Molslinjen's Responsibility

The core of our work with responsibility in business relationships is our Code of Conduct (CoC). It sets out concrete minimum requirements of our business relationships. Requirements that we are also implementing. These minimum requirements are based on the framework provided by the UN Global Compact and are operationalised through the UN Guiding Principles for Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises (OECD).

The minimum requirements entail that our business relationships exhibit responsible business conduct by establishing a management system in full alignment with the above international principles. More specifically, we require our business relationships to establish and implement a management system in compliance with the three process requirements set out in the UNGPs/OECD: 1: Policy commitment, 2: Due Diligence, and 3: Access to Remedy. These three process requirements shall equip our business relationships to avoid and to manage adverse impacts on human rights, the environment, and principles for anti-corruption.

1. https://www.unglobalcompact.org/what-is-gc/mission/principles
2. http://business-humanrights.org/en/un-guiding-principles-on-business-and-human-rights-1
3. http://mneguidelines.oecd.org/text/

Our CoC provides a more detailed explanation of our requirements of our business relationship’s responsible business conduct. In cases where there is a contractual commitment between a business relationship and Molslinjen, we can either choose to include the CoC directly in the contract, or we may refer to it through a contract clause.

Our contract clause(s) underline(s) the importance that we attach to sustainable development, ensuring commitment from our business relationships on our expectations from their responsible business conduct, i.e. ensuring compliance with our CoC. Embedding the requirement in our contract outlining the legal consequences of not following the minimum requirement from responsible business conduct as described by our CoC will increase our opportunities for leverage, should our business relationships cause or contribute to severe impacts without managing them.

Molslinjen’s CoC is directed at all our first-tier business relationships. However, it is primarily used with those of our first-tier suppliers, with whom we have a contractual relationship.

All our business relationships in the first tier and their possible parent companies and subsidiaries are subject to our CoC. Add to this the relationship’s affiliated parties, i.e. entities where the relationship has a controlling influence. That could, for example, be a company, in which the business relationship has a majority stake, or the business relationship’s representative office, e.g. its local sales office.

Our business relationships hold the responsibility of making their business relationships align with the global minimum standard and thus follow the same or similar requirements as outlined by our Code of Conduct. This means that our business relationships must, as a minimum, require their business relationships to implement the UNGPs/OECD.

We can follow up with business relationships after having shared our expectations by asking about:

1. Their policy commitment on responsible business conduct.
2. Their impact assessments that provide for an overview of potential and actual adverse impacts and how our business relationships address such impacts, as a minimum covering the business unit that we are directly linked to. Our business relationships shall account for their plan conducting regular impact assessments illustrating their progress in establishing the required due diligence processes.
3. Information on the operational-level grievance mechanisms that the relationship has established to meet concerns from relevant stakeholders in relation to possible adverse impacts.

All business relationships should as part of their due diligence identify risks of adverse impacts on human rights, the environment, and anti-corruption. They should further explain their actions to prevent or mitigate such risks. Following the international standard, reiterated in our CoC, any business relationship shall be able to communicate their identifications and actions at any time upon request by Molslinjen (or any other relevant stakeholder). When a relationship has implemented a due diligence process, i.e. conducting regular impact assessments, we can start asking that relationship to send us their latest impact assessments. To evaluate these, the following rules of thumb may help evaluate if that relationship’s due diligence process is adequate:

1. The relationship should as a minimum have identified risks of adverse impacts on 15 human rights explaining their actions to prevent and mitigate these. The impact assessments should demonstrate that the business relationship has taken into consideration all 48 human rights from the International Bill of Human Rights, all 20 environmental impact areas, and all 12 risk areas in relation to anti-corruption.
   
