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NF5 Compliance

The compliance initiatives throughout 2023 continued to be significantly influenced by the sanctions imposed on Russia and the company decision in 2022 to wind down its operations. During 2023 the focus of compliance gradually moved from actual winding-down towards risk-based efforts to counteract Russian entities from accessing Sandvik products through intermediaries outside of Russia. Prior to February 2022, Sandvik operated through eight legal entities and employed approximately 950 individuals in Russia. By December 31 2023, Sandvik had no employees left in the country and only one legal entity, which was in the process of being liquidated.

The Compliance House serves as a tool allowing, among other things, each Sandvik entity to understand and address its compliance risks, increasing transparency in control implementation. In 2023, the emphasis was placed on identifying and rectifying additional gaps in the implementation of the compliance program. As of the year-end 2023, the Compliance House included all business entities, with the exception of a few recently acquired entities that underwent compliance risk assessment during the due diligence process. Additionally, certain entities primarily engaged in administrative tasks and internal services, deemed low risk, were excluded. 88 percent (92) of the operational units in the tool conducted a self-assessment review during the year.

The Compliance House requires that each entity communicates annually with its employees in four compliance areas. As of December 31, 2023, 82 percent (94) of the entities reported compliance with anti-corruption communication. The corresponding figures for competition law, trade compliance, and data privacy communication were 82 percent (93), 71 percent (new), and 82 percent (92), respectively.

Compliance training was provided to employees through various formats, including e-learning, webinars, and classroom sessions. Over 53,835 training records were generated, with 21,476 focusing on anti-corruption, 5,510 on competition law, 22,801 on data privacy, and 4,048 on sanctions and export control.

In 2022, all members of the Group Executive Management participated in anti-corruption dilemma training, and during 2023, this training was expanded to include business area and division management teams. This will continue in 2024.

Sandvik has zero tolerance for bribery and corruption and in 2023, Sandvik reviewed and updated its Anti-Bribery and Corruption policy. The policy mandates all employees, managers and directors to identify and disclose any conflicts of interest. No members of the Board of Directors have declared any conflict of interest with respect to cross-shareholding with suppliers and other stakeholders. The risk assessment conducted through the Compliance House, factoring in action plans and existing controls, did not reveal any significant residual corruption risks. Sandvik requires its business partners to adhere to its supplier/business partner Code of Conduct. It requires suppliers/business partners to comply with relevant rules and principles concerning anti-corruption, competition law, data privacy, and international sanctions.

Sandvik also requires that relevant commercial intermediaries sign an anti-corruption and export control/trade clause in the contract. The use of the anti-corruption clause and the Business Partner Code of Conduct is followed up through Compliance House. 78 percent (63) of the entities using commercial intermediaries responded that all their commercial intermediaries had signed the Sandvik Business Partner Code of Conduct and 73 percent (60) that all commercial intermediaries had signed a contract including an anti-corruption clause. The entities’ responses are audited and confirmed by the Internal and External Audit functions as part of the regular audit programs.

During 2023 there were no major public legal cases regarding potential non-compliance with laws and regulations brought against Sandvik and neither did Sandvik receive any significant fines or non-monetary sanctions for non-compliance with laws or regulations.