In accordance with the Transparency Act, SG Armaturen AS ("SG") is proud to present its first report demonstrating the company's commitment to uphold human rights and ensure decent working conditions across our global supply chain. Our Nordic heritage informs the ethical values that guide our operations, which are shaped by comprehensive policies including the Health, Safety, and Environment (HSE) Handbook, and SG Ethical guidelines. 

Our supply chain, primarily located in China, Denmark and Norway, consists of a diverse array of partners, all expected to adhere to SG's Code of Conduct. A systematic follow-up procedure is in place to ensure compliance, underpinned by an OECD-based risk assessment set to be rolled out. 

Internally, Work Environment Committees operate in Norway and Denmark with representation from both employees and management. These practices are also mirrored across all our locations. An emphasis is placed on employee training, with an investment in a Learning Management System in 2023 to facilitate this. 

As part of our commitment to transparency, we will annually update our Transparency Act report, available on our company website. This marks the beginning of a structured approach to ensure SG operates ethically and responsibly within its supply chain, fostering a sustainable future for the business.

1. Introduction
1.1 SG Armaturen Group
1.2 The Transparency Act
1.3 Focus
1.4 First reporting yea

2. Own business
2.1 Policies and procedures
2.2 Employee training
2.3 Due diligence in own business

3. The value chain
3.1 Policies and procedures
3.2 Supplier Follow-up
3.3 Due diligence in the value chain

4. Communication

1.1 SG Armaturen Group (SG)

The core business of SG is to develop, manufacture, distribute and sell lighting solutions and install products for residential and professional use. 

SG has an operational structure designed for meeting the requirements of the core business:    

• SG R&D offices in Norway and Denmark  

• SG factories in China and Denmark  

• SG distribution units (central warehouses) in Norway and Belgium, and a warehouse at the factory in Denmark   

• SG sales operations in Norway, Sweden, Denmark, Finland, United Kingdom, Germany, Austria, Switzerland, Belgium, Netherlands and France. 

1.2 The Transparency Act

The Norwegian Transparency Act, implemented in 2022, mandates businesses to uphold a level of openness concerning their commitment to fundamental human rights and decent working conditions in their operations. The Act stipulates that businesses must carry out due diligence assessments, investigating not only their operations but also their supply chain and business partners to identify potential risks. The exchange of such information should be done in writing and responses are expected within a reasonable timeframe, no later than 3 weeks upon receipt of the request. 

This legislation seeks to strengthen the transparency of companies' engagement in these critical issues. Consequently, it is a company's responsibility to ensure respect for human rights and decent working conditions throughout their operations and supply chains, reflecting the objectives of the Transparency Act. 

1.3 Focus

SG is committed to maintaining a respectful and equitable global supply chain that upholds high standards of human rights and decent working conditions. We believe in sustainable and ethical business practices that value the welfare of every individual involved in the production of our products.  

Producing luminaries in both China and Europe and distributing the products internationally, can indeed pose certain risks related to fundamental human rights and decent working conditions. SG has identified the following risks: 

Labor Rights: There exist risks of substandard working conditions, long working hours, and inadequate pay throughout our operations, particularly impacting our transport workers. These employees often grapple with extended hours, demanding schedules, and significant safety risks due to fatigue. Furthermore, instances of child labor and forced labor are serious concerns we actively monitor, especially in regions such as China, known for previous labor rights issues.  

Health and Safety Risks: Production of any goods can pose health and safety risks to workers, and this is particularly true for industries where hazardous materials or dangerous machinery is involved. Workers might not be provided with adequate protective equipment or training, which increases the risk of accidents. 

Environmental Impact: The production of goods can lead to environmental pollution, which can harm the local community's right to a healthy environment. This is a particular concern in industries such as electronics, where the production and disposal processes can generate harmful waste. 

Lack of Freedom of Association: In some regions, workers may face restrictions on their right to organize, form labor unions, and bargain collectively. This limits their ability to advocate for better working conditions. 

Exploitation of Migrant Workers: There can be risks associated with the exploitation of migrant workers who may be more vulnerable to abuse due to lack of knowledge of the local language, laws, or rights.  

1.4 First reporting year 

Since the start of SG, our commitment to human rights and decent working conditions has been an integral part of our foundational values. This commitment has always been applied internally, but now, we are extending it in a more structured manner throughout our supply chain. 

For the first time, we are adopting a systematic approach to track and report on our performance in these areas. Recognizing the complexities and challenges of maintaining ethical practices within a global supply chain, we believe that this structured approach will provide greater transparency and reinforce our commitment to our foundational values. 

We are developing a comprehensive framework that will monitor and assess key aspects of our supply chain. This framework will enable us to identify areas where we excel and areas where improvements can be made. It will also guide us in making decisions that align with our dedication to human rights and decent working conditions. 

In parallel with these operational changes, we are also improving our reporting on these topics. We recognize the importance of transparency in maintaining trust with our stakeholders, including our employees, customers, partners, and the wider public. We are committed to providing regular, detailed updates on our progress towards upholding human rights and ensuring decent working conditions throughout our supply chain. 

