UK Modern Slavery Act
Slavery and Human Trafficking Statement
For the year ended 31 December 2021
The Smurfit Kappa Group (“SKG”, “The Group”) is committed to eliminating the risk of forced labour and human trafficking occurring in our direct operations and supply chain and we welcome the requirements set out in the UK Modern Slavery Act. We will continue to comply with the legislation but also making sure that our culture and actions continue to reflect a no tolerance approach to modern slavery.
This statement relates to the financial year ending 31 December 2021.
Smurfit Kappa (‘SKG’), a FTSE 100 company, is one of the leading providers of paper‐based packaging solutions in the world, operating across 36 countries with around 48,000 employees in over 350 production sites and revenue of €10.1 billion in 2021. We are located in 23 countries in Europe and 13 in the Americas. In Europe we are the leader by production volume in corrugated packaging and containerboard and in Latin America, we are the only large-scale pan-regional player. More information on our locations can be found on our website at https://www.smurfitkappa.com/locations.
Our business in numbers:
- 68k forestry plantations (hectares)
- 47 fibre sourcing
- 35 mills
- 241 converting plants
- 32 other production facilities
We design, manufacture and supply innovative packaging solutions to promote and protect our customers’ products.
WHAT DIFFERENTIATES US
Our integrated model
We have an integrated system of containerboard mills and corrugated box plants. Our recycling, wood procurement and forestry operations provide raw material to our containerboard mills, who produce a full line of containerboard which is converted into corrugated containers.
Our vertical integration is key to guaranteeing security of supply for our customers and enabling us to drive efficiencies across the whole supply chain with technological advances, paper machine optimisation and logistics management, which in turn means we can offer optimal paper design, quality and logistics. We have lower exposure to volatility in containerboard prices and our integrated structure ensures that we provide a stable outlet for our product through the uncertainty of market falls and rises.
We are a highly innovative, design‐led company. Our approach to innovation is data‐driven and focused on solving our customers’ challenges, whether through packaging development, process improvement or optimising supply chain efficiency. We employ a range of ‘Innotools’, unique to Smurfit Kappa, enabling us to create the optimal fit‐for‐purpose packaging solutions for our customers.
Our circular business model, from replacing natural resources to recycling materials and optimising processes, including reducing CO2 emissions, gives us a competitive advantage. Our embedded Chain of Custody ensures that close to 100% of our raw material comes from sustainable and/or certified sources regardless of whether is it virgin or recycled. We continuously strive to reduce our CO2 emissions, our waste to landfill and our water consumption. As a leader in sustainable packaging we have a responsibility to respond to the challenges the world faces with litter and single use plastics. We are addressing this with our Better Planet Packaging Initiative which seeks to create more sustainable packaging solutions for our customers providing them with solutions that minimise inefficiency and waste and address their sustainability needs today and tomorrow. In early 2021 we launched our Better Planet 2050 programme which enhanced existing targets or introduced new ones across water use, diversity and inclusion and communities.
Culture and People
At SKG, we recognise that culture plays a fundamental role in the delivery of our strategy and the Board is ultimately responsible for ensuring that our activities reflect the culture we wish to instil in our colleagues and other stakeholders to drive appropriate behaviours. Our focus on culture and learning from one another is continuous, which helps us to adapt to a changing environment and ensure our culture supports our business model.
In having a workplace culture that embeds the core values of Safety, Loyalty, Integrity, and Respect, and strives for a diverse and inclusive workforce, we are empowering our people to reach their full potential. In 2021 we continued to navigate a second year of the pandemic together and it was the agility, adaptability and resilience of our people that stood out. Our people have proved again and again to be our most valuable asset in our response to COVID-19, and as a critical partner in supporting and delivering for all our stakeholders.
SKG unites some 48,000 people around the globe, our people are at the heart of all our operations. We can only achieve sustainable long-term success by relying on our people’s talent, expertise and innovation..
OUR UK BUSINESS
The Group’s UK business operations include 2 paper mills, 6 recycling plants, 32 manufacturing operations and various office locations. Our UK external supplier network is predominantly based in the UK and Europe.
In keeping with the United Nations Guiding Principles on Business and Human Rights and the Fundamental principles and Rights at Work developed by the International Labour Organisation, we are committed to the principles of respect, diversity, working fairly, fair pay and compliant acquisition practices. These principles are maintained in every country in which we have a presence and are set out in our Code of Business Conduct, our Social Citizenship Policy Statement and our Sustainable Development Report as detailed in the next section.
The Smurfit Kappa Group has thousands of suppliers globally and we believe that our suppliers are an integral part of the value chain of our business. We are committed to working with our suppliers in accordance with our sustainability principles and objectives whereby we distinguish the areas of compliance, performance risk, management, social responsibility and governance. Maintaining transparent and long term relationships with suppliers is essential for our business. This partnership approach ensures we can audit suppliers on their compliance and our sustainable supply chain standards and, where they fall short, work with them to improve sustainability in their business.
