Impact, risk and opportunity management
S3-1 – Policies related to affected communities
To mitigate the material potential negative impacts explained in the previous subsection, thyssenkrupp has committed to implementing the policy for human rights and environmental due diligence obligations in its own operations and in the supply chain. Further details of the policy can be found in subsection “E2-1” in the section headed “ESRS E2 Pollution.”
This policy has the goal of protecting human rights and complying with environmental and occupational safety standards. Communities are to be protected especially from practices such as illegal land theft by respecting and guaranteeing fundamental rights of ownership, access to water, and cultural and social integrity. Compliance with environmental standards contributes to preventing pollution and the excessive use of natural resources. This establishes the basis for protecting the livelihoods of affected communities and may have indirect consequences such as food scarcity or health impairments as a result of contaminated soil and water. Occupational safety measures contribute to preventing accidents or technical problems that could have a negative impact on neighboring communities.
We have not formulated our policy as a separate policy but embedded it in documents including the Group Operating Instruction on the implementation of human rights-related and environment-related due diligence obligations, the Principles of compliance with human rights and environmental due diligence requirements, the SCoC and our Group Policy Procurement Principles.
Through its SCoC, thyssenkrupp requires its suppliers to comply with binding minimum standards. These relate to, for example, occupational safety and health, the ban on causing harmful soil changes, water and air pollution, harmful noise emissions or excessive water consumption if these are capable of impairing the natural basis of food production, blocking access to clean water or sanitary facilities or causing harm to human health. In addition, the unlawful annexation of land, forests or water sources that serve to ensure a person’s livelihood is prohibited.
If violations of these requirements become known, actions must be taken without delay to end or minimize these violations. thyssenkrupp supports its suppliers in fulfilling their responsibilities and implementing the necessary improvements. In this way, thyssenkrupp contributes to providing and ensuring sustainable development in the upstream supply chain. The last resort is to terminate the business relationship with the supplier.
On-site supplier audits are used to review on a sampling basis whether suppliers actually satisfy the requirements formulated in the SCoC. The audits provide direct insights into the local situation so that potential violations of labor law or pollution can be identified at an early stage. When deciding to conduct an audit, group companies should give particular priority to those suppliers with elevated risk potential. To ensure that the perspectives of affected groups are considered in decision-making processes, thyssenkrupp engages in initiatives such as the UN Global Compact, econsense and those of the German Industry Association. These are forums for dialog about proven processes; they also work on the continuous development of human rights standards.
Risk management system and risk analysis
Our policy for human rights and environmental due diligence obligations underscores the importance of taking responsibility for dealing with negative impacts. The risk management system established in the context of implementing the requirements of the LkSG serves to identify, assess and minimize human rights and environmental risks in our supply chain. Each supplier is assigned to a risk category on the basis of the findings. Prioritization takes account of the established risk, our assumed contribution to the cause, the degree of our influence and the specific operation. The risks identified are used as the basis for preventive action that we take to minimize human rights or environmental risks. Suppliers that account for a smaller purchasing volume or those with which termination of the business relationship is imminent are not in focus. If thyssenkrupp becomes aware of any violations of a human rights or environmental obligation at a direct or indirect supplier, immediate and appropriate action should be initiated by thyssenkrupp aimed at ending this violation.
Although thyssenkrupp does not have a separate policy to prevent and mitigate negative impacts on indigenous peoples, the topic of land theft is integrated in our risk management system so that this kind of risk can be identified at an early stage and remedial action implemented. Land theft may have serious consequences such as forced evictions, violence and discrimination of indigenous groups. Further information on the risk management system in accordance with the LkSG can be found in subsection “S3-3.”
International standards
Our policy is based on the content of the UNGPs, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises. The processes we use to monitor compliance with the aforementioned frameworks are described in the section headed “ESRS S2 Workers in the value chain.” If national legislation contains provisions that are more extensive than those prescribed by thyssenkrupp, the national legislation shall prevail. We also expect our group companies, managers, Executive Board and management team members, other employees and suppliers to comply with the principles of the United Nations Global Compact, the International Bill of Human Rights of the United Nations, international agreements concerning civil, political, economic, social and cultural rights, and the ILO Core Labor Standards.
Although thyssenkrupp’s material impacts on affected communities are found mainly in the upstream value chain, we embrace our responsibility to prevent material potential negative impacts. For this reason, our policy on human rights and environmental due diligence obligations specifies that both our suppliers and all stakeholders in our business comply with our requirements. In the reporting period, no cases of non-compliance with the UNGPs, the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises were identified in which affected communities were involved due to our own operations or those of our direct suppliers.
At thyssenkrupp, the group regulation on environmental and energy management and the occupational safety and health policy apply. By complying with the occupational safety and environmental standards formulated there, we contribute to reducing negative impacts on affected communities that result from the business activities at our own sites. Further information can be found in the sections headed “ESRS E2 Pollution” and “ESRS S1 Own workforce.”
