Nokian Tyres has made an assessment of human rights in our value chain. In the assessment we recognized several (10) human rights related risk areas in supply chain: Right to health, right to privacy and right to family life being the most evident.
- Right to privacy
- Right to a family life
- Right to health
- Right to life
- Right not to be subjected to slavery, servitude or forced labor
- Right to freedom of movement
- Rights of protection of the family and the right to marry
- Right to enjoy just and favorable conditions of work
- Right to an adequate standard of living
- Right to education
In order to improve supply chain sustainability, we started a partnership with an external auditor already in 2016. Our separate sustainability auditing process has been developed together with a consulting company, and it is based on Nokian Tyres’ Supplier Code of Conduct and principles that comply with the UN Global Compact goals.
We have set a goal to audit all of our major rubber processor partners by 2020, comprising at least 80% of our natural rubber purchasing volume. The audits enable the processing companies to improve their occupational safety and develop their operations further.
All the audits performed between 2016 and the end of 2019 cover 90% of our natural rubber purchasing volume, which means we have exceeded our target.
After the audits, we always initiate corrective programs to address the shortcomings identified in the process. The most common problem remains the same in most of the places: the recruitment of foreign workers. Foreign workers are recruited through a recruitment agency network, and the amount of recruitment costs to the employee can be significant: up to a year’s salary. As the agencies are often approved by local governments, it is difficult to improve the process. However, we require our suppliers to improve also on this issue. The suppliers keep requesting support from the local officials, but the progress is slow.
Another common problem is the language and contents of the employment contracts. The contract is not necessarily available in the employees’ mother tongue, or the translated content differs from the original.
AUDITS HELPED IMPROVE LABOR RIGHTS IN THE SUPPLY CHAIN
In 2018, we made 4 new audits and 4 follow-up audits. They were carried out externally by a third party.
In our sustainability audits, five different areas are being investigated: human rights, labor rights, health & safety, business practices, and environment. After the initial audits, a commonly agreed corrective plan is drawn. The follow-up audits in Malaysia and Indonesia showed significant improvement especially in labor rights: workers no longer did grueling 12–14 hour-shifts and had resting days required by the law.
The follow-up audits also showed significant improvement in creating health & safety systems as the factories have arranged education on safety issues. The recycling of metallic waste was also well organized after the initial audits. However, some governments still lack a proper recycling program for hazardous waste.
Business practices also showed improvement: education on code of conduct had been arranged and one factory owner had also visited his suppliers to educate them on safety issues and discuss ethical business practices. No critical risks were found concerning human rights.
However, the high recruitment and work permit fees for the foreign workers in Malaysia remain problematic. Workers are forced to loan money, which creates the pressure to work excessive hours.
During 2019, we organized seven sustainability audits. In December 2019, we conducted two reaudits. The results showed improvements in the following areas:
• One company had organized training on discrimination, harassment, fair treatment and first aid. Previously none of the employees had received training on any of the topics.
• The other company had implemented hazardous waste management system and since 2018 organizes an environmental performance monitoring twice a year.
• The company had also installed a box for feedback. Letters from 3 employees were received and reviewed by the management. In 2019, management organized training on how to use the box to increase awareness.
Due to the pandemic, all audits were put on hold in 2020.