Strategy

SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model

As an international industrial and technology group, thyssenkrupp has a global supplier network spanning many countries and industries. Due to the complexity and global reach of our value chains, potential indirect impacts on employees in the upstream and downstream value chains in respect of human and labor rights cannot be entirely ruled out. In our double materiality assessment, we considered particularly actual and potential impacts relating to human and labor rights such as child labor, forced labor and trafficking in human beings, unfair working conditions, a lack of freedom of association, inadequate wages, poor working time regulation, a lack of occupational safety and discrimination.

Workers in the upstream supply chain – both in the extraction of raw materials and in the manufacture of products – are particularly affected by negative impacts. Poor occupational safety may be hazardous to health or even life-threatening. Inadequate wages and all forms of discrimination may impair physical and psychological health or reduce the quality of life of those affected. Especially in countries with inadequate protection of human rights, restrictions on the freedom of association and expression may be clear indications of oppression. The groups that may be particularly affected by impacts in connection with child and forced labor include young workers and low-qualified workers who have few educational opportunities and are therefore exploited very frequently. In the downstream value chain, the people who work in the transport and logistics sector face human and labor rights violations. Due to complex and hard-to-control structures involving many subcontractors and changing contractual relationships, transparency in this sector is limited. This makes it difficult to monitor working conditions and may jeopardize compliance with fundamental standards such as those relating to working time, fair wages and occupational safety.

Our double materiality assessment identified actual and potential negative and positive impacts only on workers in the upstream value chain.

Material negative impacts

The actual negative impacts resulted from violations that were reported via the various channels of our complaints procedure and were confirmed. They concern topics such as inadequate wages and working time, poor occupational safety and accident prevention and the denial of freedom of association. Inadequate wages may result in, for example, poverty, hunger and a lack of educational opportunities for children. The abuse of working time regulations such as a lack of breaks or excessive overtime may result in physical and psychological stress and exhaustion that is harmful to health. A lack of occupational safety may be harmful to health or even life-threatening and may also affect the psychological health of the affected person. The denial of freedom of association and collective bargaining may mean that workers have only limited options to defend themselves against unfair treatment. The actual negative impacts that were identified were isolated cases at individual suppliers.

We identified potential negative impacts in respect of child and forced labor and for all forms of discrimination and the associated violence. In relation to working time models, poor work-life balance is a potential negative impact, as are other work-related rights such as the lack of access to a complaints procedure. The lack of secure employment may cause uncertainty for those affected and result in societal costs due to unplanned unemployment. Child and forced labor are variously widespread and/or systemic in some countries and industries, as is discrimination on the basis of ethnic origin or religion. Safety risks are also systemic in iron ore mines in certain countries. The increased probability of potential impacts in this respect result from our operations in China, India and Brazil. The other potential negative impacts identified are not considered to be systemic; they are the result of isolated cases at suppliers and are not connected with specific business relationships of thyssenkrupp. thyssenkrupp recognizes that certain groups of workers in the supply chain may be at particular risk in respect of human and labor rights. This applies to, for example, minorities that experience a greater probability of forced labor in certain regions due to their ethnic origin or religion. Workers involved in the extraction of certain raw materials may be exposed to greater occupational safety risks. Moreover, migrant workers, indigenous peoples, women and trade union members are to some extent at greater risk of discrimination.

Material positive impacts

Skills development to increase education and qualification represents a potential positive impact on all workers in the supply chain. It may contribute to increasing the educational level and qualifications and, as a result, improve the long-term employment opportunities and standard of living in the affected regions.

Risks related to value chain workers

We have also identified risks for thyssenkrupp in connection with workers in the supply chain. These are risks of a legal nature and reputational risks due to child or forced labor. Moreover, the lack of secure employment for workers in the supply chain may reduce productivity and result in legal action and reputational damage for the company. No opportunities for thyssenkrupp were identified in connection with workers in the supply chain.