S3-2 – Processes for engaging with affected communities about impacts
The accessible whistleblower system that is available to affected communities via thyssenkrupp’s website is an established reporting channel in accordance with the LkSG. It can be used to report potential or actual human rights or environmental violations anywhere in our value chain. If a group company establishes that a violation of a human rights or environmental obligation has already occurred or is imminent, it must take appropriate remedial action without delay. Over and above this process, there is currently no approach to actively involve affected communities within the supply chain. Further information on the complaints procedure can be found in subsection “S2-3” in the section headed “ESRS S2 Workers in the value chain.”
In addition to the structured reporting channel via the whistleblower system, thyssenkrupp values direct dialog with affected communities, especially in respect of locally relevant projects such as the construction of the new direct reduction plant. Measures include community dialog events with experts and the regular participation by the Corporate Citizenship Team in round-table discussions in neighboring districts. During so-called neighborhood walks, our employees initiate a direct dialog with residents to provide transparency, answer questions and foster corporate citizenship in the neighborhood.
S3-3 – Processes to remediate negative impacts and channels for affected communities to raise concerns
Approach for implementing remedial action
We work continuously to analyze the human rights and environmental impacts of our own business activities in order to minimize possible negative consequences and prevent their occurrence. This is also based on the policy on human rights and environmental due diligence obligations described above, which is characterized by an integrated and interdisciplinary risk management system that includes risk analyses, processes to implement preventive and remedial actions, the definition of responsibilities, the publication of principles, the maintenance of a complaints procedure, and documentation and reporting.
thyssenkrupp has implemented preventive and remedial actions in its own operations and in the upstream supply chain to respond at an early stage to human rights or environmental challenges and prevent negative consequences. In our upstream supply chain, this includes acceptance of the thyssenkrupp SCoC and the performance of supplier training, for example. If we have identified an elevated risk potential at a supplier, we expect them to make a contractual commitment to complying with our human rights and environmental due diligence expectations. This includes agreeing to individual preventive or remedial action such as supplier audits. A particularly serious violation by a supplier may result in the temporary suspension or even immediate termination of the business relationship. These actions are aimed at, for example, identifying and minimizing negative human rights and environmental impacts in the supply chain at an early stage. They include potential negative impacts on affected communities, such as pollution, inappropriate safety practices or interventions in their livelihood.
As well as implementing our actions, key corporate functions, responsible persons and bodies in the respective segment – up to and including the SCA Officer Group – are to be informed and involved. In addition, a root cause analysis and final effectiveness review must be carried out.
Channels for raising concerns and their effectiveness
It is our understanding that assuming responsibility for good working conditions worldwide, especially in the areas of human rights and environmental protection, and for the application of certain principles and standards by our business partners means providing processes and systems for communication with thyssenkrupp. This applies in particular to channels that can be used to report violations of laws and our standards.
As we wish to identify and remedy violations at an early stage, various official reporting channels are available to all thyssenkrupp employees (alongside the essential open communication culture within the company), as well as to customers, suppliers and other third parties (e.g., those directly affected, persons with knowledge of a suspected violation at direct/indirect suppliers). Further information on our reporting channels can be found in subsection “S2-3” in the section headed “ESRS S2 Workers in the value chain.”
However, it is difficult to make a reliable estimation of the extent to which potentially affected communities, such as neighbors, local communities, indigenous peoples or communities located in the supply chain, are aware of our whistleblower system and consider it to be trustworthy due to the number and diversity of these groups. This information is not recorded systematically at present.
We protect the interests of whistleblowers, not only through our whistleblower system but also through our commitment to treat the reports we receive in confidence; we do everything possible to protect whistleblowers who act in good faith against any disadvantages that result from submitting a report. That is why they may submit reports entirely anonymously if this is legally permissible. thyssenkrupp treats all reports received from whistleblowers with the utmost diligence and confidentiality and undertakes to comply with all applicable data protection laws. The Compliance Investigations department of thyssenkrupp AG has central responsibility for managing the whistleblower system for the thyssenkrupp group. Reports of possible violations are processed by a Compliance Officer of thyssenkrupp AG. Depending on the individual case, reports of violations that do not relate to core compliance matters (corruption prevention, antitrust law, data compliance, money laundering and trade compliance) may be transferred to the responsible organizational unit or processed in collaboration with this unit. Violations of global minimum labor standards at thyssenkrupp can be reported as violations of the IFA to the International Committee – a codetermination body. In addition to recognition of the ILO Core Labor Standards and the Universal Declaration of Human Rights, these minimum standards include principles for occupational safety and health, options for professional and personal development, the right to adequate compensation, a ban on child and forced labor and a ban on all forms of discrimination.
thyssenkrupp bans and will not tolerate any form of reprisal (e.g., unfavorable actions, disciplinary measures, threats and intimidation) for reports of violations made in good faith or for cooperation in investigating a violation. The corresponding regulations are contained in the rules of procedure for whistleblowing at thyssenkrupp. Knowingly reporting incorrect information (malicious report) is itself a violation and actions taken as the result of such a malicious report are not reprisals.
