Ethical operating culture and human rights

S Group is committed to respecting human rights in all of its operations. We are responsible for ensuring that we treat our employees and customers in a non-discriminatory manner, taking care of safety and respecting diversity. We continuously evaluate our human rights impacts and practices in order to ensure that human rights are respected and products are manufactured in reasonable working conditions in our supply chains.

Since 2017, we have been following the ethics index, which is part of our job satisfaction survey. The index measures employees' trust in their employer, as well as their perceptions of the ethicality of the company's operating methods and the implementation of its values and principles in day-to-day work. The index was 78.2, with the corresponding score being "good". The scale is 0–100.

Audits

94%

SHARE OF PURCHASES FROM HIGH-RISK COUNTRIES 
 
EMPLOYEES' ASSESSMENT OF ETHICS

78.2%

Ethics index 
Certification level of
private label products (of the sales volume)

87%

coffee

82%

tea

98%

cocoa


TARGETS FOR RAW MATERIALS CERTIFIED OR VERIFIED FOR SUSTAINABILITY

100%

coffee 2019

100%

tea 2020

100%

cocoa and chocolate 2020

We promote the following UN Sustainable Development Goals in particular:

Human rights in S Group

We respect human rights in all of our operations

S Group is committed to respecting human rights in all of its operations. We are also committed to promoting the fulfillment of human rights in our supply chains.

Our commitment to human rights concerns our customers and employees, as well as the employees and producers in our supply chains. This commitment to human rights is part of SOK Corporation's ethical principles, which concern all SOK Corporation employees and have been approved by its Board of Directors. Our cooperatives have adopted SOK Corporation's ethical principles or have established their own principles. During 2019, we will prepare principles concerning human rights, including practices related to human rights management, risk and impact assessment and due diligence.

Human rights management is part of our sustainability management. In accordance with SOK's management model, key figures concerning human rights, as well as the most important projects related to human rights, are reported to its Executive Board and senior management on a regular basis. The goals, measures and projects related to human rights are determined in cooperation with the business operations. The most important goals have been integrated into our sustainability programme.

S Group's human rights impacts

In accordance with the UN Guiding Principles on Business and Human Rights, we work to carefully assess and predict the human rights impacts of our operations and prevent and mitigate adverse human rights impacts. The assessment of human rights impacts is a continuous process. During 2017 and 2018, we assessed key human rights impacts and affected parties, as well as measures to minimise adverse human rights impacts in line with the due diligence principles, for each of our business areas. As part of this process, we also monitor the implementation of human rights in the supply chains in many ways, including audits of suppliers in high-risk countries and certifications of high-risk raw materials.

In assessing our key human rights impacts, we make use of reports by various organisations and authorities and dialogue with stakeholders, such as non-governmental organisations and trade unions, as well as our own experience in monitoring working conditions at factories, for example. The impacts, as well as the measures to minimise them, have been determined in cooperation with the business operations, and will be processed by SOK's Executive Board during spring 2019.

Our most salient direct human rights impacts are related to the safety of our customers and employees. Ensuring the safety of locations and products, self-monitoring and the monitoring of compliance with the age limits for purchasing alcohol and tobacco products are examples of our work to ensure that no one's safety is compromised at work or when visiting an S Group location. The materialisation of this risk is unlikely.

Our potential direct human rights impacts also include non-discrimination and the equality of our customers and employees. Non-discrimination means the equal treatment of customers and employees and the accessibility of our locations, for example. We also respect our employees' right to join trade unions, and do not tolerate any kind of discrimination or harassment.

We may also have an indirect impact on the human rights of the employees in the supply chains of products and services. Our most significant indirect human rights impacts are related to forced labour, discrimination, violations of freedom of association, child labour, insufficient salary, excessive working hours and compromised occupational health and safety.

