can and are encouraged to report the hazards they observe, which is handeled by the accountable person in the location where the hazard was identified. The system supports a process for handling all hazards adequately and following them through to completion. Hazard reporting is repeatedly encouraged, and the person reporting will not risk being held accountable in their capacity of ‘reporter’. The most senior Sandvik manager at each location is responsible for correct handling of the registered hazard.

Each business area/location has an Incident Reporting and Investigation system to ensure that hazards, near misses and incidents are:

• reported in a timely and accurate manner
• accurately classified based on Sandvik EHS Definitions
• assessed for Future Risk Potential
• adequately investigated and analyzed to determine root causes, corrective action plans, and trends in the causes of incidents.

Each business area/location ensures that the findings from incident investigations are shared within the organization.

All employees have access to a colleague in their immediate workplace or as part of their organization who is representing the EHS function within Sandvik. This function is formed differently in different business divisions within the company as they are designed to be effective within the field to which they belong. There are EHS specialists in our sales areas and territories and they are specialized in covering health and safety issues e.g. in relation to travel or to harsh work environments on customer sites. They could also specialize in e.g. ergonomics or psychosocial issues if employed within a service function or an office location. Our EHS organizations in production sites have vast experience in managing industrial environments and associated risks. The EHS issues are integrated in the business everywhere and the EHS function provides expertise and support to have EHS aspects as an integral part in our day-to-day work.

The steering documents and the rules in place are approved after proper review and input from various stakeholders. A process of firmly establishing our procedures always precedes the final decision. The stakeholders are mainly from our EHS organization but also from operational management as well as from workers safety committees where EHS professionals and representatives from workers and from management regularly meet. Topics like Policies and Procedures, and Risk Management are discussed in these committees.

Health and safety commitments are organized depending on the nature of the local organization and the issues within that region. Typically, representatives are from local management and from workers and EHS professionals. Decisions in relation to local workplaces about EHS issues are dealt with in the committees.

Training is provided as part of the induction for all employees and in more depth to EHS professionals. Furthermore, EHS issues are integrated in any training for certain roles. Our training packages vary from classroom training in-house to external training and self-learning, for example, e-learning. General awareness is also raised through a notification system within the company where alerts of hazards are shared as well as best practices and problem-solving.

Access to medical and healthcare services is designed based on local needs and customs. It varies from having professional healthcare on site either as employed practicians or as a service provided from an external party on our premises. In other locations there may be agreements with external parties where our employees have access to vaccinations, health checks, etc. Health and Well-being programs are offered and maintained for all employees. Enrollment is voluntary. The programs are adapted to local needs and tested for their effectiveness.

In addition to our own internal operations, our EHS Policy includes a commitment to external relationships that Sandvik has in the market.

GRI Topics: Occupational Health and Safety. Material inside and outside Sandvik.