Sustainable supply chain management

Supply chains are a crucial part of the sustainability of Sampo Group’s products and services. The Group is a major procurer of goods and services, especially in claims handling, and therefore has an impact on the economy, the environment, and people. Sustainability issues can carry significant reputational and operational risks if not managed correctly.

Sampo Group’s upstream value chain includes suppliers of office products and services (e.g. ICT suppliers, external data providers) who support the running of the business. In the downstream value chain, the Group has a large network of suppliers and business partners, of which suppliers in claims handling and loss prevention (e.g. vehicle and property repair contractors), and partners in health and travel services form a major part. Sampo Group’s direct suppliers (Tier 1 suppliers) are mapped according to their service and/or product category and expenditure, for example.

The nature of the business relationships with suppliers varies with respect to the type of product or service purchased and can be long-term or short-term, contractual or non-contractual, project-based or event-based. Sampo Group can, for example, offer networks of repair shops that have a long-term contractual relationship with the company. On the other hand, certain suppliers, such as external consultants, are typically hired on a project basis and can be either long-term or short-term. Sampo Group’s suppliers can have sector-specific characteristics, but they vary with respect to the type of product and service purchased. For example, re-building tends to be highly labour intensive and, content claims are capital intensive when items are replaced, but labour intensive if items are repaired.

Sustainable procurement and due diligence practices

Sampo Group takes environmental, social, and governance (ESG) considerations into account in supply chain management through its procurement and due diligence practices. The due diligence processes are part of the Group’s general risk management practices and aligned with the OECD Guidelines for Multinational Enterprises. These allow Sampo Group to identify, avoid, and address potential and actual adverse impacts on human rights, labour rights, the environment and anti-corruption commitments associated with its suppliers as well as underwriting and investment operations. Sampo Group is committed to ongoing development of its sustainable procurement and due diligence practices, for example, through further development and implementation of relevant systems and tools, enhanced supplier data, improved monitoring of suppliers, and effective engagement.

Policies and commitments

The Sampo Group Code of Conduct provides the group-level guidance principles regarding sustainable supply chain management. According to the Code of Conduct, Sampo Group expects its suppliers (including sub-suppliers) and other business partners to comply with the principles of the Code throughout their own operations and supply chains. In addition to the Code of Conduct, each Sampo Group company has its own supplementary policies and guidelines for supply chain management (e.g. supplier codes of conduct, sustainability policies, procurement policies).

The supplier codes of conduct define the minimum requirements that suppliers and sub-suppliers are expected to comply with. The codes cover the areas of human rights, labour rights, the environment including climate change, and anti-corruption, and they are based on the ten principles of the UN Global Compact and its underlying conventions and declarations. Suppliers must, for example, ensure the fair and equal treatment of all employees, take appropriate measures to protect privacy rights and secrecy, promote the development and use of environmentally friendly alternatives, and compete in a fair and honest way.

Through its supply chain management policies, Sampo Group is committed to encouraging and supporting its suppliers and business partners in adopting more sustainable methods in their operations. For example, the company-specific sustainability policies highlight that environmentally friendly alternatives (e.g. eco-labelled products) should be prioritised when procuring office supplies and services. By actively requesting innovative solutions, resource efficiency, transparency, and responsibility from suppliers, Sampo Group aims to manage supply chain risks, minimise its negative impact, and stimulate sustainable production and consumption. Set requirements, in combination with close cooperation with suppliers and other business partners, enable the Group to develop its risk management and business while also contributing to more sustainable development. Sampo Group employees working with suppliers (e.g. in Claims, Procurement, Group services, Legal) receive training on related policies and processes.

In addition to supplier codes of conduct, Sampo Group has additional contractual requirements for selected suppliers integrated into the purchasing agreements. These can be based, for example, on the supplier’s ESG risks, sector, size, geography, or business relevance. For example, to ensure that waste and materials from repair processes are managed in the best possible way, If’s property and vehicle repair contractors must comply with sector-specific Additional Environmental Requirements (AER), which cover transportation, energy usage, material usage, water usage, handling of chemicals and hazardous substances, and waste handling. The AERs for property repair contractors include requirements to repair more, reduce material usage, demolish less, and increase remote work using video and sensors. They also include requirements for ordered material to be sent directly to the claim site to reduce transportation, use material with environmental certification when available, and increase the use of electric and hybrid vehicles. The AERs for vehicle repair contractors contain a requirement to repair, instead of using new parts, and to reuse spare parts. If has also set expected levels of plastic repairs and used parts, and these are monitored and reported regularly.

Supplier-related targets and metrics

Sampo Group has set a voluntary science-based climate target (SBT), approved by the Science Based Targets initiative (SBTi), for suppliers on a subsidiary level. According to the target, If is committed to engaging with its suppliers so that 30 per cent of its suppliers by spend, covering purchased goods and services, will have science-based targets by 2028. The progress against the target is monitored and reported on regularly.

In addition to the SBT, the Group tracks and reports on other metrics (i.e. the share of suppliers having signed a supplier code of conduct, the share of reused parts and the share of glass repairs in car repair claims) to monitor the work related to its supply chain. Going forward, Sampo Group will assess the need for related targets and additional group level metrics, and implement them, if considered material.

Monitoring

In accordance with the due diligence process, Sampo Group engages with and monitors its suppliers regularly (e.g. monthly, quarterly, annually) using screening and risk assessments (e.g. questionnaires), audits, site visits and other meetings, collection of feedback from suppliers (e.g. during tender processes, contract negotiations), and reporting, for example. Actions taken on individual suppliers are proportionate to the size and type of the supplier and its potential impact on the Group’s business operations. In addition, Sampo Group has externally managed whistleblowing channels through which employees and other stakeholders can raise concerns anonymously, supported by defined structures for processing such notifications.

In case of a breach against a supplier code of conduct, the Group engages with the supplier, for example, by requesting a corrective action plan for approval, where necessary, to bring about improvements in the supplier’s business conduct. Sampo Group monitors the situation, and actions depend on the corrective measures taken by the supplier.

Providing remedy

If non-compliance with Sampo Group’s supplier requirements is detected, the first step to remediate non-compliance is to verify what has happened and investigate the reasons leading to it. Depending on the findings, corrective actions taken can be, for example, improvement of processes, correction of mistakes, or audits. The Group can terminate the supplier contract if the error or contract breach is major, or the supplier does not take steps to remediate the situation within a reasonable timeframe. Sampo Group ensures that all outcomes and remedies accord with internationally recognised human rights and local legislation.

Reporting and communication

Sampo Group’s key forms of reporting and communication related to sustainable supply chain management are Sampo Group’s annually and quarterly published sustainability reporting, and website. This includes reporting on externally disclosed metrics and targets. In addition, each Group company produces reporting according to their own legislative requirements.