   
2. The relationship should have identified potential adverse impacts and the risk areas that are characteristic for their industry. In the area of human rights, it is for example known that:
   a. The legal profession has special challenges related to discrimination based on gender (women are missing from leadership positions) and the right to rest and leisure (much overwork).
   b. The IT and ICT sector meet specific challenges regarding managing the right to privacy, the right to freedom of expression, the right to freedom of information, and authors’ intellectual property rights.
   c. The weapons industry has specific challenges regarding the right to life (the use of weapons against civilians), the right to health, and the right not to be subjected to torture, cruel inhuman and/or degrading treatment (the use of produced weapons for other purposes than the intended).
   d. The automobile industry faces specific challenges regarding the right to safe and healthy working conditions (dangerous or physically demanding working conditions), the right to health, and the right to life (client’s safety when using automobiles).
   
   
3. The business relationship should, as a minimum, have identified potential negative impacts on the areas where the country in which the business relationship operates has special challenges according to official sources (internationally authoritative sources).

All businesses have risks of adverse impacts. Two expectations from the international minimum standard can usually be used as a spot-check when evaluating whether a business relationship is managing their adverse impacts adequately:

1. Placing responsibility: The responsibility to manage an adverse impact should be placed with an adequate function in the business.
2. Sufficient resources: The relationship should set aside sufficient resources, such as time and budget, to manage the adverse impact.

Molslinjen will not necessarily end our collaboration with a business relationship without a dialogue first, where we try to use or build our leverage to make the business relationship follow the global minimum standard, referenced in our CoC. We are open to engaging in a dialogue on how together we can ensure that the necessary understanding of the requirements is developed with the business relationship. We will continuously work to assist the relationship in adapting their policies and procedures to the minimum standard for responsible business conduct referenced in our CoC.

We will inform our business relationships in case of a lack of compliance with the requirements of our CoC. We will then aim to make the relationship identify their risks of adverse impacts and integrate actions to prevent or mitigate such risks of adverse impacts. If the business relationship demonstrates a lack of interest or effort to create the necessary changes, and if another business can be identified for our business purpose, Molslinjen may seek to end the relationship.

Molslinjen’s contract clause does not explicitly include state expectations from work clauses*, but it:

1. Reflects the global minimum standard for responsible business conduct, the UNGPs and OECD guidelines, which also count for Molslinjen’s business relationships.
   
   
2. Avoids possible challenges in relation to unfair competition under the EU and WTO; and secure that companies manage risks of impacts to employees also in relation to the areas covered by ‘work clauses’.
   
   
3. Requires the business relationship to consider adverse impacts on all elements entailed in a ‘work clause’, as these elements are covered by human rights:
   a. Right to rest and leisure
   b. Right to paid holiday
   c. Right to a living wage (minimum wage)
   d. Right to work
   e. Right to a safe and healthy working environment
   f. Right to family life, including protection of pregnant people, children and youth
   g. Right to be free from discrimination (equal treatment)
   h. Right to form and join trade unions and rights of collective bargaining

*Public procurement in Denmark often includes ‘work clauses’ in public contracts referring to certain expectations of how the State’s business relationships manage a few core labour rights in accordance with prevailing collective agreements.

An adverse impact is an impact that your company has, or potentially has, on human rights, the environment or principles of anti-corruption. An adverse impact occurs when an action or omission removes or reduces the ability for a person or a group of persons to enjoy their human rights, strains the environment severely, or in case of engaging in corrupt practices.

The severity of an impact is defined from an evaluation against the following three parameters:

1. Scale: Relates to the gravity of an impact. How grave is the impact for the affected party(ies) – e.g. employees or ground water.
2. Scope: Relates to the number of affected individuals or how widespread the impact is. How many are affected by the impact, or how big is the omission? There might, for example, be many customers exposed to adverse impacts on the right to health, when buying old food, or a large geographical area exposed to pollution.
3. Irremediability: Relates to the possibility to remediate the impact for all involved parties. Is it possible to make your impact good again for the affected parties? E.g. if a person loses their life, the impact is severe as it is irremediable.

