How We Manage Integrity
GRI Content: G4-DMA, G4-56, G4-57, G4-58, G4-HR2, G4-LA15, G4-HR5, G4-HR6, G4-HR9
Sustainable Development Goals: Goal 8, Goal 16
The SGS Code of Integrity (the “Code”) defines the main principles of professional integrity for SGS Group and is an expression of the values that are shared throughout the organization. Specifically, the Code covers the integrity of our services and financial records; the use of company assets and resources; bribery and corruption; political donations and charitable contributions; gifts and entertainment; fair competition; employee relations (including non-discrimination, freedom of association and collective bargaining, child labor and forced labor); environment, health and safety; confidentiality; intellectual property; external communication; insider dealing; and compliance with laws. Referring to the Code should help anyone acting for SGS to make the correct decisions while carrying out their work.
The Code applies to all SGS employees, officers and directors, affiliated companies, contractors, joint-venture partners, agents, subcontractors and anyone acting on behalf of or representing SGS. Compliance with the Code is managed through mandatory training, risk assessments, due diligence, performance monitoring and reporting, and whistle-blowing procedures. Violations of the Code result in disciplinary action, including termination of employment and criminal prosecution for serious violations.
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Training on the Code is mandatory. New employees must sign the Code of Integrity at the start of their employment with SGS, complete an integrity e-learning module within three months of joining and attend Annual Integrity Training (AIT). The content of our AIT is refreshed each year using case studies drawn from the business as well as emerging issues. From 2017, this training includes a mandatory case study on human rights. Training is typically delivered face to face and in teams by trained managers using scenarios adapted to employees’ areas of work.
The Code encourages employees and customers to report suspected violations, including cases of discrimination, using confidential integrity helplines or by reporting directly to corporate and local Compliance teams. Cases reported via our integrity helplines are monitored by the corporate Compliance team, and data is presented to the Professional Conduct Committee.
The Professional Conduct Committee ensures implementation of the Code within our organization and advises management on all issues of business ethics. The Committee comprises the Chairman of the Board of Directors, two other Board members, the Chief Executive Officer and the Chief Compliance Officer.
We recruit employees from across the SGS network for our Investigation Network and provide training in investigative skills, using guidance based on the European Convention of Human Rights (ECHR). Reporting to the Head of Security, our trained investigators conduct investigations into internal and external incidents, and key learnings from these investigations are fed into the AIT.
(For details of our 2016 performance, including the number of suspected violations reported and investigated, please see Performance on Managing Integrity).
The SGS Code of Integrity and the SGS Supplier Code of Conduct contain clear requirements and guidance on grievance mechanisms. Suspected violations are reported via an Integrity Helpline or directly to the corporate and local Compliance teams. We encourage employees and other stakeholders to report any concerns without retribution. (See Performance section for more details on the number and type of incidents reported).
Our Compliance and HR teams monitor the proportion of employees signing the Code of Integrity and completing the AIT, and the proportion of new employees completing the e-learning module on the Code (See our Performance section for more information).
SGS has established processes for preventing corruption and misconduct across our global network. This includes having clearly defined governance systems, manager and employee training and communication, contractual obligations, effective reporting and monitoring systems, and a responsive network of investigators to review cases of suspected violations of the Code. (See our Performance section for more details on the number of cases of suspected corruption and misconduct reported and investigated in 2016.)
At SGS, we honor the principles and guidance contained in the United Nations (UN) Guiding Principles on Business and Human Rights. We strive to comply with all applicable laws and we respect internationally recognized human rights wherever we operate. Where national law and international human rights standards differ, we follow the higher standard; where they are in conflict, we adhere to national laws and we seek ways to respect international human rights to the greatest extent possible. We evaluate and review our approach to ensure that it reflects developments in laws and societal expectations.
Human rights commitments are embedded in the SGS Code of Integrity, the SGS Human Rights Policy (as of April 2017), the SGS Business Principles and related policies. Our Supplier Code of Conduct also sets out our standards for suppliers on respecting human rights in our supply chain.
