Anticorruption Policy, Employee and Supplier Code of Conduct
• The company has engaged and worked with the International Anti-Corruption Academy and international experts in developing its Anticorruption measures. Both an Employee Code of Conduct and Supplier Code of Conduct have been developed and published in English, Romanian and German on the company’s website and which comprehensively express the company's expectations and requirements of employees in Anticorruption and integrity.
• First tier suppliers are given relevant guidance through the Supplier Code of Conduct/Timber Sourcing Policy, provided as part of Supplier Contract agreements.
• Sufficient resources are allocated to implement the Anti-corruption and integrity policy (ACIP) - e.g. resources for the operation of a Compliance and CSR department, SCCC department, and provision of training.
• A system for training of HS employees and suppliers in the Employee and Suppliers Code of Conduct are in force and largely implemented.
Supplier and employee auditing: ensuring compliance with HS’ DDS and Supplier Code of Conduct
• First tier supplier breaches are investigated and enforced.
• Interviews with HR demonstrated clear understanding of control and enforcement processes in relation to employee non-compliance.
• Interviews with Legal Officers demonstrated excellent understanding for first tier supplier checks for criminality/potential criminality via media and court records and the process for investigation and if proven/suspected, suspension of the supplier.
• Enforcement actions taken in both employee and supplier breaches, recorded and appropriate to issues identified.
• Control of first tier suppliers is carried out at different levels. Prior contracting each new supplier is investigated by the legal department for previous or ongoing court cases involving the company as legal entity or the managers / administrators / shareholders as physical persons. Internal software links to the public juridical databases. Additional checks for compliance with SCC are applied by the Supply Chain Control and Certification (SCCC) department. HS purchasers working on the ground are obliged to sign a 'Conflict of Interests' declaration and if any conflict is declared then the decision on the contract to go ahead is taken by the respective mill manager.
Media monitoring is also performed by HS CSR department observing any public cases for involvement in HS potential and current partners in unacceptable activities including corruption.
• Review of the internal database maintained by the legal department showed that recently a total of 1419 companies are under the HS monitoring. HS refrains from doing business with companies registered as 'red' according to their internal monitoring and risk evaluation.
• HS database showed that in 2020 based on information obtained by media review 6 companies were suspended from contractual arrangements with HS.
Improved stakeholder engagement
• Stakeholder inputs related to the company's Codes of Conduct/Timber Sourcing Policies are addressed positively and appropriately by the company and considered.
• The company actively provides Stakeholders with opportunities to engage, tools and processes detailed on the Stakeholder Engagement Protocol.
• A public Stakeholder Platform exists through which stakeholders can submit input.
• HS has also engaged in proactively reaching out to stakeholders to present their sustainability report and systems, for transparency and feedback.
Timber Souring Policy
• HS Timber Sourcing Policy expressed the company’s commitment for ensuring all timber is responsibly sourced from sustainably managed forests and to excluding material sourced from virgin forests and non-intervention, also voluntarily refraining from buying timber originating from National Parks in Romania
• The policy is aligned with the FSC requirements in the FSC Conditions Framework.
Sustainability report
• HS Timber Group has developed an effective and transparent Sustainability Report, most recent published in August 2020, and which covers the mandatory elements required by EU 2014-95 (environmental matters, social and employee-related matters, respect for human rights, anti-corruption matters, description of the policies, outcomes and risks related to those matters, information on the due diligence processes and its supply chain). The report details key performance indicators for the required reporting period of 2017 - 2019.
• A critical review of HS Timber Group's Sustainability Report was carried out by the Environmental Agency Austria (Umweltbundesamt Gmbh) the report review of the latest report draft of 28/05/20. The critical review panel found the overall quality of the sustainability report, especially regarding materiality, completeness, balance and design to be high and adequate for the purpose of the report. The data listed are comprehensible and comprehensive. The report includes positive aspects of the company ́s sustainability performance, but also addresses existing challenges and current or previous difficulties.
• The company's Sustainability report dated August 2020 was compiled in accordance with Global Reporting Initiative requirements with clear indication within the report of areas of action and GRI topics & related codes.
System for identification and mitigation of social and environmental impacts
• The company has developed a group wide sustainability system which is used to assess the negative social impacts related to its operations and supply chains. That system is clearly embedded into business processes and the company’s Corporate Social Responsibility system, including with the Employee and Supplier Codes of Conduct and the Timber Sourcing Policy.
• Impacts are identified and assessed by HS Timber Group but also through stakeholder consultation processes and measured through the company's sustainability process details of which are published in its Sustainability reports the most recent dated August 2020. Those impacts include wood material use, fuels, energy water, gas use, emissions and waste streams generated. A detailed KPI assessment exists for Significant Environmental Aspects at Mills including fuel consumption, energy use and waste.
Social Impacts the company has identified by the presence of its log purchase operations in rural areas, risk of illegal logging by its supply chains impacting local communities (pre-control risk), fraud and corruption (pre-control risks) as well as local issues such as light pollution at Reci when first installed.
The company takes positive actions to minimise, mitigate, prevent and correct negative environmental and social impacts.
Timber traceability systems and Due Diligence
• The company has a detailed documented HS Timber Group Manual on the Supply Chain Management System dated January 2020 which details arrangements for supply chains Risk Management through a due diligence system sourcing based on information gathering, risk assessment and risk mitigation (where required).
The DDS considers risk management and DDS at a country level, supplier Level, and also in high-risk countries for delivery level (e.g. Romania) and covers mitigation of risks identified (classified as high or low risk).
• First tier suppliers and their managers and officers are subject to review by HS Legal Officers prior to supplier contract approval., criminal databases (Ministry of Justice) and media checked for infringements and excluded from approval in evidence of such exists. Regular checks also carried out of existing suppliers.
• Risk mitigation methods implemented by HS include the use of Timflow (wood traceability system), legal review, exclusion of areas (national parks) and second party audits to address high risk rating for Romania. Other mitigation methods for high-risk countries of origin include sourcing only certified inputs, conducting third party audits, isotope testing (programme under development) and sourcing wood with FLEGT licenses (Indonesia).
• HS Group avails comprehensive system and tools to implement its Risk Management Programme. Moreover, prevention and mitigation of any identified risks is embedded into the company purchasing routines.
• Various risk prevention and mitigation tools are used:
o Legal verification of suppliers
o Media monitoring
o Regular audits of suppliers
o Timflow software for tracking and tracing roundwood deliveries on HS gates
o Supplier management system (DDS Hub)
Gate and log yard checks.
TimFlow System
• HS has implemented a very advanced, effective and impressive timber traceability system: TimFlow (developed with, and is supported by a large Romanian GSM operator, since April 2017).
HS implements the TimFlow system, which works in unison with the national SUMAL system to allow the tracking of timber from the forest stump or log yard, and into the sawmill. TimFlow details confirmed during interviews/demonstration.
Tomorrow’s Forests Foundation
• Foundation was set up with support by HS
• Foundation for the implementation of social and environmental forest related projects in alignment with the FSC Conditions Framework. As of December 14th, 2020, the programme figures are as follows: 33 reforestation sites in 8 counties and 617,380 seedlings planted on 146.1 hectares.
• Tomorrow’s Forest website, www.padureademaine/en/, serves as a platform for potential beneficiaries, volunteers, donors, it presents the programme methodology, as well as details on each reforestation project.
• Additionally, HS concluded a framework contract for setting up a program for additional forest related social and environmental projects. An initial contribution of 700.000 Euro, as well as a 500.000 Euro as budget for implementation of future projects has been allocated.