It is important that all risks of impacts are evaluated individually with regard to the three parameters. You should manage all adverse impacts, but in case it is necessary to prioritise company efforts, the three parameters can function as a guide to establish what impacts are severe and thus should be prioritised for immediate attention. Typically, business relationships can and should deal with all risks of adverse impacts that they cause or contribute to, while prioritisation will become necessary when acting in relation to risks of impacts to which one is merely ‘linked’ through business relationships. It is especially important to address an impact immediately, if delayed action may cause the impact to become severe.

You should immediately contact your reference person at Molslinjen and inform them of the impact(s) and how you plan to manage them. Through dialogue, we will evaluate whether the efforts are sufficient.

If Molslinjen learns that you have not immediately informed us of severe adverse impacts, this will constitute a material breach of contract.

To cause an adverse impact on human rights, the environment or principles of anti-corruption, means that your company’s activities or omissions lead to an adverse impact. For example, if your company discriminates during hiring procedures.

To contribute to an adverse impact on human rights, the environment, or principles of anti-corruption means that your company’s activities or omissions, in combination with a third-party’s activities or omissions, lead to risks of adverse impacts. When your company contributes to an adverse impact, there is causality between your activities and the adverse impact. Also, you should to a reasonable extent have been able to foresee (i.e. expect or predict) that the adverse impact would occur. For example, if you ask a small supplier to deliver the double amount at half the time, you should be able to predict that such an action can lead to adverse impacts on the rights of the employees of the supplier to rest and leisure and to safe and healthy working conditions.

Being linked to an adverse impact on human rights, the environment or principles of anti-corruption means that there is a direct link between third party causing or contributing to an adverse impact and your products, services, or operations. When you are linked to an adverse impact, there is no causality between your company’s actions or omissions and the adverse impact, but your company is in a business relationship with the third party. For example, you may have a supplier that is not managing its waste water responsibly, causing pollution of the local water supply.

We expect you to conduct your impact assessments identifying your potential and actual adverse impacts on human rights, environmental and anti-corruption principles regularly, e.g. annually.

We further expect that you describe what you do to prevent and mitigate the adverse impacts, and what you have done to ensure access to remedy to affected parties in case of an actual adverse impact. The efficiency of your actions should be tracked, and actions should be decided in dialogue with those who are exposed to the adverse impact, or – if possible or required – with public authorities.

Finally, we expect that you describe what grievance mechanisms you have in place to ensure access to remedy for the affected stakeholders.

Molslinjen’s CoC reflects the globally agreed minimum standard for responsible conduct when it comes to business impacts on human rights, including labour rights and the standard agreed between OECD countries when it comes to business impacts on the environment and risks of corruption. You can find the standards here:

https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf, and http://mneguidelines.oecd.org/guidelines/.

The standards cover the requirements for responsible business conduct reflected in our CoC on all three bottom lines: 1) Social sustainability 2) Environmental sustainability, and 3) Economic sustainability.

You can read more about the international requirements through UN publications and interpretive guides*. Small and medium-sized enterprises can further acquire information on implementation through the EU Guide for small and medium-sized enterprises*.

* UN FAQ on the UNGPs: https://www.ohchr.org/documents/publications/faq_principlesbussinesshr.pdf The UN Interpretive Guide on the UNGPs: https://www.ohchr.org/Documents/Publications/HR.PUB.12.2_En.pdf
* https://globalcsr.net/sme-guides/

All our business relationships must manage their adverse impacts on all three bottom lines referenced in our CoC. The specific principles are included in the following declarations and conventions:

• Human rights including the core labour rights: The UN’s International Bill of Human Rights (IBHR). For an overview, see https://globalcsr.net/overview-of-the-48-human-rights/
  
  
• Environment and climate: The Rio Declaration on environment and development and the Paris Agreement. For an overview, see https://globalcsr.net/overview-of-the-20-environmental-areas/
  
  
• Anti-corruption: UN Convention Against Corruption. For an overview, see https://globalcsr.net/overview-of-the-16-economic-areas/