We require all individuals, entities, agents or anyone acting on the Group’s behalf to comply with our various Group policies which are supported and approved by our Board of Directors.
The Smurfit Kappa Group Code of Business Conduct (the ‘Code’) applies to the Group’s Board of Directors, officers and employees worldwide. We require all individuals, entities, agents, or anyone acting on the Group’s behalf, to comply with the Code, which has been translated into 21 languages to ensure full accessibility.
The Code of Conduct incorporates the Group’s Good Faith Reporting Policy (Whistle-blower Code) and the Speak Up Policy which is designed to ensure our employees and all other stakeholders have the opportunity to report actual or potential wrongdoing.
The Code takes account of international conventions and codes such as International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work (core conventions) and the UN declaration on Fundamental Human Rights.
The Code provides accessible and understandable guidance for each employee in every jurisdiction. It sets out our expectations from employees for compliance with local, regional and national law, adherence to ethical standards and commitment to quality and service. Each Group company and its employees is required to apply the Code and abide by the laws and practices required for their industry in the jurisdiction in which they operate. The Code makes it clear that personal and professional integrity is essential to conduct business in an ethical manner.
Social Citizenship Policy Statement
Smurfit Kappa Group is committed to managing its business in accordance with its declared values which recognise that good social citizenship, reflected in the manner in which we interact with our employees, business partners and host communities is an essential ingredient in creating and maintaining a sustainable future. The policy statement summarises the Group commitments in this regard.
It covers human rights, freedom of association, child labour, forced labour and abuse, indigenous peoples and employee respect.
Sustainable and Responsible Sourcing Policy
Our Sustainable and Responsible Sourcing Policy, last updated in March 2021, explicitly states that we will not work with suppliers who do not share our declared values in good citizenship such as respecting human rights, including forced labour specifically. The policy details our commitment to audit preferred and multinational suppliers to ensure that they are in compliance with the policy. All of our policies include direct contact details if questions or concerns are raised.
DUE DILIGENCE AND RISK ASSESSMENT
Our Direct Operations
As outlined in the previous section all of our employees are governed by the Code of Conduct which provides a guide to legal and ethical responsibilities and points them to the information and the resources needed to exercise sound decision-making on the job. Employees are required to be familiar with the Code and all Group policies, to apply them every day and ask questions if they are ever unsure of the correct action to take.
As part of our Speak Up Policy there is also a 'Speak Up' service in place, which allows anyone to raise a concern across all key communication channels, including telephone, email and online. It is available in 21 different languages, 24/7/365 and provides confidentiality and/or anonymity and assurance of non‐retaliation.
The UK business continues to take pro-active steps to ensure all of their direct operations within all 3 divisions are minimising
direct risk and measuring compliance in accordance with the Ethical Trading Initiative.
All UK units/plants and depots continue to be assessed in line with the Ethical Trading Initiative standard or National SMETA 4 Pillar standard to ensure all direct operations are regularly assessing and mitigating risk factors as they arise. Formal action plans are reviewed on a regular basis to eliminate risk within their direct operations and to review continuous improvement.
All UK sites are registered on the SEDEX platform for transparency with customers to link with their direct operations and reviewing the Audits or Supplier Assessment Questionnaire (SAQ). These SAQ’s are reviewed annually and in accordance with the SEDEX standard. This allows full transparency with all customers and supply chains within the UK operations.
Our Supply Chain
The Group will not work with suppliers who do not share its commitment to combat slavery and human trafficking. We will ask suppliers to disclose relevant data in that regard directly or via a recognised organisation.
We are committed to setting a clear objective and target of zero tolerance in relation to slavery and human trafficking in our supply chain and will measure suppliers’ performance against this.
As part of our commitment of zero tolerance within our supply chain, we identify and mitigate risk, by completing audits of suppliers on a regular basis to assess and monitor potential risk areas. In doing this the primary focus will be on suppliers of SKG’s
key materials and services.
We commenced a review of our reported purchasing spend on sourcing materials, goods and services with regard to country risks, based on the risk ranking of the Global Slavery Index. The initial output from the sample selected confirms that a significant majority of the purchasing spend assessed originates from countries with a BB, BBB or A rating. In addition we also initiated a review of our purchasing spend on sourcing materials, goods and services to determine the percentage that is purchased from Tier 1 suppliers. These processes are ongoing.
Across the Group, we are explicitly communicating our expectations to our preferred and multinational suppliers to uphold our commitment to combatting slavery and human trafficking, and are working with suppliers to develop similar compliance programmes within their own supply chains.
The UK business continues to assess suppliers’ risk profile based on their country of operation, and the product/ service that they provide. In 2021 the UK used this assessment to engage with all suppliers including preferred, multinational and local suppliers. In 2022 the UK plan to continue to streamline this process further and re-assess the high risk suppliers based on country of operation, spend or product/service that they provide.
