Conduct procurement

The obligation under law is limited to the ILO fundamental conventions, which include:

• freedom of association and collective bargaining
• forced labour
• child labour
• discrimination in employment
• a safe and healthy working environment

Labour law conditions in procurement regulations (in Swedish)

To meet the legal requirement, it is sufficient to impose requirements on the ILO fundamental conventions (section 2.1–2.5 of the code of conduct). Furthermore, the legal requirement only applies to subcontractors who are directly involved in fulfilling the contract. “Directly involved” refers to the personnel who produce or assemble a product, provide a service or perform work under a construction contract, regardless of the number of tiers between the supplier and the subcontractor(s) involved in fulfilling the contract.

The contract clause contains recommended deadlines, in square brackets, for:

• Supplier’s reporting obligation (section 3)
• Dialogue (section 4.2)
• Self-assessment (section 4.3)
• Supply chain transparency (section 4.4)
• Audit (section 4.5.1)
• Action plan (section 5.2)

Through dialogue meetings, requests for information (RFI) and referrals, you can collect valuable information and, if necessary, adjust the deadlines to the specific procurement.

Supply chain transparency is the disclosure of which sub-suppliers a supplier uses to fulfill the contract, including legal names and physical addresses. The number of tiers required depends on the complexity, risk, and maturity of the industry, with final manufacturing facilities being a minimum. Transparency is different from traceability, which is the ability to track each step in the chain, including providing verfications for the specific delivery.

If the subject matter of procurement has few components, you can require disclosure of [manufacturing facilities [one (1)] tier beyond final manufacturing of [product/products/assortment] . This provides transparency into where the components are manufactured and is a requirement that most suppliers and sub-suppliers should be able to meet.

If you need to know where a specific component is manufactured, such as a semiconductor or microchip, you can request disclosure of [manufacturing facilities for [component/components] in [product/products/assortment]. Semiconductors and microchips are crucial in the IT, automotive and medical technology industries.

For products containing risk minerals, you can use the requirement [smelters/refiners for the tin, tungsten, tantalum and gold (3TG), cobalt and mica] used in [product/products/assortment]. Many brands already track smelters and refiners, often with the assistance of the Responsible Minerals Initiative. This work is based on the OECD guidance for responsible mineral supply chains.

Responsible Minerals Initiative

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas

For goods with serious risks at the raw material level, it may be necessary to require disclosure of [extraction facilities for [raw material] used in [product/products/assortment]]. For example, the polysilicon in solar cells and the cotton in textiles may come from regions with a high risk of forced labour.

When assessing confidentiality, you need to take into account any requests from the supplier for confidentiality of certain information, in accordance with the Public Access to Information and Secrecy Act.

Excerpt from the contract clause

Supplier shall bear the cost of any follow-up audits required to verify that Supplier has corrected deviations.

Within the regions’ national collaboration, audits to monitor the prioritised purchasing categories are co-financed. This means that the collaboration pays for initial audits and a possible first follow-up audit, to verify that the deviations have been addressed. If the supplier does not meet the conditions at the follow-up audit, the supplier must bear the cost of a second follow-up audit.

For other purchasing categories, the buyer can choose to have the supplier bear the cost for all follow-up audits, in accordance with the contract clause.

Excerpt from the contract clause

[Contracting organisation] has the right to share results of completed monitoring with other regions within the regions’ national collaboration for sustainable public procurement (National Secretariat for Sustainable Public Procurement) provided that the receiving region already has an agreement with Supplier, which includes equivalent conditions for sustainable supply chains.

The contract clause gives the contracting organisation the right to share the full audit report with other regions within the national collaboration for sustainable public procurement. This only applies if the receiving region already has an agreement with the supplier that contains equivalent conditions for sustainable supply chains. The aim is to streamline monitoring and save resources for both contracting organisations and suppliers. Other regions only receive a summary of the audit results, where confidential and commercially sensitive information has been redacted.

According to the Freedom of the Press Act (chapter 2 article 4), a document is official if it is held by a public authority and has been received (article 9) or drawn up there (article 10). This means that consultants’ audit reports are deemed as received, while reports from monitoring carried out by the authority’s own staff are drawn up. Such documents can be requested. Since regions are covered by the Public Access to Information and Secrecy Act (OSL), a confidentiality assessment must be made when a public document is requested. Examples of information that may be subject to confidentiality according to chapter 31 article 16 of the OSL are suppliers’ partners, sub-suppliers and addresses. However, deviations in audit reports are usually not considered trade secrets.

All processing of personal data must also comply with the General Data Protection Regulation (GDPR). Personal data should therefore be masked in audit reports and other shared information.

Excerpt from the contract clause

If Supplier does not report in accordance with clause 3, does not participate in monitoring in accordance with clause 4, fails to take measures according to points 5.1 – 5.2 or does not address deviations in accordance with the established action plan, [the contracting organisation] is entitled to impose a liquidated damage on Supplier. Liquidated damages are paid at [___ SEK, excluding VAT] per commenced week the circumstances remain. The liquidated damage can be issued for a maximum of [___ weeks].

The contract clause contains a notice of liquidated damages to ensure that the supplier takes the necessary actions. A liquidated damage is a predetermined compensation for deviations from the contract clause. For the buyer, the notice of liquidated damages simplifies the management of penalties, while it provides the supplier with clarity about any costs in the event of deviations. You determine the amount of the liquidated damage based on what is appropriate for the specific procurement, taking into account, for example, the subject matter of procurement and the contract value.