Risk description and consequence
Supply chain risks mainly relate to social, environmental and ethical risks in Gränges’ supply chain. Mismanagement of these risks may lead to undesirable effects on the supply of input materials for Gränges. It can also lead to reputational losses.
Social supply chain risks and human rights violations are mainly related to indigenous rights in the extraction, mining and smelting activities. Extractive activities also carry a risk of forced and child labour, although there are few reports of this in aluminium mining. Health and safety risks are present throughout the value chain.
Environmental supply chain risks mainly occur in mining activities where there are risks related to water consumption, leakage, noise from heavy vehicles, air emissions, and significant alterations to the landscape due to open-pit mines. It can also contribute to biodiversity loss, increased carbon emissions, and soil erosion. Further, refining and smelting activities are very energy- and water-intensive processes and much of the energy comes from hydroelectricity which is a renewable source but has other environmental impacts.
Corruption risks are mainly linked to mining approvals, regardless of the country’s level of economic development or political system. A few countries in Gränges’ supply chain are deemed to have a higher risk for corruption, according to Transparency International’s Corruption Perceptions Index for 2019.
Risk mitigating activities
- Supplier Code of Conduct: Gränges has a Supplier Code of Conduct which all significant suppliers are requested to sign. The intention is to increase awareness and improve transparency of responsible and sustainable business practices in Gränges’ supply chain. By signing, suppliers declare to observe all applicable laws and regulations, including the ten principles of the UN Global Compact, and to promote the implementation of these principles in their own supply chains.
- Supplier assessments: Gränges periodically assesses supply chain sustainability performance and risks and makes sure that suppliers adhere to the Supplier Code of Conduct. The purchasing teams use different tools for such assessments, including supplier score cards and site visits at suppliers.
- Updated responsible sourcing programme: Gränges has during 2019 updated its group-wide responsible sourcing programme which will be implemented starting from 2020. The company plans to regularly screen its supplier base and identify potential risk suppliers through evaluating suppliers’ environmental, social, and corruption risks in different sectors and countries. Suppliers assessed as having potential sustainability risks will be invited to perform a sustainability assessment. Gränges will use the results from the assessment to decide how to manage suppliers and improve supplier performance through for example on-site workplace audits.