Our Sustainable Sourcing
Our sustainable sourcing programme started in 2010, and since then we have audited over 350 suppliers, ensuring our key materials, goods and services are managed sustainably and meet our standards.
Our Tier-One suppliers of key materials are global brands themselves and governed by stringent regulation. We audit all of our strategic suppliers, requiring certification or compliance to internationally recognised standards including ISO9001, ISO14001 and ISO45001. Spread over seven regions, across our global network, we work with 17 external auditors supporting us with their knowledge of local legislations regarding environment, working conditions, labour rights, culture and language.
We made modifications to our sustainable sourcing programme as a result of the introduction of the UK Modern Slavery Act including an increase in supplier screening on human rights. We broadened the scope of our supplier assessment, from Human Rights to Sustainable Development Goals (SDG’s), targeted at our suppliers of key materials.
In addition, to the audits through our sustainable sourcing programme, we ensure, that where wood and primary fibre based material is used as raw material, that no wood from controversial origins is used in the supply chain. We request our suppliers to be Chain of Custody certified for pulp and paper and we purchase in line with internationally recognised schemes such as FSC, PEFC, or SFI in the Americas.
Each of our own mills, converting operations and our FSC certified suppliers of any wood based materials we consume are required to complete the FSC self-declaration and in addition all FSC certificate holders are audited periodically against the FSC criteria outlined in a FSC Chain of Custody standard. This declaration involves explicitly agreeing not to be directly or indirectly involved in a number of unacceptable activities including violations of human rights and violations of the ILO Core Conventions as defined in the ILO Declaration on Fundamental Principles and Rights at Work.
In 2021 the FSC Chain of Custody standards were revised to include labour requirements based on ILO Core Conventions. FSC chain of custody certificate holders are required to implement the FSC core labour requirements in their operations and must be able to demonstrate this to external third-party auditors.
To comply with the FSC core labour requirements, the organisation must:
- Not use child labour.
- Eliminate all forms of forced and compulsory labour.
- Ensure that there is no discrimination in employment and occupation.
- Respect freedom of association and the effective right to collective bargaining.
To conform with the FSC core labour requirements, organisations are required to complete a self-assessment in relation to the requirements outlined. The completion of these self-assessments was initiated in our operations in 2021 and are expected to be completed in 2022.
We are continuously increasing awareness and understanding of our commitment to eliminating the risk of forced labour and human trafficking occurring in our direct operations and supply chain.
At Group level presentations detailing the provisions of the Modern Slavery Act which outlines our zero tolerance approach to modern slavery throughout our supply chain have been presented to senior procurement executives in the organisation and will continue to be presented during 2022.
In addition, as outlined in the monitoring performance section below, the UK has also implemented a training programme aimed at improving knowledge of the UK Modern Slavery act in their operations
This statement has outlined the various measures taken by the Group in relation to our zero tolerance approach to modern
In 2021 the cross functional and cross divisional committee in the UK, which was established to drive the business forward in eliminating the risk of modern slavery, met to assess the businesses key performance indicators for the UK which are outlined below, further details of which are included in the SKG Modern Slavery Act Statement (UK).
- The UK business target is to have zero incidents either within its direct operations or direct supply chain. The UK business had zero incidents reported either via their sustainability reporting or whistleblower procedure in 2021.
- The UK business commitment to training continued during 2021, the business will review these processes and ensure that training takes place across all three divisions ensuring a standard process is followed within the UK.
- In 2022 the UK business will be investing in a new supplier portal database which will give the business a clear and engaging way of being able to access all new suppliers in a fair and consistent manner in line with our UK business’s supplier risk assessment tool based on type of supply and country of origin.
- All new suppliers both indirect and direct will continue to be required to complete an assessment in line with the Company’s
risk assessment criteria before they will be accepted as a new supplier to Smurfit Kappa UK.
- In 2021 the UK business continued to assess all prospective suppliers in line with the Company risk assessment criteria. The risk assessment criteria in 2021 did not highlight any supplier of potential risk within the supply chain.
- The UK business continues to commit that all direct operations will be assessed at a minimum in line with the SMETA assessment standard on an annual basis to ensure compliance and elimination of risk within its direct operations.
In addition to the progress outlined, throughout the Group, we have a number of policies, processes and controls that have been in place prior to the introduction of the UK Modern Slavery Act. For example, in the Americas we complete a child labour assessment in high risk areas of the recovered paper supply chain periodically.
Suppliers will continue to be encouraged to disclose their assured data in accordance with Global Reporting Initiative, an independent institution whose mission is to provide a trusted and credible framework for sustainability reporting.
This statement is made pursuant to Section 54 (1) of the UK Modern Slavery Act 2015 and has been approved by the Board of Directors of SKG plc, and is signed on their behalf by Tony Smurfit, Director and Group Chief Executive Officer.
Director and Group Chief Executive Officer
Group SKG Modern slavery statement June 2022