Our CoC is based on the international standards (UNGPs/OECD) for responsible business conduct. This involves a requirement for the implementation of a management system that regularly identifies and manages your risks of adverse impacts on all three bottom lines of responsible business conduct: human rights, including labour rights; environment, including climate; and anti-corruption principles. To establish this management system in compliance with the standards referenced by our CoC, you have to implement the three following procedural elements in your company:

• Policy Commitment: You need a policy commitment that:
  o Is approved at the most senior level in the company
  o Is informed by relevant internal/external experts
  o Stipulates the businesses expectations of personnel, business partners, etc.
  o Is publicly available and communicated internally and externally to relevant stakeholders, including your employees and business relationships
  o Is reflected in operational policies and procedures in order to integrate it throughout the entire business
  
  
• Due diligence: You have to continuously: 1) Identify your actual and potential adverse impacts on all three bottom lines, 2) Prevent or mitigate the impacts that you may cause or contribute to, and 3) Measure the effectiveness of your actions and communicate on your work*.
  
  
• Access to remedy: Should you identify or be informed of the fact that you are causing or contributing to actual adverse impacts, you have to ensure access to remedy for the affected parties through effective grievance mechanisms. These mechanisms should be directed towards those individuals and groups who could be affected negatively by the activities of your company*. In relation to significant impacts in the areas of environment and corruption, you may need to contact the appropriate authorities.

It is your responsibility to establish a management system by implementing these three procedural requirements. An implementation may be executed in collaboration with Molslinjen, if Molslinjen has the adequate resources.

It is important to remember that you will always have potential adverse impacts. It is your responsibility to establish the process of identifying, preventing, mitigating, remediating, and communicating these adverse impacts that are central for your compliance with our CoC and thereby the global minimum standard.

* UNGPs Foundational Principle 15/Operational Principle 17-21: https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf

* UNGPs Operational principle 22+29+31: https://www.ohchr.org/documents/publications/GuidingprinciplesBusinesshr_eN.pdf

The international requirements for responsible business conduct, which are reflected in our CoC, apply to all companies, whether large or small, and, therefore, form a global standard. The UN and the EU, in addition to business organisations, trade unions, and civil society, all support these requirements. All businesses are subject to these requirements, because all businesses risk having adverse impacts on human rights, environmental principles, and anti-corruption principles.

Small and medium-sized enterprises usually have smaller capacities and more informal processes and management structures to manage these risks than larger businesses. Hence, the processes of small and medium-sized enterprises may often look different and be less complex; also, our expectations in terms of documentation will be less. However, we expect that all our business relationships can account for how they have established appropriate policies and processes and that these policies and processes reflect company size, sector and context.

The implementation of a management system never stops. Our business relationships are required to account for implementation of the management system in compliance with UNGPs/OECD within two years from when they were first introduced to these requirements in our CoC. This includes the adoption of a policy commitment, the implementation of a due diligence process (including documentation of the latest impact assessments from the part of your business that is directly linked to Molslinjen) and the establishment of complaint mechanisms or ‘tell us’ that give access to remediation in the three areas of human rights, environmental principles, and anti-corruption principles, see also section 3.6.

Molslinjen can send comprehensive questions, requirements for self-evaluations, and in some cases visit selected business relationships. The frequency of our contact will depend on Molslinjen’s risk assessment of the business relationship in question. Business relationships that are open and transparent about what they do to live up to the minimum standard as referenced in our CoC will be met with fewer questions and requirements.

Should a specific situation occur, such as a journalist’s inquiry into questionable actions, you will have to expect an increase in elaborate questions, self-evaluations sent, or possible visits. Through this Molslinjen aims at increased cooperation, where Molslinjen will be able to help and guide you in the implementation of a proper management system. If you cause, contribute to, or are linked to severe adverse impacts on one of the three bottom lines and cannot account for proper management of such impacts, the contact between you and Molslinjen will most likely be increased, where we will seek to ensure that you manage your adverse impacts adequately.

