S2 Workers in the value chain
Strategy
Material impacts, risks and opportunities and their interaction with strategy and business model
The materiality assessment identified the following material impacts, risks and opportunities related to workers in Höegh Autoliners’ value chain. They relate to the sub-topics: working conditions, equal treatment and opportunities for all, and other work-related rights.
| Material Impact, Risks, and Opportunities | Location in the value chain | Time Horizon | |||||
| Upstream | Own Operations | Downstream | Short-term | Medium-term | Long-term | ||
| Value chain workers may face excessive working hours, forced labor, unfair wages, and lack of social insurance | Potential negative impact | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | |
| Possible adverse effects on the health and safety of supply chain workers | Potential negative impact | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | |
Höegh Autoliners collaborates with its upstream and downstream value chain worldwide to support its operations. Currently, our largest supplier is the shipyard involved in our newbuilding program.
Additionally, the supplier network includes workers from port suppliers, fuel suppliers, suppliers of goods and services to our daily vessel operations, and administrative suppliers. None of these workers are working in Höegh Autoliners’ offices, nor onboard our vessels while trading. Further, an external crew is employed on three of our owned vessels and three time-chartered vessels.
Value chain workers may face negative impacts such as excessive working hours, forced labour, unfair wages, and lack of social insurance
Workers within Höegh Autoliners’ supply chain may face challenges such as inadequate wages, lack of social insurance, excessive working hours, and forced labour. These potential negative impacts are present in our upstream and downstream value chain, are considered systematic due to the nature of our operations, and can occur over the short, medium, and long term.
Possible adverse effects on the health and safety of supply chain workers
In addition to the negative social impacts discussed above, the nature of our business inherently poses health and safety risks for workers in our value chain. These risks are present in the shipbuilding process, dry-dock maintenance, port- and fuel operations, at sea during vessel operations, and in recycling facilities for future recycling activities. Potential negative impacts from our newbuilding and recycling activities are somewhat time-bound to the period these activities take place. However, impacts from port, fuel, and vessel operations, as well as dry-dock processes, are considered systemic to our industry and are applicable across all time horizons.
Impact, risk and opportunity management
Policies related to value chain workers
Höegh Autoliners’ Human Rights Policy promotes ethical business practices and the protection of human rights for everyone involved in our operations and value chain. The policy is based on the UN Guiding Principles on Business and Human Rights and addresses human rights topics relevant for our supply chain such as forced labour, child labour, any practice that constitutes trafficking in person or slavery, fair and equal treatment, and respect of regulations in all locations where we operate. For more details of our Human Rights policy, please refer to ‘Höegh Autoliners’ approach to human rights” in ESRS S1.
We detail our requirements and expectations for our suppliers in our Supplier Code of Conduct, including forced labour, working hours, wages, and benefits, as well as health and safety. The policy is available for all employees through our internal document management system and is made public on our website. For more information on our Supplier Code of Conduct, please refer to ESRS G1-2.
Our Whistleblowing Policy acknowledges the importance of anonymous reporting and ensures that whistleblowers are protected from retaliation for raising concerns and reporting violations. For more information on our Whistleblowing Policy and availability of the Whistleblower channel, please refer to ESRS G1-1.
Processes for engaging with value chain workers about impacts
Third-party audits of the shipyard, conducted regularly by the classification society DNV on behalf of Höegh Autoliners, include a comprehensive review process. The audit includes a desktop review of publicly available information, review of the shipyard’s internal policies, onsite visits, and interviews with key members of the shipyard’s management as well as randomly selected workers.
The audits cover a range of topics, including but not limited to, social management, working hours, wages, social insurance, environmental protection and health and safety. In addition, the internal newbuilding team also does an annual onsite audit at the yard, assessing if any findings from the previous external audit have been remediated.
While the shipyard audit is under the responsibility of the Chief Operating Officer, we have not yet established a formal process for engaging with value chain workers beyond our shipbuilding operations and existing grievance mechanisms.
