Sustainability Program

The underlying rationale behind all our sustainability activities is to create value for our main stakeholders: customers, shareholders, employees, suppliers and the community. The purpose is to become a more valuable partner to our customers and all our stakeholders. At FLSmidth, we aim to align sustainability with business operations as part of our global business strategy. Having signed the UN Global Compact in November 2008, FLSmidth committed itself to supporting the United Nations' ten principles regarding human rights, labour, environment and anti-corruption, as well as reporting on progress made.

Sustainability

Responsible sourcing

FLSmidth's Code of Supplier Conduct communicates our expectations to our suppliers, recognising that conducting business in an ethical and sustainable manner is crucial for developing long-term partnerships.

responsible sourcing

Sustainable Supply Chain

As a company operating throughout the world and with most manufacturing outsourced, FLSmidth spends a large share of its earnings in a global network of suppliers. We have a large impact and with that comes responsibility. We are committed to honouring the commitment we made to UN Global Compact in all aspects of our business, and responsible sourcing is one of our CSR focus areas.

Quality management principles form the basis of good CSR work. FLSmidth is committed to adopting a responsible manner in its efforts to maintain a high level of product quality while driving down costs responsibly.

Our daily work with suppliers around the world is based on the strong relationships between a high standard of occupational health and safety, labour rights, environmental control and the quality of the product.

New Code of Supplier Conduct

Following a review of supplier relations, FLSmidth has raised its expectations to suppliers. We have renewed and reinforced our Code of Supplier Conduct (CoSC) in an effort to communicate these expectations more clearly.

The use of sub-contractors and temporary workers is a high-risk area within CSR. Ensuring fair labour rights and acceptable working conditions for temporary workers is a challenge for companies operating in a cost-competitive environment. Our new CoSC describes how FLSmidth meets this challenge, and it describes in explicit terms how we expect our suppliers to provide a safe and healthy working environment for all employees.

The new CoSC applies to all subsuppliers working on behalf of our suppliers and thus expands the scope of our earlier CSR policy. It enables us to improve our CSR performance throughout the supply chain.

The CoSC covers the following areas:
• Legal compliance
• Health and safety
• Child labour
• Freedom of association
• Forced labour
• Environmental

Pilot

FLSmidth initiated a Responsible Sourcing Pilot in 2015 to support the launch of a new programme within supplier development. This involved developing and testing a series of tools and methods to help suppliers raise their quality and CSR performance. Fundamental to the pilot is the strong correlation between CSR and quality. Evidence shows that performance within health and safety leads to improved processes and better quality of products.

The pilot programme was launched with two suppliers representing different industries, different cultures and different sizes. Together with each, we identified areas for improvement and agreed on development plans, which are currently being implemented. Our partnerships with these suppliers have developed and matured as a result of certain risks being identified and mitigated. When CSR and quality improvements are jointly implemented, they become mutually reinforcing.

The pilot has shown that the new tools and methods can lead to change and spark improvements. For example, significant improvements have been seen in the use of PPE and safety procedures.

The pilot will continue in 2016.

 

Code of Supplier Conduct