Human Rights Assessment

We acknowledge the responsibility to respect human rights as outlined in the UN Guiding Principles on Business and Human Rights (UNGP).

Why it matters

In today’s ever more interconnected and globalized world, there is increasing public focus on how companies are respecting human rights in their operations as well as through their business relationships across value chains. That means demonstrating that they are not harming the fundamental dignity and welfare of people as they go about their legitimate work and generate the jobs, wealth, and growth that benefit all communities. Human rights are rights inherent to all human beings, irrespective of nationality, place of residence, sex, national or ethnic origin, color, religion, language, or any other status. Above all, human rights are interrelated, interdependent, and indivisible.

As a global company with highly complex supply chains, we are exposed to increased risks of being directly or indirectly linked with human rights violations. We therefore treat the issue of human rights as a priority and require our business partners to do the same.

Key activities

Our human rights commitment was published in the financial year 2019/20 in the form of the dormakaba Statement of Commitment on Human Rights. It was elaborated based on a gap assessment, stakeholder consultations, and the salient issues identified (see details in the following section) and approved by our then Chairman and CEO. In prioritizing these salient issues, we recognize that some groups may be at greater risk of negative human rights impacts due to their vulnerability or marginalization. We also recognize that the evaluation of the severity of potential impacts may change and that other issues may grow in importance over time. We will therefore regularly re-assess salient issues and human rights risks based on internal and external stakeholder feedback and expert judgments.

In line with the “Protect, Respect, Remedy” Framework provided by the UN Guiding Principles on Business and Human Rights (UNGP) and as outlined in the Statement of Commitment on Human Rights, we recognize the important role the company has in respecting human rights. We are guided by international human rights frameworks, which include but are not limited to the UNGPs, the Universal Declaration of Human Rights (UDHR), the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the Core Labor Conventions of the International Labor Organization (ILO), and the OECD Guidelines for Multinational Enterprises

We are committed to fully respect the personal dignity, privacy, and individual rights of our colleagues, customers, suppliers, and other stakeholders. Our commitment to respect human rights extends to all individuals throughout the value chain, and we use the relationships with co-manufacturers, independent suppliers, and other business partners to encourage and promote the principles of the Statement of Commitment on Human Rights throughout our network. We believe that we can influence others through leading by example and therefore communicate proactively about our commitment.

Our aim is to conduct Human Rights Due Diligence (HRDD) throughout our business to proactively assess, identify, prevent, and mitigate actual and potential adverse human rights impacts on potentially affected rightsholders across the value chain. We also use HRDD to identify where we can better support and promote individuals’ ability to live and exercise their fundamental human rights.

We have defined the following HRDD process and outlined it in the Statement of Commitment on Human Rights to ensure dormakaba will be able to effectively implement our commitment to respect human rights:

Process of Human Rights Due Diligence (HRDD)

Assessing potential impacts to define salient issues

We do not attribute more importance to one human right over another. However, for the implementation of our human rights commitment, we prioritize human rights issues that are most salient to the business – identified via a formal human rights saliency assessment conducted in accordance with the UNGPs.

This included consultations with 20 key internal and external stakeholders including human rights experts, customers, and suppliers, which generated a focused list of salient human rights issues and formed the basis for the company’s Statement of Commitment on Human Rights.

The stakeholder consultations were focused on the potential gross risk of human rights impacts on rightsholders, as opposed to a standard risk assessment approach, which looks at the risk to the company. The company’s current management of human rights-related topics was not evaluated. In other words, saliency was defined based on the inherent human rights risk, without reference to how well our company manages the topic already. Thirteen issues appeared as most relevant, and these were further analyzed in terms of the company’s leverage and the potential severity of impact. Severity here is defined by the scale, scope, and remediability of the potential human rights impacts on people.

Where possible, we will strive to measure the actual impacts of our actions on the human rights of potentially affected rightsholders.

dormakaba Human Rights Saliency Matrix

Among the broader human rights issues identified, we commit to focus on the salient human rights issues (in alphabetical order) defined below:

Access to grievance

The dormakaba whistleblowing system and tool have been evaluated by an external party for conformity to the effectiveness criteria for grievance mechanisms laid out by the UNGPs. The criteria are:

• Legitimate
• Accessible
• Predictable
• Equitable
• Transparent
• Rights-compatible
• Source of Continuous Learning
• Based on Engagement and Dialogue

Generally, the criteria of Legitimate, Predictable, Equitable, and Rights-compatible were met well. Considering that the whistleblowing system has been implemented recently, some criteria such as Source of Continuous Learning (i.e., identifying lessons for improving the mechanism) and Based on Engagement and Dialogue (i.e., a feedback mechanism for users regarding the processes of the system itself) could not yet be fully assessed. For the target group of own employees, the grievance mechanism also met the Accessibility criteria well. A description of our reporting channels is included in the dormakaba Code of Conduct. A communication campaign has also been launched, including print media (poster campaign) for local implementation to reach production workers.