Processes to remediate negative impacts and channels for value chain workers to raise concerns
If any material negative impacts on supply chain workers come to Höegh Autoliners’ attention, each case will be diligently evaluated and investigated by the Legal Department and Human Resources depending on the case and circumstances. Relevant stakeholders, including impacted workers where applicable, will be informed and consulted to determine the necessary actions to effectively address and mitigate the issue. An appropriate action plan will be developed, outlining corrective actions and a timeline for implementation. A proper feedback loop will be established to monitor the implementation of these actions. The effectiveness of the plan will be continuously monitored and documented, with the ultimate goal of preventing similar issues in the future.
All external parties, including our value chain workers, can raise concerns about any suspected legal or financial misconduct through our independent whistleblowing mechanism, available on our website. Our supplier code of conduct includes a dedicated section outlining the availability of the whistleblowing hotline for value chain workers, allowing them to report issues either openly or confidentially. This channel facilitates direct dialogue with value chain workers when concerns are raised. Further information about the whistleblowing process and policies can be found in section G1-1 of our business conduct reporting.
Taking action on material impacts on value chain workers, and approaches to managing risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions
We have implemented actions to identify and manage potential negative impacts on value chain workers. These actions support our policy objectives of securing human rights for workers in the value chain and maintaining strong relationships with our suppliers.
These ongoing actions aim to mitigate potential negative impacts and will continue in the coming years. Although we currently have no specific budgeted resources allocated for future planned actions, we continuously monitor them to ensure that suppliers uphold our standards and mitigate potential negative impacts.
In 2024, we updated and standardized our supplier registration procedure across the organization, utilizing a comprehensive third-party sanction screening tool to ensure alignment with regulatory and ethical standards. More information on this procedure can be found in G1-2.
An internal risk assessment of existing suppliers is conducted at each functional level within the company to identify those with a higher risk of human rights breaches. To streamline this process and enhance the efficiency of our due diligence, we implemented a third-party tool in late 2024. This tool aims to improve due diligence procedures by mapping supplier risks based on external factors such as geographical location and industry presence.
By targeting high-risk suppliers, we work to prevent and detect adverse impacts on human rights and ensure decent working conditions throughout our supply chain. We will continue to enhance and refine our risk assessment efforts in the coming years.
China Merchant Heavy Industry is Höegh Autoliners’ largest supplier, and we are conduct regular ESG audits of the yard. These audits, conducted by DNV on our behalf, include a comprehensive review process encompassing a desktop review of public information, internal policies, onsite visits, and interviews with management and randomly selected workers.
The audits cover various aspects of social management, including working hours, wages, social insurance, environmental protection, and health and safety. The aim is to identify potential negative impacts on both the health and safety and general working conditions of yard workers.
Additionally, our internal newbuilding team conducts an annual on-site audit to assess if previous findings made by DNV have been properly solved. It is expected that both audits will continue on a regular basis going forward.
With respect to the safety of workers at ship recycling facilities, Höegh Autoliners will adhere to its Green Recycling Standards for all future ship recycling. Additionally, Höegh Autoliners has joined the Smart Freight Centre’s Ship Recycling Transparency Initiative, aiming to contribute to a coordinated and transparent approach for safe and responsible ship recycling.
No severe human rights issues, nor any incidents of non-respect of the UN Guiding Principles on Business and Human Rights, ILO Declaration on Fundamental Principles and Rights at Work or OECD Guidelines for Multinational Enterprises that involve value chain workers connected to Höegh Autoliners’ upstream, or downstream value chain have been reported during the reporting year.
As such, no incidents causing negative impacts on workers in our value chain, which required remediation, were reported in the reporting period.
Metrics and targets
Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities
Currently, we have not established specific targets for managing potential material negative impacts due to the evolving nature of the topic. We plan to set relevant targets for the risk assessment and supplier due diligence process once it is fully implemented.
Additionally, we actively monitor potential cases through our external grievance mechanisms, supplier audit findings, and stakeholder engagements.
