Eaton Corporation PLC
EATON CORPORATION PLC DISCLOSURE STATEMENT UNDER THE UK MODERN SLAVERY ACT 2015
AND CALIFORNIA TRANSPARENCY IN SUPPLY CHAINS ACT 2010 FOR THE YEAR ENDED 31st DECEMBER 2017
This statement is made pursuant to Section 54 of the UK Modern Slavery Act 2015 and the California Transparency in Supply Chains Act 2010.
Eaton is a power management company with 2017 sales of $20.4 billion. Eaton provides energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton is dedicated to improving the quality of life and the environment through the use of power management technologies and services. Eaton has five key business segments: Electrical Products and Electrical Systems and Services, Hydraulics, Aerospace and Vehicle. Eaton has approximately 96,000 employees and sells products to customers in more than 175 countries.
For additional information about our business segments, including the wide variety of products manufactured in each segment, refer to Eaton's 2017 Form 10-K.
Eaton supply chain overview
Eaton has a substantial number of suppliers globally that span across our five business segments. Our supply chain is multi-tiered and the raw materials, parts and services that we purchase are varied and are sourced from more than 50,000 suppliers across the globe supporting Eaton’s segment businesses. Eaton actively seeks to do business with suppliers that are industry leaders, strategic partners and financially stable, and share Eaton’s focus on doing business responsibly.
Powerful purpose – Eaton’s policies and governance processes
At Eaton, we consider how we achieve our results an important measure of success. Doing business right is at the core of the Eaton brand. Eaton’s success as a high performance company is tied directly to our long-standing commitment to the highest ethical standards. An important part of this commitment is ensuring that Eaton’s suppliers and supply chain do not use slave labour or engage in human trafficking. Several key governance processes and supporting policies guide our actions accordingly.
Eaton’s Code of Ethics establishes respect for human rights as a fundamental Eaton principle, and one that both Eaton employees and suppliers are required to honor. Eaton’s Ethics Guide specifically prohibits Eaton suppliers from using forced labour of any kind. To demonstrate that Eaton’s ethics standards are both current and at the highest level, Eaton established an office to oversee and manage its ethics and compliance programme. The office is under the direction of the senior vice-president of global ethics and compliance, with ultimate oversight by the governance committee of the board of directors.
Eaton’s Supplier Code of Conduct sets forth minimum workplace standards and business practices that are expected of any supplier doing business with Eaton, consistent with our company’s values as documented in Eaton’s Code of Ethics. These requirements are applicable to suppliers of Eaton and their affiliates and subsidiaries globally and include prohibitions on the use of forced labour, slavery and human trafficking. Eaton suppliers are required to adhere to and certify compliance with the supplier code.
Eaton’s Code of Ethics and Supplier Code of Conduct are integrated into policies, procedures and plans to ensure awareness and understanding of requirements. Implementation responsibilities are further addressed in various plans and guidance resources such as the Eaton Ethics Guide, the Eaton Supplier Excellence Manual and in the case of relevant US government contracting requirements, through a ‘trafficking in persons’ compliance plan in accordance with federal acquisition regulations on human trafficking related requirements.
In support of all of these policies, processes and procedures, Eaton undertakes specific actions to prevent and mitigate the risk of forced labour, slavery and human trafficking in our own business and supply chain, including:
Risks related to human trafficking and slavery in Eaton’s supply chain are addressed through setting clear expectations for suppliers and ensuring conformance by Eaton suppliers with the Supplier Code of Conduct through inclusion of the code of conduct requirements in our standard terms and conditions. Suppliers are required to further separately review and accept the requirements contained within Eaton’s Supplier Code of Conduct.
Eaton has established a Supplier Site Assessment (SSA) process to review supplier performance and practices. The SSA includes questions to evaluate whether a supplier has processes to address ethics & compliance-related issues.
Eaton further monitors publicly available information, as well as information from subscription services. In cases where we are alerted to a risk of non-compliance with Eaton’s Supplier Code of Conduct, we will conduct an investigation and address such risk appropriately.
2. Supplier audits
Under the terms of Eaton’s Supplier Code of Conduct, Eaton is permitted to audit its suppliers’ compliance with the code and standard terms and conditions. In cases in which serious risks are presented, this audit may be immediate and unannounced. Eaton monitors its supply chains for compliance with the supplier code; however, such monitoring is typically not focused solely on human trafficking or slavery. And while Eaton regularly audits its suppliers for a variety of reasons, typically those audits are not performed solely to determine compliance with the prohibition against slave labour or human trafficking. If necessary, Eaton may choose to engage third parties to evaluate compliance with human trafficking or slave labour laws. Eaton will promptly and thoroughly investigate any claims or indications that a supplier may be engaging in human trafficking or slave labour, or is otherwise not complying with Eaton’s Code of Ethics or Supplier Code of Conduct.
Eaton’s Supplier Code of Conduct states that suppliers must uphold the human rights of workers and treat them with dignity and respect. Suppliers must not use or engage in any indentured or forced labour, slavery or servitude, or human trafficking.
Under the code, suppliers’ personnel and operations are required to operate in full compliance with the laws of their respective countries and with all other applicable laws, rules, and regulations. Suppliers must ensure that products, services and shipments for Eaton adhere to all applicable international trade compliance laws, rules, and regulations, and the Eaton Supplier Code of Conduct requirements. Eaton requires its suppliers to certify compliance with the Supplier Code. In addition, suppliers must contractually require their own suppliers and subcontractors to comply with standards of conduct equivalent to the provisions of Eaton’s Supplier Code of Conduct.
4. Internal accountability
Accountability related to human rights, modern slavery and human trafficking risks is established by Eaton’s Code of Ethics and Supplier Code of Conduct. In addition, Eaton has enacted rigorous governance and risk management processes in order to identify and mitigate a broad spectrum of supply chain risks.
Eaton has established various mechanisms, including a global help line, for the reporting of any ethical concern or potential or actual legal violation. Any person, including employees and suppliers, may openly or anonymously ask a question or report through our Help Line or related means.
If we learn of any allegations of slavery or trafficking through our help line or any other means, we will promptly investigate and act to remediate the situation, which could include necessary actions up to termination of involved parties. Claims made through our help line or Ethics Office are reported to the governance committee of Eaton’s board of directors, along with the resolution of the claim and/or the findings of the investigation.
As ethics are a cornerstone of Eaton’s values-based culture, all Eaton employees globally are trained annually with respect to expectations in Eaton’s Code of Ethics. In addition, we provide ongoing training to supply chain management and other key Eaton executives engaged with Eaton’s supply chain on protecting human rights. This training includes specific content on recognising and mitigating the risks of slavery and human trafficking.
Approved by the Board of Directors on 25th April 2018.