The SGS Human Rights Policy was developed in 2016, with inputs from the Sustainability Steering Committee as well as internal and external advisors. The draft policy was also shared with employee representatives on the European Works Council in October 2016 who prepared a statement endorsing the Company’s commitments on human rights, prior to being formally approved by the Operations Council in early 2017.
- We are committed to conducting our business in a manner that respects the rights and dignity of everyone affected by our business activities, acting with due diligence, and addressing the adverse impacts of our global operations
- We honor the principles and guidance contained in the United Nations (UN) Guiding Principles on Business and Human Rights
- We comply with all applicable laws and we respect internationally recognized human rights wherever we operate. Where national law and international human rights standards differ, we follow the higher standard; where they are in conflict, we adhere to national law and we seek ways to respect international human rights to the greatest extent possible
- We treat causing or contributing to gross human rights abuses as a legal compliance issue
- In the course of its activities, SGS will not willingly be complicit in human rights violations
- SGS policies and codes are informed by the International Bill of Human Rights and the International Labor Organization’s declaration on Fundamental Principles and Rights at Work; the Children’s Rights and Business Principles; UN Women’s Empowerment Principles; and the UN Global Compact
- We strive to treat everyone with whom we come into contact fairly and without discrimination. Our employees, sub-contractors, business partners and suppliers are entitled to work in an environment and under conditions that respect their rights and their dignity
- We respect freedom of association. Where our employees wish to be represented by trade unions or works councils, we will cooperate in good faith with the bodies that our employees collectively choose to represent them within the appropriate national legal frameworks
- We respect the rights of people in communities impacted by our activities. We will seek to identify adverse human rights impacts and take appropriate steps to address and remedy them
- Our actions are guided by transparency, fact-based decision-making and based on a preventative, precautionary and integrated approach to environmental management. This means conforming to or exceeding the requirements of national or international regulations as well as investing in environmental technologies and engaging in continuous and informed dialogue with relevant stakeholders
- In our business dealings we expect our partners to adhere to standards of conduct and business principles that are consistent with our own. We are also committed to working collaboratively with state and non-state actors to inform our approach, share experiences and help address shared challenges and influence systemic positive change
The Operations Council assesses the scope of SGS’s involvement in particular regions and evaluates the risks to individuals, communities and SGS assets. The SGS Human Rights Committee, which is chaired by the Chief Executive Officer and includes the Chief Compliance Officer and the Vice President Corporate Responsibility, oversees the implementation of our human rights commitments across the Group. Senior managers are expected to demonstrate visible and explicit support for human rights as defined in the SGS Code of Integrity and our Business Principles.
Due diligence is an ongoing process, requiring attention at certain stages in our business activities, such as when forming new partnerships or when our operating conditions change.
The Chief Compliance Officer manages compliance with the SGS Code of Integrity, while the SGS Corporate Security team ensures that security arrangements adequately protect our people and assets and respect human rights. Impact and risk assessments, supplier screening, audits of local security arrangements and other due diligence processes are used to identify, prevent, mitigate and account for how SGS addresses its human rights impacts.
SGS Framework for Managing Human Rights
The due diligence process
Understanding the prevalence of human rights and other related risks and their geographic distribution forms an essential part of our due diligence planning. Thus, in 2016, SGS conducted a risk assessment and evaluation of human rights, social and environmental issues across 220 geographies, which included countries that form SGS’s global supply chain. This work, using the data and analytics services of our consultant, considered issues such as:
- Climate change vulnerability
- Water stress
- Conflict prevalence
- Institutional capacity
- Social cohesion
- Modern slavery
- Child labor
- Gender equality
- Labor rights
The second stage of the risk assessment considered the direct and indirect impact of SGS operations. Using economic input-output modeling, SGS evaluated risks across 35 industry sectors in 40 countries representing areas of highest spend for the company. The economic modeling covered factors such as greenhouse gas emissions, employee numbers and compensation, occupational fatalities, modern slavery and child labor. This provided a more focused view of the company’s exposure to human rights, social and environmental risks.
