Disclosure 103-1: Explanation of the material topic and its Boundary

As a signatory of the UN Global Compact, Sika supports and respects the protection of internationally proclaimed human rights and ensures that it is not complicit in human rights abuses. With operations in more than 100 countries, Sika is active in many regions ranking high on human rights risk indices. Sika thus takes seriously its responsibility of assessing its own operations in relation to potential human rights violations.

The Human Rights Assessment encompasses three levels: Statement in favor of human rights; confirmation of processing a human rights assessment; and a compliance check in order to specify the minimum requirements concerning human and labor rights. The minimum requirements are: Respect of human rights, prohibition of child labor, freedom of association, prohibition of forced labor and guarantee of equal opportunities for all employees. They are listed in Sika’s Code of Conduct. This document gives a clear statement in favor of integrity and ethical conduct. By signing the Compliance-GRI Confirmation, GMs annually give written confirmation that the Code of Conduct is in place.


Disclosure 103-2: The management approach and its components

Sika’s Code of Conduct requires all employees to comply with the applicable laws and regulations. At all locations where Sika operates, child labor and forced labor are strictly prohibited. For the reporting year, Sika has received no indication or reports of human rights violations within its own entities. This has been confirmed by the GMs by means of the Compliance-GRI Confirmation. In 2019, the response rate for the Compliance-GRI Confirmation was 100%. The Compliance Checklist distributed to GMs specifies the minimum requirements pursuant to the Sika compliance system, including training and information for staff on human rights (freedom of association, if permitted by local laws, no discrimination, no child or forced labor). In line with Sika’s holistic approach to compliance, this checklist is relevant to the operation of all functional units in the Sika companies and in all regions.  

Given the broad supplier base in many countries with high human rights violation risks and the sourcing from industries where labor rights, in particular, are potentially at risk, Sika considers the protection of human rights across its supplier base as an important issue that needs to be monitored and managed. Sika’s Supplier Code of Conduct focuses on human rights and labor laws. Sika regards the protection of human rights as the foundation of its business, wherever it operates.

Through mechanisms such as audits and inspections, Sika ensures and monitors the protection of human rights by Group companies. A cross-functional team, led by Corporate Compliance and supported by Internal Audit and external experts, has developed a proposal (scope, focus, timing and resources) for a Compliance Audit Program. Approval of the proposal by the Audit Committee of the Board of Directors is pending.

GMs and the local management team are obliged to ensure, supervise, and monitor the protection of human rights for their area of responsibility in their companies. In the signed Compliance-GRI Confirmation, General Managers are asked to report annually on human rights and confirm:
that they have ensured and communicated that child labor is strictly prohibited, and that child labor does not take place in their company,

  • that they have ensured and communicated the right of freedom of association in their company,
  • that they have ensured and communicated the non-discrimination principle as per Sika’s Code of Conduct in their company, and
  • that no apparent cases remain unresolved, and
  • that they have ensured that no apparent cases of forced labor exist in their company.

As clearly stated in the Compliance-GRI Confirmation, which is signed by each GM each year:

  • Sika promotes equal opportunities and fair treatment in employment and occupation. Discrimination is the act and result of treating people unequally by imposing unequal burdens or denying benefits rather than treating each person fairly based on individual merit.
  • Sika ensures the right of workers and employers to establish and join organizations of their own choosing without the need for prior authorization.
  • Sika prohibits “forced or compulsory labor”, which refers to work and services exacted from any person under the menace of any penalty and for which the said person has not offered herself or himself voluntarily. The most extreme examples are slave labor and bonded labor, but debts can also be used to maintain workers in a state of forced labor (for example: withholding identity papers or requiring compulsory deposits).
  • Child labor is strictly prohibited at Sika. The term “child” refers to any person under the age of 15 years or under the age of completion of compulsory schooling (whichever is higher).

Sika is an equal opportunities employer and is committed to treating staff without discrimination based on their race, color, gender, age, national origin, religion, sexual orientation, gender identity or expression, marital status, citizenship, disability, or any other legally protected factor.

COMMITMENT

Sika is committed to aligning its operations and strategies with the universally accepted principles in the area of human rights and labor established by the United Nations Global Compact Initiative.

