Lifco strives to operate in a positive and sustainable manner that contributes to society. The company’s main sustainability impact, and thus also opportunities and risks, is in the operations of the subsidiaries.
Lifco’s subsidiaries have a high degree of autonomy, and Lifco strives for minimal bureaucracy and simple processes. A fundamental requirement for Lifco’s decentralised structure is that the subsidiaries operate in accordance with Lifco’s ethical principles. The ethical principles are set forth in Lifco’s Code of Conduct, which all subsidiaries are required to follow and which covers the companies’ relationships with employees, customers, suppliers, society and shareholders. All new employees in the Lifco Group must be informed
Acquisitions are a central element of Lifco’s business model. In addition to fulfilling the requirements described on pages 8–9 in the Annual Report 2017, takeover candidates need to be running a sustainable business. Lifco does not acquire companies which are considered to violate the UN Global Compact’s principles on human rights, labour standards, environment and anti-corruption. This means, for example, that they must not be involved in human rights abuses, serious environmental damage or obvious corruption. Nor does Lifco acquire companies which manufacture or sell weapons, tobacco, fossil fuels or uranium.
Code of Conduct
Lifco’s Code of Conduct is based on the following international principles: the Universal Declaration of Human Rights, the United Nations Global Compact, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises. The Code of Conduct also includes Lifco’s core values: respect for others, openness and pragmatism.
Lifco has signed the UN’s sustainability initiative, Global Compact, which means that the Group has undertaken actively to implement the Global Compact’s ten principles for sustainable development in the four areas of human rights, labour standards, environment and anti-corruption. Lifco’s policies on the four areas are presented below.
Lifco shall inform its suppliers of the company’s values and business principles. Lifco shall not engage in business relationships with suppliers that violate the applicable legislation, fail to uphold fundamental human rights and neglect environmental issues.
All Lifco employees shall have the right to freedom of association and Lifco shall respect the right of all trade union members to negotiate collectively. Employees are recruited and promoted exclusively on the basis of their work qualifications and without regard to race, religion, age, national origin, sex, sexual preference, political belief, trade union membership, marital status or disability that does not prevent the performance of the duties involved. Lifco does not tolerate any form of harassment or violence at the workplace. Forced labour and/or child labour are strictly forbidden in all operations of the company. Products from suppliers, their subcontractors or business partners which use child labour must not be accepted.
Lifco has undertaken to prevent or minimise and mitigate any harmful effects of the company’s operations or products on the environment. Lifco strives to reduce the company’s products environmental impact throughout their lifecycle.
Gifts, entertainment, remuneration and personal benefits may only be offered to outside parties if they are of small value and consistent with current practice. No gifts, entertainment or personal benefits may be offered if they conflict with the applicable legislation or current practice. Gifts which do not meet these criteria must be reported to management, which will decide what measures to take. None of Lifco’s employees should seek to obtain or accept gifts or benefits which could be thought to affect their business decisions. Gifts which could be thought to affect business decisions must be reported to the company’s management, which will decide how to handle the issue.
Risks and risk management
In 2017 Lifco conducted a survey of sustainability risks in its subsidiaries’ operations and value chains. The survey, which was based on Lifco’s Code of Conduct and the Global Compact principles, covered 22 company groups which together account for around 90 per cent of Lifco’s sales. Due to the subsidiaries’ differing business models and activities, the risk that Lifco as a group will be negatively affected is limited.
RISKS AT THE SUPPLIER LEVEL
Some of Lifco’s subsidiaries engage suppliers which operate in markets where there is a risk of human rights abuses and inadequate concern for the environment. The suppliers are informed about Lifco’s Code of Conduct on an ongoing basis and the majority of the subsidiaries concerned conduct audits of their suppliers to identify any deviations.
Competent and committed employees are a critical resource for the subsidiaries’ continued success and competitiveness. The subsidiaries take a targeted approach to improving their work environment and invest in training activities to retain and develop their employees.
In certain industries there is a demand for more environmentally friendly products while other industries may be affected by stricter environmental legislation. The subsidiaries concerned are investing in research and development to meet future requirements from customers as well as legislators.
The handling of chemicals can pose risks to employees, local communities and the environment. The subsidiaries concerned carry out risk assessments and train their employees in the handling of chemicals. Eleven subsidiaries have ISO 14001-certified environmental management systems.
In some of Lifco’s subsidiaries there are risks of corruption and fraud, especially in vulnerable markets. It is a requirement that all new employees be informed about Lifco’s Code of Conduct. Some subsidiaries have implemented additional procedures to further reduce the risk.
Compliance with Lifco’s Code of Conduct is monitored by each subsidiary through audits, discussions with suppliers and by other means. Any deviations are reported to Lifco’s senior management. Monitoring of the Code of Conduct is integrated with the quarterly reports submitted by the subsidiaries to Lifco to ensure that these issues are given priority and reported correctly. If a deviation is identified Lifco’s senior management will contact the chief executive of the company concerned, who will be tasked with producing an action programme and reporting on progress to Lifco’s Board of Directors. No deviations from the Code of Conduct were reported in 2017. Four subsidiaries had failed to inform their employees about the Code of Conduct in accordance with the Group’s instructions, but this oversight was later corrected.
During the year Lifco also developed its sustainability due diligence process for acquisitions. The new evaluation, which is based on the principles of the UN Global Compact, was applied in two acquisitions in 2017. No significant deviations were identified during the course of the evaluations.
Sustainable product offerings
Several of Lifco’s subsidiaries offer products which help to improve their customers’ resource efficiency and work environment. Silvent, for example, sells safety air guns to manufacturing companies. The air guns help to optimise energy use while also improving the work environment by reducing the noise level. Hekotek and Heinola produce sawmill machinery which enables the users to get more out of each log and thus make better use of the raw material. That is good for the customer as well as the environment. Another example is Rapid Granulator, whose granulators enable the customers to make use of waste from production processes. Read more about Rapid Granulator below.
Rapid Granulator is a leading maker of granulators for recycling of plastic production waste. By recovering production process waste, granulating it and returning it to the process, the customer can maximise their resource use, which benefits the environment as well as the bottom line. The company sells its products to customers in the automotive, packaging, toy and other industries.
In the last few years Rapid Granulator has been focusing on implementing major energy savings in lighting, ventilation and other areas. The company has also phased out many solvents, for example by using water-based paints for all standard products and boron- and formaldehyde-free cutting fluids in machining processes. The employees’ work environment and wellbeing are also important issues for Rapid Granulator. The company has introduced initiatives to improve workplace ergonomics and reduce production noise. The company’s good work environment is reflected in a low rate of sick leave – 2.2 per cent in 2017.
At 31 December 2017 Lifco had 4,758 (3,627) employees. The average number of employees during the year was 4,107 (3,524). During the year 1,224 employees were added through acquisitions.
Eleven of the subsidiaries are certified under the ISO 14001 environmental management system and 35 are certified under the ISO 9001 quality management system. See page 80 for a full list of certifications.
The subsidiary companies Lövånger Elektronik AB, Modul-System HH AB, Rapid Granulator AB, Texor AB and Zetterströms Rostfria AB are engaged in environmentally hazardous activities pursuant to the Swedish Environmental Code, which means that they are regulated by the environment committee at the relevant local authority.
Anonymous reporting on serious deviations from our Code of Conduct: https://report.whistleb.com/lifco
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