Generally, our most significant human rights risks within the supply chain are related to countries where the laws and their implementation and monitoring are insufficient or that have not ratified international conventions on labour and human rights; to countries that have a large number of domestic or foreign migrant workers; to products and raw materials produced in high-risk countries that use low-skilled labour to a high degree; to goods suppliers that have not made a commitment to sustainability initiatives and have not developed operating methods to ensure responsible procurement; to non-certified high-risk raw materials; and to long supply chains. It must also be taken into account that non-risk countries may also have areas with elevated levels of human rights risks.

The human rights risks mentioned above do not constitute a comprehensive list. This is a list of our key risks and most significant human rights impacts that we are focusing on to reduce them. Other human rights are equally important, and we continue our work to ensure that we do not hinder their fulfillment in any way.

Training for employees

In 2018, we provided training in human rights issues to employees involved in procurement in particular. Training was provided to the procurement units of the department store and speciality store chain management organisation, Meira Nova and indirect procurement. The training focused on identifying human rights risks related to specific product groups and increasing capabilities to process these risks withsuppliers.

We also continuously provide our employees with training on the contents of our ethical principles. This training covers anti-corruption, conflicts of interest in decision-making, and equal treatment in the workplace community, to name just a few examples. The training is also part of our induction training for new employees.

EMPLOYEES' ASSESSMENT OF ETHICS

78.2

Ethical index

Anonymous channel for reporting violations of ethical principles

We are in the process of establishing an anonymous external channel for our stakeholders and other parties to report any violations of our ethical principles. In addition to this channel, our stakeholders may report unfair trading practices via the channel provided by the Board of Trading Practices in the Food Supply Chain. Via the channel provided by amfori, they may report any violations of human rights within the supply chains of amfori's members.

Responsible procurement

Focus on human rights also at supply chains

 
 
 

In responsible procurement, it is essential to agree on expectations when selecting and cooperating with goods suppliers and service providers and to monitor their performance in terms of these expectations. Our supplier contracts require all of oursuppliers to respect key labour and human rights, as well as ensuring that products can be traced back to the source of the raw materials. 

We require third-party factory audits from suppliers of private label products whose products are manufactured in countries with a high risk level in terms of social responsibility or contain raw materials procured from high-risk countries. See here for amfori BSCI's list of high-risk countries.

We are a member of the amfori BSCI (Business Social Compliance Initiative) and have actively participated in the development of the system and its tools for many years. The amfori BSCI aims to bring the working conditions of employees manufacturing products in high-risk countries to the level required by international agreements and to streamline and harmonise the monitoring of suppliers by companies. In addition to the amfori BSCI, we use the Sedex (Supplier Ethical Data Exchange) database to monitor suppliers' responsibility.

TOP 10 Procurement countries

 

83.8%

Finland

 

2.7%

The Netherlands

 

1.6%

Germany

 

0.7%

China

 

2.1%

Sweden

 

1.5%

Denmark

 

0.7%

Belgium

 

1.9%

Spain

 

1.0%

Italy

 

0.5%

Great Britain

TOP 10 direct high-risk sourcing countries

 

42.9%

China

 

8.2%

South Africa

 

5.4%

Intia

 

4.2%

Morocco

 

7.7%

Greece

 

5.2%

Turkey

 

3.5%

Bangladesh

 

6.2%

Thailand

 

4.2%

Egypt

 

2.3%

Panama

Table: S Group's procurement countriesHide the table

Human rights assessment in procurement

Human rights in procurement are assessed using the amfori BSCI's list of high-risk countries, which indicates country-specific risks, as well as a risk assessment tool for raw materials and other sources providing country-specific and raw material-specific information. In addition, we conduct regular surveys among all of our suppliers on social responsibility practices and the origin of products. These surveys provide us with information about the development of our suppliers' understanding of sustainability, among other aspects.

Direct purchases from risk countries

S Group has around 400 suppliers of private label products in risk countries. The share of direct purchases of private label products from high-risk countries is 6%. Of our direct purchases from high-risk countries, 94% come from suppliers audited by third parties. In 2018, BSCI audits were conducted at the factories of 263 S Group suppliers.