Sika has integrated human rights reviews into its quality and risk management process.

RESPONSIBILITIES

The regional and local line management is responsible for compliance with human rights principles and local regulations.

Assessment of Sika’s own operations:

Sika has assessed compliance with human rights through its internal Group auditing activities and will continue to improve the audit agenda to achieve a broader coverage. GMs have given account of the local human rights situation and their observations in this regard through the Compliance-GRI Confirmation 2019.

Sika’s suppliers

Sika’s management approach to supplier human rights assessments sets out to avoid negative impacts caused by Sika’s suppliers with regard to human rights.

As clearly stated in Sika’s Supplier Code of Conduct, Sika is committed to high ethical standards and to sustainability in its relationships with employees, shareholders, customers, suppliers, competitors, governments, communities, and to the environment. Sika follows the principles of the United Nations Global Compact. Sika therefore expects suppliers to observe equal standards of professional conduct and integrity in their relationship with Sika, their employees, and their subcontractors. Suppliers recognize that their compliance with this code is an essential element of Sika’s vendor qualification. Suppliers’ conduct is governed by high ethical, safety and environment, and sustainability standards. The supplier has taken note of Sika’s Supplier Code of Conduct and, in its dealings with Sika, will not tolerate any conduct which constitutes a violation of that code.

In relation to social and working conditions, suppliers undertake to respect the provisions of the UN Universal Declaration of Human Rights and the Conventions of the International Labor Organization regarding:

  • Prohibition and elimination of child labor and forced labor
  • Freedom of association and collective bargaining
  • Promotion of equal opportunity and fair treatment in employment and occupation
  • Safe and healthy working conditions
  • Payment of living wages and regular employment entitlements
  • Non-excessive working hours

Suppliers undertake to put systems in place for the proper instruction, training, and auditing of their personnel and subcontractors to ensure compliance with these principles. To the extent that Sika is directly concerned, suppliers will immediately inform Sika of any identified violations of Sika’s Supplier’s Code of Conduct.

Sika is increasingly requested to certify compliance not only regarding its own activities, but also regarding those of its suppliers. Accordingly, Sika has started to improve and strengthen its Third-Party Due Diligence efforts. Under the lead of Corporate Procurement, Sika has agreed to join “Together for Sustainability” (TfS), an industry-driven organization in which the major chemical companies participate (see graph below) with the aim of developing and implementing a global assessment and audit program for their supply chain. Sika will become a full TfS member and gain access to more than 10,000 supplier assessments and audits. The questionnaires for both the self-assessments and the external audits were defined by the TfS members, and thus mirror a common CSR standard. The compliance topics covered by the TfS standard include ethical leadership, EHS, labor and human rights, privacy protection, fair competition, and the complaint procedure. Every member is obliged to organize between 100 and 150 self-assessments among its suppliers as well as 20+ audits. In exchange, it has access to the self-assessments of all the other members. The TfS will greatly increase Sika’s ability to ensure compliance by its suppliers with broadly accepted CSR norms. By the same token, Sika’s organization and processes will be measured against the same norms. This, in turn, will stimulate Sika’s drive to continuously improve its own CMS. As the graph below shows, although Sika’s overall CSR performance rating is high compared to its industry peers, there is still room for improvement.

Screening of new suppliers:  Based on the requirements set out in the Supplier Code of Conduct, Sika requires its new suppliers to perform a self-assessment.

  • Procurement identifies suppliers with a hazard based on the results of the self-assessments.
  • Suppliers subject to a high risk of human rights violations are screened by Sika personnel using desktop research and supplier audits.
  • Compliance with the set of human rights included in the Supplier Code of Conduct is one of the basic contract renewal requirements.
  • If human rights violations are identified, termination of the relationship with the supplier is the only option.
  • In addition to covering all new suppliers, Sika also intends to monitor existing local suppliers, specifically in “risk geographies” where human rights violations are known or suspected, and will include this in the scope of audit and evaluation of suppliers.
 
Disclosure 103-3: Evaluation of the management approach

The management approach has been reviewed and proven to be effective.