H3. Responsible sourcing

During 2021, Essity raised the ambitions to ensure responsible business methods and respect for human rights. The new target, which is based on Essitys total purchasing cost excluding energy, is that 95% of the purchasing cost should be from suppliers that share the company’s values. The outcome in 2021 was 88%, which was in line with the target for the year.

Risk analysis

Essity has an established process to perform continuous risk assessments of the company’s suppliers and sourcing categories. Approximately 55% of Essity’s strategic suppliers for raw materials and finished products are located in Europe, 36% in North and South America and 9% in Asia and Africa. Many of the strategic suppliers’ production facilities located in Asia and South America are part of large multinational corporations based in Europe and the USA. This is a conscious choice by Essity to reduce the social and ethical risks within the supply chain. Suppliers with manufacturing units located in high-risk countries, according to the Sedex definition, are examined with particular care using regular ethical third-party audits with a focus on health and safety, human rights, employment conditions and corruption. At the end of 2021, Essity had a total of 932 suppliers (1,008; 929) that share data via Sedex.

Certain materials, such as cotton and wood fiber, are considered to primarily have risks further down in the value chain. Essity takes further measures here, such as audits of subsuppliers, or chooses certified raw materials that guarantee more sustainable extraction and production.

Geographical distribution of strategic suppliers 2021

Ethical audits conducted

Travel restrictions related to the COVID-19 pandemic have limited the number of audits conducted. During 2021, Essity evaluated the outcome from 49 ethical supplier audits, carried out in China, Mexico, Russia, South Africa, India, Sri Lanka, Brazil, Colombia, Malaysia and Estonia. Of these audits, 14 were carried out by Essity using an independent audit firm. The other 35 ethical audits, which meet Essity’s requirements, were carried out by other customers to suppliers and were approved by Essity.

Essity is informed within 24 hours in cases of critical observations. No agreements with strategic suppliers were terminated on the grounds of sustainability-related non-compliance in 2021.

Read more about how Essity works with responsible sourcing and human rights in the chapter Business ethics and human rights.