Indirect purchases from risk countries

Indirect purchases from high-risk countries include cases in which the product is manufactured in a low-risk country, such as an EU member state, but the main raw material of the product comes from a high-risk country. For our private label products, we establish the production location of the main raw material for indirect purchases from high-risk countries. If the raw material is produced in a high-risk country, we require that a third-party audit or certification be conducted to ensure sustainability. Human rights issues typical of the production area are also reviewed with the supplier.

purchases of services

In spring 2018, we conducted a survey on human rights practices for our key service providers. This assessment was related to the contract requirements, which were updated in 2017 with a special focus on risks related to labour exploitation in Finland. Based on the survey, we trained experts responsible for purchasing services, in order to provide them with the capabilities required for discussing our expectations of sustainability with our partners.

Low-risk purchases

Some purchases are regarded as low-risk in terms of human rights, as they are manufactured and produced, including the raw materials, in areas that the amfori BSCI defines as low-risk.

Private label purchases (%)

Radical transparency for supply chains

During 2018, we complemented our traditional auditing work by developing a new type of research model that examines the root causes. Its purpose is to identify typical and current human rights issues and their root causes in our key production regions or potential sourcing areas. This enables us to identify measures and procedures to minimise typical challenges. The studies will always be conducted by a third-party partner familiar with the region in question. The tool has been developed in cooperation with non-governmental organisations and other stakeholders.

The first pilot study concerned the supply chain for processed tomatoes during the 2018 harvest season, in the Foggia region of southern Italy in particular. Italy was selected because, rather than being a traditional high-risk country, it is an EU country with recent reports of poor working conditions for employees with immigrant backgrounds. The study was conducted by the non-governmental organisation Oxfam, which produced a report independently based on the study.

In the production of processed tomatoes, key human rights issues are related to primary production – that is, tomato farms. These farms have a high number of employees with immigrant backgrounds, who are in a very vulnerable position in the labour market. They are often recruited by illegal gangmasters who deduct considerable agency and transport fees from their salaries. As a result of this, the salaries paid to the employees are small, and they cannot afford appropriate living conditions. The farms also have serious safety issues. Our next step is to seek to improve the employees' working conditions in Italy by discussing our findings with our suppliers and addressing the migrant workers' situation in our impact work at the EU level.

Principles of good business practice

We are committed to the principles of good business practice, which aim to ensure fair rules among the operators within the food supply chain. The purpose of the principles is to secure the competitiveness of the contract parties, as well as ensuring the continuity of the contract relationships by strengthening mutual trust. The principles of good business practice include policies concerning written contracts, predictability and responsibility for risks, and they were agreed between the EU Commission and the EU organisations within the food supply chain in 2011.

In Finland, the Board of Trading Practices in the Food Supply Chain promotes procedures in line with good business practice in the food supply chain. If the Board detects non-compliance, it may intervene by issuing recommendations concerning good business practice, for example. In addition, the Board may develop the sector's ethical principles and issue statements concerning compliance with the principles of good business practice. We have taken the Board's recommendations into account.

Audits

Third-party factory inspections

When monitoring our suppliers, we pay particular attention to the countries with the most significant risk of violating labour and human rights. According to the amfori BSCI, such high-risk countries include several countries in Africa, Asia, South and Middle America, as well as certain European countries. We purchase from audited suppliers in high-risk countries.

Audits refer to factory inspections, such as amfori BSCI audits or equivalent third-party audits. In the amfori BSCI system, independent auditors inspect production plants to ensure that the criteria of the system are met in practice.

Audits cover, for example, working time and occupational safety practices, as well as the payment of the statutory minimum wage.

Of the direct purchases of S Group's private label products and its own imports from high-risk countries, 94% are audited. The share of audited purchases from high-risk countries decreased slightly on the previous year because Greece was classified as a high-risk country as of the beginning of 2018. We were not able to audit all of our Greek suppliers during the year due to the availability of auditors. In addition, we were not able to audit all of our consumer goods suppliers during the year. Our goal is to audit all high-risk country suppliers of private label products through amfori BSCI audits or equivalent third-party audits.