SG, rooted in Norwegian and Nordic culture, is guided by a profound commitment to uphold human and labour rights in all its operations. Our approach to business is underscored by Nordic frameworks which prize respect for individuals, transparency, fairness, and social responsibility. These values have established a strong ethical foundation for SG, permeating our work environment and business practices. 

Our operations extend beyond providing quality products; they reflect a determined commitment to promoting a healthy, safe, and inclusive workplace. We recognize that our most valuable asset is our people, and thus, we prioritize their rights and well-being. 

In line with Norwegian labour laws and international labour standards, we ensure fair wages, reasonable working hours, and a safe, healthy work environment for our employees. We have zero tolerance for any forms of discrimination, harassment, or violence in the workplace. 

Furthermore, we respect the right of our workers to form and join trade unions, and we're committed to promoting constructive dialogue with workers and their representatives. We acknowledge that open communication and the ability to collectively bargain are fundamental to maintaining harmonious labour relations and a productive work environment. 

SG extends this commitment to our supply chain, demanding our suppliers adhere to these same standards of human and labour rights.

2.1 Policies and procedures 

SG operates within a strong policy framework, underlined by our Health, Safety, and Environment (HSE) Handbook, our Ethical Guidelines, and our Data Discipline Statement. Each of these documents reflects a specific aspect of our commitment to the well-being of our employees, ethical business conduct, and the responsible handling of data. 

Our HSE Handbook outlines our commitment to a safe and healthy working environment. It defines our safety protocols, emergency procedures, and health guidelines, ensuring we maintain a workspace that values and protects the well-being of our employees. This document also outlines our environmental responsibility, ensuring our operations respect and protect our natural surroundings. 

The SG Ethical Guidelines highlight our commitment to ethical business practices. They provide guidance on issues like conflict of interest, anti-corruption, confidentiality, and respect for human rights. This comprehensive guide ensures all our employees and partners understand and uphold the standards of conduct we expect within our organization. 

Lastly, our Data Discipline Statement emphasizes our rigorous approach to data management. In an era of increasing digital connectivity and data reliance, we recognize the importance of maintaining stringent data handling protocols. This statement guides our procedures for data collection, processing, storage, and sharing. It ensures our adherence to data privacy laws and our commitment to maintaining the confidentiality and integrity of the personal and business data we handle. 

All employees at SG are expected to be familiar with these policies and abide by them in their daily operations. Through these policies, we strive to uphold our Nordic values, fostering a culture of transparency, respect, and integrity. 

2.2 Employee training 

At SG, we place great importance on the comprehensive training of our employees to ensure their full understanding and ability to comply with our Health, Safety, and Environment (HSE) guidelines. The primary arena for familiarization with our policy framework and routines is the HSE Handbook, which new employees are required to read and sign. 

The HSE Handbook is conveniently accessible online via both PC and mobile devices, ensuring that our staff can revisit the policies and procedures whenever necessary, regardless of their location. 

To enhance our training capabilities further, in 2023, SG invested in a Learning Management System (LMS). This innovative platform allows us to offer HSE-related topics as interactive learning modules. These modules not only facilitate efficient and engaging training for our employees but also enable us to track their progress and understanding of the content, ensuring a well-rounded and effective learning experience. 

2.3 Due diligence in own business 

We value a safe and healthy work environment as a cornerstone of our success. In Norway, we have established a Working Environment Committee (AMU), and in Denmark, a corresponding Cooperation Committee (SU) is in place. These committees actively work towards creating and maintaining a work environment that aligns with health and safety regulations and caters to the specific needs of our workforce. 

Both the AMU and SU comprise representatives from management and employees, ensuring a balanced approach towards occupational health and safety matters. This diversity in representation allows for an open dialogue, mutual understanding, and the inclusion of varied perspectives when addressing work environment issues, formulating policies, or suggesting improvements. 

The committees meet regularly, serving as an open platform for discussions and initiatives related to work environment matters. This ongoing dialogue ensures quick resolution of any concerns, monitors the effectiveness of implemented improvements, and propels continual efforts to advance our working conditions. 

Moreover, we encourage active participation from all employees in this process. Every staff member is invited to suggest topics or areas of focus for these committee meetings, ensuring that the discussions reflect the real experiences and insights of our team. This input is invaluable in our mission to foster a safe, productive, and supportive work environment. 

Following each meeting, minutes of the meeting (MoM) are promptly distributed to all employees. These minutes detail the topics discussed, the decisions made, and the action plans established during the meeting. This practice ensures that every member of our team is kept informed and aware of our ongoing commitment to improving our working conditions and maintaining the highest standards of health and safety across all our operations. 

Apart from Norway and Denmark, at our other locations, we may not have formal AMU or SU committees. However, the same principles of open dialogue and mutual understanding are upheld in our management practices. Managers in these locations maintain a continuous exchange with employees, addressing their concerns, and working collaboratively to ensure a positive, safe, and healthy work environment. 

In this way, SG demonstrates its commitment to providing a supportive, safe, and healthy work environment. The integrated efforts of the AMU and SU, with their diverse representation from across our organization, play a crucial role in embedding this commitment into our everyday operations and culture. 

