ANNUAL REPORT 2019/2020
In recent years, Addtech has grown beyond the Nordic region, both by accompanying customers as they expand into new markets and through new acquisitions. Internationalisation generates additional business opportunities, but simultaneously increases the importance of taking responsibility throughout the value chain.
Although Addtech’s roots are in Nordic industry, the proportion of its business conducted outside the Nordic countries is growing steadily. Over the past fiscal year, the Swiss company Omni Ray was acquired by Addtech Automation, for example, and Addtech Power Solutions acquired German company DMC Digital Motor Control, as well as Dutch company Q-tronic.
There are several explanations for this international expansion. As customers have become increasingly global, Addtech companies have simply followed their customers into new markets, both through exports and by establishing their own operations. Addtech also works with many of the world’s leading suppliers, who in turn often have a global presence.
For Addtech, such development entails additional business opportunities and more stable operations. By constantly adding new customer segments and establishing itself in more countries, the Group can, for example, reduce market risks and better mitigate cyclical fluctuations.
However, internationalisation also entails new challenges, not least with regard to issues of responsibility. Ensuring that good business ethics, zero tolerance of corruption and human rights are respected at every stage of the value chain is becoming increasingly important. For a long time, Addtech has conducted all operations on the basis of its Code of Conduct, which is based, among other things, on the UN Global Compact guidelines. In 2017, the Group also introduced a special Code of Conduct for its suppliers. The purpose was to show clearly what requirements Addtech sets, and to make visible the demands that customers in turn place on Addtech.
“Although the question of responsibility in the value chain is central for us, at the same time, our decentralized model means that we, as a Group, work a little differently with these issues than many others. Since the subsidiaries live closest to both customers and suppliers, they conduct the ongoing dialogue and make the actual evaluations,” says Malin Enarson, CFO and responsible for sustainability issues at Addtech.
She points out that Addtech’s ability to act as a link between customers and suppliers provides unique opportunities to contribute to economic, environmental and social values alike:
“Our subsidiaries have long-term relations with their suppliers and in many cases already have well-structured sustainability work, with their own targets and ambitions for how they can take responsibility in the value chain. At the same time, as a group, we also need to show more clearly how we can contribute to positive change in society. Accordingly, we have now chosen to set a new Group-wide vision to further raise the level of the companies’ supplier monitoring.”
The Addtech Group’s largest subsidiary, Hans Følsgaard, is one of the Addtech companies that are already far ahead in terms of sustainability issues. For example, the company signed the UN Global Compact in 2012 and produces its own sustainability report. Although the operations are based in Denmark, the whole world is the workplace, with global customers and suppliers in a number of different areas, including automation, electrical technology, infrastructure, greentech, telecom and much more. Accordingly, for Hans Følsgaard, the matter of supplier evaluations is high on the agenda.
“Customers impose increasingly stringent demands on us in terms of sustainability, and this in turn means that we impose tougher requirements on our suppliers, in terms of both environmental and social issues, such as working conditions and zero tolerance of corruption. This is a necessity to be able to withstand the competition,” says Helle Aker Jensen, who is responsible for sustainability at Hans Følsgaard.
The starting point in the company’s sustainability work is integrating the issue of sustainability at all levels.
“We want sustainability awareness to permeate the entire operations. All employees should take into account the aspects of sustainability in the decisions that are made. In this way, it becomes natural to ask the right questions, both of themselves and of suppliers, for example when it comes to transports: How can we package the products correctly, how can this container be filled so that it is climate efficient? How can we minimize plastic and plastic packaging for the products we receive and handle? How do we develop even more sustainable solutions?”
All suppliers, both new and existing, must sign to having made themselves familiar with the Code of Conduct, and evaluations are conducted on a continuous and regular basis, says Helle Aker Jensen.
“We maintain very long-term relations with both customers and suppliers – we have worked with some for 50-60 years. Quite simply, we get to know one another very well and we meet often. Many of the suppliers also have stringent sustainability requirements themselves. This results in an intensive dialogue, which in turn builds a trust from which we all benefit greatly. My view is that the suppliers really appreciate our commitment. We are at the forefront, and when our suppliers see our work and our sustainability report, they appreciate our commitment and see us as role models. In that sense, we are helping improvements also outside of our own operations - which is exactly what UN Global Compact is all about.”
Every second year Hans Følsgaard conducts a major evaluation of its suppliers, who are each required to answer a number of questions about their operations and their sustainability work. In the most recent survey in 2018, the company received answers from suppliers who together account for more than 80 percent of Hans Følsgaard’s sales. The company also conducts both its own inspections and third-party inspections on an ongoing basis. It has almost never happened that suppliers have failed to meet expectations,” says Helle Aker Jensen:
“Let me take our Chinese suppliers as an example. Although many probably expect higher risk in Chinese companies, we have conducted numerous audits and follow-ups, and everything has always been in line with requirements. We are now starting to work with the global goals, and we will involve our suppliers in this work, too. We have not yet decided exactly how, but we feel that it is important to involve the whole value chain so we move in the same direction.”
Addtech’s Code of Conduct controls how the Group does business, behaves and reacts in everyday life. The Code builds on the Group’s own core values, the UN Global Compact, the ILO’s core conventions and the OECD’s guidelines for multinational companies. The Code of Conduct also contains the Environmental Policy. The Code has been adopted by the Board of Directors and encompasses all companies and employees. It is available at www.addtech.com, where Addtech’s Code of Conduct for Suppliers is also available, explaining what the Group expects from business partners.
Percentage of purchasing volume evaluated based on the Code of Conduct
Addtech has a large number of suppliers around the world. Most production takes place at our suppliers’ facilities. The vision is for 80 percent of the purchasing volume to be evaluated in 2030, see also the Sustainability Notes.