Purchases from audited suppliers in 2018, %

Audit scores

In 2018, the most significant development needs detected during the amfori BSCI audits were related to management and working time practices.

If the audit score is low, the factory will draw up a remediation plan. A new audit will be performed to monitor compliance with the plan. Cooperation with the partner is not discontinued, as doing so would not help the workers' situation at the factories and farms – cooperation is the best way to improve operations. This is also backed by the results of the initial and follow-up audits.

To help suppliers improve their operations, amfori BSCI provides training on correcting typical issues detected during audits. We encourage our suppliers to participate in such training. We are also participating in a Nordic project to develop a new training tool for factory workers. The tool will be tested in food product factories in Thailand in early 2019.

Results of S Group's BSCI audits in 2018, %

In the audits conducted in 2018, there were no E (Unacceptable) scores or Zero Tolerance observations, meaning observations related to child labour, forced labour, corruption, or safety defects causing an immediate danger, for example.

Results of S Group's BSCI audits by area in 2018

Certified products and raw materials

Choices based on values

We work to offer our customers an opportunity to make choices based on their values by providing an extensive selection of products with environmental or sustainability certificates in various product groups.

Coffee, tea and cocoa 

The production of coffee, tea and cocoa is associated with human rights and environmental violation risks, because the production centres around countries where compliance with laws and monitoring by the authorities may be low. For our private label products and restaurants, our goal is to use only coffee, tea and cocoa that have been certified or verified for sustainability.

For a product to be verified for sustainability, its supply chain must be verified through audits all the way back to primary production. Acceptable certificates include Fair Trade, UTZ and Rainforest Alliance, for example.

Certification rate in the sales volume of private label products

87%

Coffee

82%

Tea

98%

Cocoa

Table: certification ratesHide the table
Targets for raw materials certified or verified for responsibility

100%

COFFEE 2019

100%

TEA 2020

100%

COCOA AND CHOCOLATE 2020

Palm oil

Palm oil is the world's most commonly used plant-based oil, and its production involves issues, such as deforestation and weakening biodiversity, as well as substandard working conditions for workers in Southeast Asia in particular.

We are committed to using sustainably produced palm oil. Our goal is to use only certified palm oil traceable back to palm oil plantations (RSPO segregated) in our private label products, as well as the deep-frying oil in our restaurants, by 2021. We have been a member of the Roundtable for Sustainable Palm Oil (RSPO) since 2011.

 
Use of certified palmoil
2016 2017 2018
99 99 99
Palmoil certification rate 

99%

 

 
Use of RSPO-segregated palm oil
2016 2017 2018
71 88 89
RSPO Segregated certification rate 

89%

 

Target for the use of certified palm oil

100%

by the end of 2021

Organic products

The demand for organic products continues to grow, as does their selection. At the end of the year, the product ranges of our grocery stores included more than 4,100 organic products, and their sales grew by 10% in 2018. Organic products represented 2.5% of all sales of food products.

Organic products

4,100

Number in the selection

 

10%

SALES GROWTH

 

2.5%

SHARE OF GROCERY SALES

Fish and shellfish 

Our grocery stores want to offer responsibly caught fish from sustainable fish stocks to consumers. Fish product procurement follows S Group's fish policy, which is based on the species endangerment classification, WWF's seafood guide and the recommendations of the Marine Conservation Society, as well as research information from the Natural Resources Institute Finland. The policy applies to our centralised procurement and purchasing by the cooperatives in both grocery stores and restaurants within S Group.

The basic principle is to not include fish from fish stocks that are endangered, threatened or subject to overfishing in the product range, and the origin of the fish must always be known. In addition, undersized or protected fish are not accepted in the product range. Separate criteria concerning fishing areas or fishing methods have been set for many fish species, such as prohibition of bottom trawling, or prohibition of using drift nets in tuna fishing. The fish policy is updated every two years. The most recent update was carried out in 2018.

