Sustainable Public Procurement in Sweden

In Sweden, 21 county councils have joined forces to make sure the products and services they procure do not involve human trafficking or violations of workers’ rights. Pauline Göthberg, the National Co-ordinator of the Swedish County Council Network on Sustainable Public Procurement, explains:

When was the county council network founded and why?

In 2007, an independent NGO called Swedwatch, which reports on Swedish business relations in developing countries, decided to investigate the conditions under which the surgical instruments that some of our county councils were procuring for the public healthcare service were being manufactured in Pakistan. During the course of their investigation, they detected child labour, hazardous working environments and pay below the minimum wage. In response to this disturbing surprise, the work of county councils on sustainable public procurement was initiated. Most of the county councils’ procurement – around 80 per cent – is in the area of healthcare. The councils are also responsible for dental care and public transportation, but general healthcare products and services are the main area of procurement. 

At the beginning, the large county councils worked together in a pilot project. In 2010, all the other county councils joined – 21 in all. In 2012, I was hired as the National Co-ordinator. My main responsibility is to develop a national process and routines, so that everyone in all the county councils is doing the same work, and to collaborate with other global actors. The network also includes a secretariat and a group of eight experts, who co-ordinate the work in their specific region and within their own areas of expertise. We have developed a national code of conduct based on the ten principles of the UN Global Compact as well as a set of conditions for contract performance. 

What conditions have you set for public procurement contracts?

By entering into a contract with us, a supplier agrees to deliver products made in compliance with the following standards: the 1948 United Nations (UN) Universal Declaration of Human Rights; the International Labour Organization’s eight core conventions (which together cover the topics of forced labour, child labour, discrimination, equal remuneration, freedom of association and the right to organize);  the UN Convention on the Rights of the Child (in particular, Article 32 on forced labour); the UN Convention against Corruption; and the laws and regulations applicable in the country of manufacture on health, safety and worker protection, on labour (including rules on conditions of pay, and social insurance protection) and on environmental protection.

Suppliers need to implement due diligence processes to ensure that the goods they supply are made in compliance with these standards. Their routines must include the following: a policy commitment, an internal division of responsibility, a risk analysis mechanism, a description of how the social requirements of the contract are passed forward and followed up in the supply chain and importantly a description of how any violations are remedied.

During the contractual period, our experts follow up on certain contracts where we believe the risks are greatest to ensure that our suppliers are abiding by our contract clauses.

How do your experts go about evaluating the suppliers for compliance?

We follow a three-stage method. First, we send out a questionnaire asking the suppliers whether all the necessary processes and policies are in place to ensure that they have a quality system for abiding with the social requirements. Then, we ask them to verify how these processes actually work in reality. So we want to see an audit result; we want to see how their risk assessment looks; we want to see whether they had any violations, and how they fixed them.

Finally, based on these results, we may decide to conduct an on-site audit in factories. For that, we use a third-party auditor, one of the global audit companies that have local expertise, knowledge of the local language and also knowledge of the language of the migrant workers whom they interview.

So the primary responsibility for ensuring compliance falls on suppliers?

Yes, at the beginning it is very much self-assessment by the suppliers. But then we verify their assessment by asking them to send in audit reports, risk assessments and so on and we evaluate those documents.

Also for corrective action plans, it is important that the supplier assumes responsibility.  When we have done an audit and the auditor points out violations, the company must come back to us with a plan for remedying these violations. It is not a matter of us telling them what to do, but we do review their suggested remedies and if we think that some of them are not good enough, we will suggest others.

Can you give an example of how you successfully followed up on a contract case? 

In 2015, several major human and labour rights violations were detected in a surgical glove factory in Malaysia during an audit performed on behalf of our network. Our supplier was a healthcare products wholesaler based in Sweden, who was sourcing surgical gloves from this factory. We followed up on the contract using the three-stage method I have described to you. We checked whether they did risk analysis and how they verified compliance in their supply chain, but they could not give us a good description of these processes. So we decided to commission an auditor to do an on-site audit at their sub-supplier in Malaysia.

For the factory management it was quite surprising because this was the first time a buyer had done an on-site audit there. They were very open and willing to show us all the documents. Sometimes it can be quite difficult to detect slave labour, but in this instance it was quite obvious. The company was lending money to its workers so that they could pay the recruitment agencies and then the money was deducted from their salaries; they withheld migrant workers’ passports and made them sign contracts that basically did not allow them to terminate them and go back to their countries of origin. In total, 23 points of non-compliance with our sustainable procurement conditions were found.

After the audit, we had a discussion with the factory management on the correction plan. This was tricky, as it was hard for us to know how far we should go. So I solicited help from the International Trade Union Confederation and discussed with them what kind of remedy we should ask for. They suggested that the supplier should assume responsibility for all the recruitment fees, but also repay migrant workers not working there anymore. Even though we didn’t get all the way, our suppliers did assume responsibility for all the foreign recruitment fees, not just now, but also going forward and in all the factories. But we did not get them to repay former workers in these factories.

This was a good example of how we can achieve results by working together with our suppliers. There was no confrontation with the factory managers, who in my estimation acted responsibly on this case. They took several measures as a direct consequence of our audit, which have improved conditions for the workers.

Do you partner with other networks?

Yes, we do. We are collaborating with the National Health Service in England and the healthcare sector in Norway, with whom we have signed a letter of intent. Together we plan our activities for the upcoming years, so that we do not duplicate our work. We are also collaborating with the United Nations Informal Interagency Task Team on Sustainable Procurement in the Health Sector. And we have signed a letter of intent with the municipalities in Sweden.

With these partners, we share results of audits, follow-ups and discussions we have with suppliers and problems we detect. Even though we procure goods and services for €13 billion a year, we are really a small buyer on the global scale. Co-operating with others gives us greater leverage to produce some change.