In its investigations, thyssenkrupp makes every effort to protect the legitimate interests of other persons affected by a disclosure. Raising suspicion against another person may have serious consequences. thyssenkrupp is committed to conducting its investigations strictly on the presumption of innocence and the need-to-know principle.
S3-4 – Taking action on material impacts, risks and opportunities related to affected communities and the effectiveness of those actions
thyssenkrupp pursues the goal of meeting its human rights and environmental due diligence obligations and, as far as possible, of not causing or contributing to the occurrence of negative impacts on affected communities as a result of its business activities. The basis for this are groupwide regulations and management systems aligned with internationally recognized standards for the respect of human rights, including the rights of affected communities. We expect the same of our business partners, who commit to complying with these standards and minimum requirements.
We are conscious of the fact that negative impacts on affected communities may occur despite our regulations and management systems. The double materiality assessment at thyssenkrupp has shown that potential negative impacts occur primarily in the upstream value chain, especially as the result of inadequate occupational safety or environmental management practices by suppliers. Accordingly, we have established measures for responsible procurement as part of our due diligence obligations in order to address material actual and potential negative impacts.
As far as possible, these measures aim to prevent material potential negative impacts in our upstream supply chain by requiring our suppliers to comply with binding minimum standards as specified in our SCoC. These requirements include standards in the areas of environmental management and occupational safety. Their implementation not only aims to reduce negative impacts for employees but also to prevent potential negative impacts for neighboring communities from, for example, pollution at suppliers’ sites or accidents at work that could have impacts on the neighboring communities at plants. To review compliance with these minimum standards, we use internal processes like risk management in accordance with the LkSG as well as supplier audits and self-declarations from our suppliers. Further details can be found in the section headed “ESRS S2 Workers in the value chain.” In addition, we require our suppliers to implement preventive and remedial actions to remedy or minimize actual or potential negative impacts that are identified. As part of our risk management system relating to the implementation of human rights and environmental due diligence obligations, we have taken structured actions to address aspects such as material negative impacts on affected communities in the upstream value chain and risks to the undertaking. Further details of the actions relating to human rights and environmental due diligence obligations in our upstream value chain can be found in subsection “S2-4” in the section headed “ESRS S2 Workers in the value chain.”
To further reduce potential negative impacts in the area of sustainability in our supplier portfolio, we have implemented an appropriate catalog of actions. The goal is to continuously reduce the proportion of suppliers classified as high-risk and minimize the general potential negative impacts in our supply chain. These actions are aimed at ensuring that our human rights and environmental due diligence obligations not only exist in theory but are also integrated in our processes.
The actions we take in the context of responsible procurement are not only aimed at preventing and mitigating negative impacts but may also support positive impacts on affected communities. For example, within the context of responsible development, we require our suppliers to contribute to strengthening local structures by providing and ensuring basic infrastructure such as wastewater disposal. Such actions may create substantial added value for the affected communities and contribute to the long-term improvement of their economic, social and environmental conditions. Compliance with these minimum standards is binding for our business partners. If violations are identified, we require the affected suppliers to implement suitable corrective action. If no adequate improvement is achieved, we reserve the right to suspend or terminate the business relationship as a last resort. Although our double materiality assessment has shown that negative impacts mainly occur in the upstream value chain, we take our responsibility in our own operations equally seriously. Against this backdrop, we seek to continuously identify potential negative human rights and environment impacts and take actions to prevent them. To reduce potential negative impacts on affected communities at our own sites, thyssenkrupp has implemented environmental management and occupational safety actions. Further information can be found in the sections relating to the environment and in subsection “S1-4” in the section headed “ESRS S1 Own workforce.”
Moreover, social responsibility is firmly anchored in our corporate culture. thyssenkrupp regards itself as an active corporate citizen. We want to engage positively with the communities around our locations and support the people who live there. We want to help solve the challenges currently faced by society and use our entrepreneurial skills for the common good. In our corporate citizenship activities, we are guided by our slogan “engineering.tomorrow.together.” For this reason, thyssenkrupp promotes enthusiasm for technology and innovation, education, and local engagement. When natural disasters occur, group employees and companies participate in fundraising activities for the affected regions, organizations and people. In the reporting year, group companies at our sites worldwide engaged in and supported a range of local projects, collaborations, multi-stakeholder initiatives and associations in line with the respective local possibilities and needs.