In addition to being required to comply with separate restrictions concerning fish species, fishing areas and fishing methods, the producers of private label tuna products must also participate in the activities of the International Seafood Sustainability Foundation (ISSF). The large purse seine vessels used to catch tuna should also be entered in ISSF's Proactive Vessel Register. The fishing operators who participate in the operations of the ISSF are committed to sustainable fishing methods and third-party audits to verify the sustainability of their operations.

At the end of the year, the product ranges of our grocery stores included 115 MSC-certified products, of which 50 were private label products. Food Market Herkku has Finland's only MSC-certified fish counter.

MSC-certified products in 2018

115

items in selection

 

50

items in private label products

Traceable Finnish fish

Increasing our offering of Finnish fish is part of our Food Manifesto and our Healthier Food for Children initiative. We have added many easy-to-prepare fish products to our Kotimaista range, such as Baltic herring patties, fried vendace and fresh pike-perch fillet.

We made significant progress in terms of the transparency of the food chain by introducing the Kuhatutka (Pike-perch radar) application, which enables consumers to check where their pike-perch was caught. This S Group retail application was built using blockchain technology. S Group was the first food-sector company in Finland to try this technology.

Diversity

We appreciate one another and respect diversity

S Group employs more than 40,000 retail professionals, who work in a wide variety of positions, from sales assistants to warehouse workers and specialists. A workplace community where diversity is respected and supported ensures equal treatment and equal opportunities for everyone.

Our key principles include respecting and appreciating others, as well as non-discrimination and equality. Our employees are free to be themselves. Competence, attitude and the ability to learn are what counts, not personal background factors.

S Group companies prepare annual plans concerning personnel, training, equality and equal treatment of employees. The personnel and training plan is prepared in order to maintain and develop employees' professional skills. The purpose of the equality plan is to promote gender equality in the workplace, whereas the equal treatment plan aims to promote the equal treatment of employees with different backgrounds, prevent discrimination and improve the legal protection of individuals who experience discrimination.

We also work to promote diversity through communication and marketing. For example, Prisma's ‘Fashion belongs to everyone' slogan is promoted by models of different ages, appearance and size. In addition, Prisma served as the main partner of the 2018 Helsinki Pride event.

Employee diversity

Nationalities

76

Average age of employees 

36

 

Employees' age (50 and over, 25–49 & under 25)
Gender distribution, %
Table: OF S GROUP'S EMPLOYEES WOMEN/MEN 2018, %Hide the table
Share of women

21%

OF EXECUTIVE BOARD MEMBERS

13%

of management team members

66%

OF SUPERVISORS AND MANAGERS

Table: Share of womenHide the table

Data protection principles 

The customer always comes first

The careful and lawful processing of personal data is important to us. In 2018, we continued the data privacy project we had launched in 2017. Its key purpose was to ensure compliance with the GDPR across S Group. During the project, we created and implemented operating methods at the S Group level.

For example, we defined and published S Group's data protection principles, which guide all processing of personal data within the Group. Their purpose is to ensure compliance with data protection laws in all personal data processing. 

All employees who process personal data as part of their work are provided with induction and other relevant training. Our goal is for all employees processing personal data to be aware of the applicable data protection requirements and guidelines and act accordingly.

30,000

EMPLOYEES HAVE COMPLETED DATA PROTECTION TRAINING

Through the implementation of data protection principles, we are able to provide S Group's co-op members and other customers with new and better services. The data protection principles also support the needs, profitability and continuity of our business operations.

With us, the customer always decides how their customer data is used. They can determine the purposes for which their customer and purchase data may be used. We use customer data to develop services that benefit the customers the most.  

Carefully planned, clear and consistent operating methods are a prerequisite for people being able to trust us as a processor of personal data.

S Group's data protection principles are available at S-ryhmä.fi.