The assessment was also intended to be a source of continuous learning and for evaluating areas for potential improvement, e.g., raising awareness of the system for other intended users, such as external business partners, suppliers, etc. Accessibility for external users who are unable to read or have no internet access is by the very nature of a web-based tool more challenging.

Tracking and communicating performance

We commit to transparently reporting on the progress of our efforts in our annual sustainability report as well as to publicly accounting – through the annual Modern Slavery Statement – for how human rights issues are addressed.

We track the effectiveness of our actions and influence to ensure human rights are respected in the value chain. We do this through a management system with concrete targets and key performance indicators, monitoring the implementation of the human rights road map.

Our performance

We focused on the following areas in the financial year 2020/21:

1. Assessing actual impacts
2. Integrating findings and committing to appropriate action
3. Remediating adverse impacts
4. Developing further policy commitments

Assessing actual impact

Given the challenges of limited transparency in the value chain, our salient issues are regularly analyzed in more detail through human rights impact assessments or social audits in high-risk areas in order to develop appropriate measures. In the financial year 2020/21, we fulfilled our commitment to carry out such an assessment to gain a better understanding of migrant workers’ risks and vulnerability in our operations in Malaysia and Singapore.

In order to achieve this, we leveraged our membership to the Responsible Labor Initiative to work with local auditors to assess our operations based on the Responsible Business Alliance Code of Conduct. The audits revealed, for example, that migrant workers under employment had paid recruitment fees. However, under the Employer Pays Principle, the costs of recruitment should be borne not by the worker but by the employer.

In addition, we also worked together with the University of St. Gallen and commissioned a study to gain deeper insight in tracing cobalt in fragmented supply chains related to electronics components that we use in our products. The study identifies and maps key actors within the cobalt value chain, along with the relevant legal frameworks. The research also assesses typical human rights risks, as well as governance and traceability challenges and provides solutions based on desk research and expert interviews.

Recommendations to work together with relevant multi-stakeholder groups to amplify activities were taken up and supplemented by our joining the Responsible Minerals Initiative (RMI). We will evaluate how to apply the RMI’s 10-step process for responsible sourcing of cobalt as we continue to develop our due diligence.

Integrate findings and take appropriate action

Based on the human rights-related risks and impacts identified in Singapore and Malaysia, we have developed prevention and mitigation measures. This has included several workshops with local stakeholders to raise awareness, assess root causes, and develop solutions in a collaborative way. Besides priority findings related to recruitment fees, other findings related to supplier responsibility, due diligence processes for recruiters, and lack of communication on the whistleblowing mechanism were discovered. Mitigation measures include, amongst others:

• Development of service agreement templates for labor agents and labor contractors to better address freely chosen employment and responsible recruitment practices
• Requirements for pre-departure training for foreign migrant workers on recruitment fees and the dormakaba whistleblowing system
• Training requirements for a wider range of stakeholders on the dormakaba supplier assessment and engagement program
• Development of a responsible recruitment self-assessment questionnaire for pre-contracting/pre-qualification phase with labor agents and labor contractors

Remediating adverse impacts

When adverse human rights impacts are uncovered due to our business activities or from links to our operations, we are committed to taking timely and transparent action to remediate in a fair and equitable manner in line with the UNGPs. Where we find impacts linked to our business relationships, we will use our influence to encourage suppliers and business partners to respect human rights. In the financial year 2020/21, when it was discovered that recruitment fees has been paid by foreign migrant workers in Malaysia, we committed to fully reimbursing these fees dating back to those that had been paid even ten years ago. All foreign migrant workers were interviewed to collect information on recruitment fees paid and reimbursements have been made within the time frame recommended by the Responsible Labor Initiative.

Developing further policy commitments

In the financial year 2020/21, we developed a Responsible Labor Directive as a result of policy gaps discovered in the course of social audits. The aim was to give more concrete guidance and minimal standards on topics such as freely chosen employment, working hours, worker’s accommodation, and responsible recruitment on a global level. This was supplemented by a specific Zero Recruitment Fees Directive as a preventative measure.

As regards our approach towards human rights, our biggest achievements in the financial year 2020/21 were the social audits conducted in Malaysia and Singapore and the development of associated improvement actions, including reimbursements for recruitment fees, and the development of our Zero Recruitment Fees and Responsible Labor Directives.

However, the biggest challenge of limited leverage and limited transparency in the upstream and downstream value chain remains. This is especially true at the mineral extraction stage or in terms of improper use of our products by end users. This is why we have planned to continue the development of traceability processes based on the findings of the initial study on cobalt value chains.

Outlook

In the financial year 2021/22, we will focus on the global roll out of the Responsible Labor and Zero Recruitment Fees Directives and on leveraging due diligence tools and guidelines provided through our new membership in the Responsible Minerals Initiative, in order to improve supply chain traceability.