The main human rights issues and vulnerable groups identified
Given the geographic scope of our operations and supply chain, SGS is exposed to a number of potential human rights issues. The main human rights issues identified in our high-level risk assessment are those associated with conflict prevalence, social cohesion, societal vulnerability, modern slavery and child labor.
Training on human rights forms an integral part of our mandatory training on the Code of Integrity. Our Annual Integrity Training (AIT) is refreshed each year using case studies drawn from the business as well as emerging issues. In 2017, this training includes a mandatory case study on human rights. Training is typically delivered face to face and in teams by trained managers using scenarios adapted to employees’ areas of work.
Recognizing the importance of dialogue with our stakeholders, we pay attention to individuals and groups at greater risk of adverse human rights impacts due to their vulnerability.
We treat causing or contributing to gross human rights abuses as a legal compliance issue.
The SGS Code of Integrity and the SGS Supplier Code of Conduct contain clear requirements and guidance on grievance mechanisms. Suspected violations are reported via an Integrity Helpline or directly to the corporate and local Compliance teams. We encourage employees and other stakeholders to report any concerns without retribution.
(For details of our 2016 performance please see Performance on Managing Integrity).
Performance against the SGS Code of Integrity is reported to the Professional Conduct Committee. Regular internal reports and briefings are prepared for senior managers on global security risks.
We cooperate with the relevant authorities to identify, mitigate and remedy adverse human rights impacts caused or contributed to by our business operations.
SGS businesses and assets (covering our people, physical assets, equipment, intellectual property and funds) can be exposed to a range of security risks. The SGS Corporate Security team is responsible for ensuring that security arrangements are effective in enabling SGS to operate without unacceptable exposure to deliberate harm. Our comprehensive Global Security Standard and Security Guidelines and local security arrangements, including security guarding, focus on protecting our defined asset group while respecting human rights. These are supported by a network of security managers who assist local implementation.
The SGS brand is used across the world to validate the quality of goods and materials that are sold or traded. Purchasing an item with an SGS logo or certificate verifies that it has met a required standard. The Corporate Security team is responsible for investigating incidents of fraudulent use of the SGS name and brand, which includes a growing number of counterfeit certificates and inspection reports. We continue to implement practical measures to ensure that integrity is built into every stage of our operational processes in business lines and countries with identified exposure to this type of fraud.
SGS provides a global support system to employees while traveling. The program includes access to generic and tailored pre-travel advice, advice or immediate assistance while traveling, a manned, multilingual 24-hour hotline, and a smartphone app which tracks employee movements while traveling in high risk locations. Our travel guidelines are available in multiple languages including English, French, Spanish and Mandarin. Advice is also available via a dedicated online platform.
SGS acquires and maintains customer data that is necessary for business purposes or for compliance with legal requirements. The SGS Code of Integrity requires employees to only access confidential customer data for legitimate business reasons, to respect and protect that information, and to take appropriate measures to prevent any accidental disclosure. The Code also obliges employees to maintain the confidentiality of such data and not disclose or discuss sensitive information even after the end of their employment relationship with SGS.
SGS conducts its business using competitive and fair market practices. We do not engage in any understandings or agreements with competitors to bias or improperly influence the markets in which we operate. We do not engage in discussions regarding pricing, contractual terms, market allocations, division of territories or customers, nor do we discuss competitive bid processes with competitors.
SGS does not market its services and capabilities in a deceptive or misleading way, and does not make disparaging or untruthful allegations regarding competitors. We do not obtain confidential information on competitors using illegal or unethical means.
Our pricing and costing models form part of our intellectual property. As such, our Code of Integrity requires employees not to disclose, copy or use this intellectual property except for their intended purpose.