SG's supply chain is a globally integrated system that reflects our core business of developing, manufacturing, distributing, and selling lighting solutions. The system is built to ensure efficient production, maintain high-quality standards, and facilitate prompt distribution of products for both residential and professional use. 

Product Development: The first phase of our supply chain involves our dedicated research and development teams. Leveraging their technical expertise and market insights, they conceptualize and design innovative lighting solutions that meet the evolving needs of our customers. 

Manufacturing and Assembly: Once the designs are finalized, they transition into the manufacturing phase. Our manufacturing and assembly primarily occur in our own factories located in China and Denmark. Our teams there translate the designs into tangible products, ensuring the highest levels of craftsmanship and quality. 

Quality Control: After manufacturing, the products are subjected to rigorous quality control processes. This ensures that each product aligns with our exacting standards and meets all necessary safety and performance specifications. 

Distribution and Sales: Once the products pass quality control, they are sent to our distribution centers located in strategic points across our markets. Our trusted logistics partners ensure the safe and timely delivery of our products to retailers in the European market. 

Our suppliers range from those providing raw materials such as metal, glass, and electronic components, to logistics companies that handle product transportation. We also collaborate with service providers that support our business operations, including quality assurance, regulatory compliance, and installation services. 

3.1 Policies and procedures 

SG's official purchasing policy is rooted in the principles and guidelines laid out in the internal Code of Conduct. As a framework for ethical business practices, the Code forms the purchasing policy, fostering a culture of integrity, respect, and sustainable business practices. 

The purchasing policy underscores that all suppliers and business partners must adhere strictly to the ethical guidelines outlined in the Code. This includes upholding ethical conduct, maintaining confidentiality, ensuring a safe working environment, fostering diversity, rejecting any form of corruption, and promoting sustainable and environmentally-friendly business practices. 

Moreover, the purchasing policy emphasizes SG's commitment to preventing forced and child labor. SG expects its suppliers to align with the principles of the United Nations’ Sustainability Goal #8 and the ILO Conventions, underlining the importance of ethical labor practices in the supply chain. 

In line with the environmental principles stated in the Code, the purchasing policy also requires suppliers to maintain effective environmental policies, with a focus on reducing waste, recycling, and reusing materials. The policy mandates that suppliers comply with RoHS 3 requirements and the WEEE directive, stressing the importance of using approved materials in the production. 

3.2 Supplier Follow-up 

SG builds its supplier relationships on the foundation of long-term collaboration, mutual respect, and understanding of cultural differences. These relationships are vital to the business, and SG invests in these partnerships through regular engagement and active dialogue. 

Historically, face-to-face visits and on-site inspections have been instrumental in SG's supplier follow-up methodology. Not only do these visits enable SG to gather direct insights into supplier operations, but they also fortify our professional bonds. Owning our factories in Denmark and China gives us an additional advantage, allowing our leaders to conduct direct follow-ups with suppliers. 

The advent of the COVID-19 pandemic, however, compelled us to revise this strategy due to travel restrictions and the need for social distancing. SG responded swiftly by leveraging digital tools, thus maintaining strong supplier ties and ensuring compliance with SG standards despite the physical barriers. 

Now, as the world gradually returns to pre-pandemic normalcy, SG is reinstating in-person visits, an integral part of our supplier follow-up approach. Our factory ownership allows for direct oversight and follow-up with our suppliers, supplementing digital communication through platforms like Teams. 

Furthermore, SG has the last year issued its Code of Conduct to all major suppliers, establishing clear expectations for ethical business practices. SG also ensures that suppliers formally acknowledge and commit to these guidelines by providing a signed copy of the Code. This serves to reinforce the principles of the Code and underscore the importance SG places on maintaining ethical supply chain practices. 

3.3 Due diligence in the value chain 

In its ongoing commitment to uphold human rights and ensure decent working conditions in its supply chain, SG has begun to establish a structured due diligence process this year, based on the OECD Due Diligence Guidance. This guide, developed by the Organisation for Economic Co-operation and Development, provides a comprehensive framework for identifying, preventing, and addressing potential adverse impacts related to human rights and labor conditions. 

In the initial phase of implementing this process, SG is conducting a holistic risk mapping across its supply chain. This exercise considers multiple factors such as the size of the supplier, SG's leverage over the supplier, the amount spent with the supplier, the geographical location of the supplier, and the industry sector. These factors provide an indication of where potential risks may exist and how significant these might be. 

The next step in SG's due diligence process is the distribution of a detailed questionnaire to all suppliers later this year. This questionnaire is designed to cover all issues outlined in the OECD framework and to gain a deeper understanding of each supplier's practices regarding human rights and working conditions. The insights gained from this exercise will guide SG's next steps in mitigating potential risks and addressing any identified issues. 

SG remains committed to maintaining transparency in its operations. As part of this commitment, we will be updating the Transparency Act report annually. This report will be readily accessible to all interested parties on our company website. 

Our Head of Sustainability is the primary contact for any questions related to this report or our practices.  

For those wishing to access more detailed information, requests can be sent directly to our company's official email address: firmapost@sg-as.no.