We expect that you demand from your business relationships that they meet the international minimum standard outlined in the UNGPs/OECD. When we require you to establish the mentioned management system, it includes that as a minimum you make corresponding requirements of your own business relationships. We are not asking you or your business relationships to meet self-invented standards or some arbitrarily designed requirements; we expect you to meet the globally agreed minimum standard for responsible business conduct. Nothing more nothing less.

We expect you to cooperate and engage in a dialogue with certain business relationships about establishing the management system. This, however, does not mean that you will be held accountable for the actual establishment of your business relationships’ management systems; however, you will be held accountable for sharing the requirement with your business relationships.

Should something be found lacking with your business relationships, you are expected to use your leverage to get them to manage their own adverse impacts as described by the UNGPs/OECD.

We may terminate our contract on this ground. However, more likely, Molslinjen will not end the relationship before there has been dialogue on upcoming initiatives, which clearly show improvements towards compliance with our CoC. We may even commit to developing a capacity in collaboration with you and enter into a dialogue about an implementation plan of the next steps of full implementation of the CoC. Should we not be able to see any real commitment or actions from our business relationships, and possibly a lack of willingness towards collaboration, Molslinjen would need to consider whether the business relationship should end.

Should you cause, contribute, or be linked to severe adverse impacts, and do not make us aware of these impacts and how you are managing them, this will also constitute a material breach of our contract and may, in itself, lead to a termination of the contract.

We have chosen to base our approach to responsibility in business relationships on the UNGPs/OECD because they provide for an authoritative global reference point to responsible business conduct. The UNGPs/OECD operationalise the principles of the UN Global Compact. From our own experience we find that the implementation can improve our performance and help us avoid unnecessary risks.

By following the global minimum standard, we make sure that Molslinjen’s approach to responsibility in business relationships adheres to the global development within responsible business conduct. The global minimum standard has a historic consensus in all parts of the world and in all business areas. Additionally, the UNPGs/OECD serve as a risk management tool, which ensures that reputational risks (and financial risks) are identified and managed in time. Also, States are obligated to use the standard in setting legal requirements from responsible business conduct, in public procurement, and when financing businesses. Hence, we make sure that Molslinjen’s business relationships address social, environmental, and economic sustainable development. In light of the international development and the universal and authoritative character of the UNGPS/OECD, it would undermine that authority if Molslinjen were to manage our responsibility in business relationships through any other means than the UNGPs/OECD.

The UNGPs/OECD focus on establishing a management system, which also enables our business relationships to manage their risks in relation to exploitative child labour. How our business relationships intend to deal with such risks shall not be prescribed by us. You must present the actions most appropriate for your situation and context to effectively prevent risks of adverse impacts on this human right as well.

Establishing predefined performance requirements on all human rights would make it impossible for you to present innovative solutions fit for your operations and context.

With the UNGPs/OECD, the traditional global approaches to responsibility in business relationships are shifting from specific performance measurements (monitoring and auditing) to an expectation that business relationships establish a management system to manage their adverse impacts on all three bottom lines. This management system has to include all rights when assessing your potential adverse impacts on human rights, including labour rights, and all the principles of environmental sustainability and anti-corruption.

It seems difficult, if not impossible, to set up specific requirements of how a business relationship should act in relation to a given specific risk of an adverse impact. What might be effective to prevent and mitigate an adverse impact in one place, may be useless in another. The human rights, environmental principles, and anti-corruption principles on which you may risk having adverse impacts, will depend on many factors such as your sector, local conditions, national conditions, etc. Molslinjen cannot set up the specific performance requirements in certain areas because this would lead to an unsatisfactory handling of the adverse impacts from you and other business relations. Worst case, this could lead to serious injury to your and our reputation.

Moving away from performance requirements and towards the globally agreed management system, does not represent a step away from the actual target of sustainable development. More to the point, our approach to responsibility in business relationships will make this target manageable and operational even for small businesses. This approach also means that we will have a decreased intrusive interaction with you and, additionally, lead to capacity building within your own company. And the aim of the standard is for all businesses worldwide to adapt to the core elements of sustainable development in the decades to come.