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Organization Name

AB Volvo Group

Case Story Title

Project Code of Conduct

Case Story Date

2004/07/09

Issues Addressed

  • Principle 1 - Businesses should support and respect the protection of internationally proclaimed human rights
  • Principle 2 - Make sure that they are not complicit in human rights abuses
  • Principle 3 - Businesses should uphold freedom of association & effective recognition of the right to collective bargaining
  • Principle 4 - The elimination of all forms of forced and compulsory labour
  • Principle 5 - The effective abolition of child labour
  • Principle 6 - Eliminate discrimination in respect of employment and occupation
  • Principle 7 - Businesses should support a precautionary approach to environmental challenges
  • Principle 8 - Undertake initiatives to promote greater environmental responsibility
  • Principle 9 - Encourage the development and diffusion of environmentally friendly technologies
  • Principle 10 - Businesses should work against all forms of corruption, including extortion and bribery.

Case Story Category

Partnership Project

Countries of Impact

Case Description

Project Code of Conduct

Background

Leif Johansson, the Volvo Group’s Chief Executive Officer, signed a letter of intent in November 2001 to Global Compact. This was a natural consequence of a long tradition of initiatives regarding the concern for people, production methods, safety and care for the environment, all of which have affected the Volvo Group since the start in 1927. In 1982 the Volvo Group’s Board of Directors adopted the first Code of Ethical and Social issues.

In 1999 Volvo Cars was sold to the Ford Motor Company. The period thereafter has meant changes and internationalisation through acquisition of other companies i.e. Renault Trucks and Mack Trucks. The chains of suppliers have also been modified and a number of new suppliers are added, based on new markets.

The increasing interest in the general debate of globalisation and discussions on the way international companies handle ethical questions, made us renew our policies and statements how we shall act on ethical issues. There was a demand for an active discussion within the Volvo Group regarding valuation and the way of acting. We have to make “good practice” better known.

The project Code of Conduct

Even before signing the Global Compact, all existing documents and statements in the area Corporate Social Responsibility, were mapped out. Among the nine principles in Global Compact, environmental issues are the most examined and documented in environmental reports and in annual reports. Audits have regularly been accomplished on all plants since 1989. When we buy or sell another company we investigate environmental risks.

During spring 2002 ethical and social issues were discussed in different contexts i.e. our Group magazine “Global Magazine” and on the Intranet. A project group with the working title Code of Conduct was established with representatives from different areas; human resource, corporate legal, finance and business control, purchasing, public and environmental affairs, corporate communications and corporate strategy and development.

Using “the best practice model”, the project group in cooperation with a consultant, developed the first draft of Code of Conduct. The draft was committed to the principles of the UN Global Compact, Volvos core values as well as the requirements on corporate governance from stock exchanges. The draft summarised 21 statements. Examples of statements are “we do not bribe” and “we do not discriminate with regard to gender, race, religion, age, disability, sexual orientation, nationality, political opinion, union affiliation, social or ethnic origin”.

Next step was to make a survey regarding the support for the statements and to map the implementation gap. The survey was sent to 265 persons within top management within the Volvo Group, representing different companies all over the world. The survey enclosed questions on basic business principles, the workplace, environmental care, and our partnership. The recipients were asked to express their commitment, the importance and relevance of each statement.Learning and result

The result of the survey showed that all agreed that the Volvo Group has a good reputation and a culture within the company encouraging handling in accordance with ethical guidelines. We were positively surprised that the representatives gave a concise picture about the workplace practices, environmental care and human rights. The result showed that the statements were considered important business principles. The conclusion was that there were both acceptance and expectations within the Volvo Group in creating a Code of Conduct, and that all areas in the draft were relevant and important.

In dialog with the Board of Directors, a Code of Conduct, was formed based on the 21 statements covering the issues of corporate governance, business ethics, human rights and care for the environment.

The Board of Directors adopted the Code of Conduct in June 2003. The Code of Conduct is a strategic document and the general reference document for ethical and social issues for employees within the Volvo Group and our suppliers. The implementation process is now in progress.

As the Volvo Group is a decentralised organisation there is a need for a company culture. Our culture and behaviour is guided both by the Volvo Way and the Code of Conduct. The Volvo Way is a guide for our behaviour as leaders and team members. It indicates what we stand for and what we want to achieve. It forms a binding element for culture behaviour, strategy and long-term objectives. The Volvo Way was adopted by the Board of Directors in February 2004 and replaced the old Volvo Way document from 1998.

Example of acting according to the intension of Global Compact

Volvo Truck Company decided to locate a production unit for trucks in India. The area is located in Hosakote outside Bangalore. The area had no previous industrial establishment and had a restricted limit of water. The Volvo Group implemented various methods for using the areas limited water resources in the most efficient way. By digging springs, using closed-circulated processes almost 80% of the water used by the paint shop can be reused. Water from toilets, showers and the plants kitchen is first treated in a cleaning system and then used for irrigation of almost four hectares of agricultural land in the surrounding area. In order to minimise the consumption of the groundwater and to reduce soil erosion, rainwater is collected in a network of ponds, tanks and channels.

Before Volvo’s establishment in Hosakote, we investigated the local conditions. Our establishment led to new job opportunities and increased the standard of living in the area. The plant and our activities are running in accordance with the precautionary principle, and the methods described above led to a minimum of impact on the environment. The new built plant, offers the employees a safe workplace with healthy working conditions.

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