Anti-slavery and human trafficking statement 2020

Rolls-Royce SMR is compliant with and aligned to the full terms of the Rolls-Royce PLC group commitments on anti-slavery and human trafficking set out in full below;

Rolls-Royce is a global power group, focused on delivering world-class power and propulsion systems. We pioneer cutting-edge technologies that deliver clean, safe and competitive solutions to meet our planet’s vital power needs. Our purpose is to pioneer the power that matters to connect, power and protect society.

We are committed to maintaining the highest ethical standards and work hard to create a working environment where everyone at Rolls-Royce and everyone we work with can be at their best. This includes upholding global policies and processes to avoid any potential complicity in human rights violations related to our operations or supply chain.

Further details of our organisation and approach to human rights can be found in our Annual Report and at rolls-royce.com/sustainability.

Business structure, business model and supply chain

Rolls-Royce is a world-leading manufacturer of gas turbine and reciprocating engines for use in aerospace, marine, energy and off-highway applications. Our revenue is generated through the sale of original equipment supported by long term service agreements.

Registered in London, UK, we have production and office locations in more than fifty countries globally; with our largest sites in UK and Germany; North America; and, Singapore. In total we have more than 48,200 employees worldwide, just under half of whom are based in the UK. The nature of the products and services we provide means we have long lead times, typically <5 years, which means our workforce is typically highly skilled and in permanent employment, and we do not typically employ seasonal or temporary resource. The impact of COVID-19 on our business, particularly Civil Aerospace, means we are in the process of undergoing a fundamental restructure, the largest in our history, which will see around 9,000 roles leave the business over the course of 2020 and 2021. We do not believe these organisational changes present significant change to our exposure to modern slavery risk.  

We rely on a global supply chain to design, develop and manufacture components of our product portfolios and to support our own operations and facilities and services network. We work directly with suppliers from more than 70 countries, including engineering and manufacturing organisations as well as service providers.

The Group operates as four core business units (Civil Aerospace, Power Systems, Defence, and ITP Aero), supported by a head office, innovation hub and global business services (GBS) organisation. The head office function has responsibility for Group strategy, policy and governance. Our approach to modern slavery is integrated into our broader approach to business conduct and risk management.

The Board has ultimate accountability for managing modern slavery risk. The Board Safety, Ethics & Sustainability Committee receives regular updates on our ethics and compliance programme. A cross-function working group, comprising representatives from our ethics, sustainability, procurement and HR teams, and sponsored by our General Counsel, has delegated responsibility for transactional management.

We consult and work closely with elected employee representatives, internationally, nationally and locally though well-established frameworks, including through our European Works Council.

Exposure to modern slavery and human trafficking risk

Our approach to identifying and assessing modern slavery risk is embedded within our broader risk management approach; for more information see our Annual Report. Risks are identified by individuals across all businesses and functions and at many layers of the organisation. Compliance is considered a principal risk at a Group-level; this risk is subject to review by the Safety, Ethics & Sustainability Committee.

We have considered in detail the exposure of the Group to modern slavery and human trafficking risk, taking into account the nature of our business activities; the application of group policies, particularly procurement and recruitment practices; and the markets and geographies we operate in. Overall, we consider the Group’s exposure to modern slavery and human trafficking risk to be low.

Our principles related to modern slavery and human trafficking

Our global governance framework sets out how we govern our business, manage risk and opportunity, reward appropriately and maintain consistent operating standards across the Group. Human rights, including modern slavery and human trafficking, is embedded within that.

Our commitment to human rights, including our position on forced labour, involuntary labour, child labour, and human trafficking, is outlined in our Code of Conduct, Supplier Code of Conduct and Human Rights policy.

Our principles related to human rights include:

·        We are committed to protecting and preserving the rights of our employees, those employed in our supply chain, and those affected by our operations;

·        We are committed to acting in a socially responsible manner, complying with applicable laws, and respecting the communities where we operate;

·        We believe that all employment should be freely chosen and commit to refrain from any form of forced or involuntary labour;

·        We are opposed to the use of any form of child labour or practices that inhibit the development of children;

·        We are alert to the risks vulnerable people may face and seek to ensure that this group is free from discrimination and exploitation, and;

·        We will only work with suppliers whose core values and commitment to ethical business conduct matches our own.

These principles are cemented through a comprehensive suite of group policies as outlined in our Group Policy Manual.

We work in partnership with customers and competitors from the Aerospace and Defence industry to seek to share and implement best practice ethical business practices. We are a steering member of the International Forum on Business Ethical Conduct for the Aerospace and Defence Industry (IFBEC) and a member of the UK Aerospace, Defence, Security and Space (ADS) Human Rights working group.

We monitor our position on external charters and signatories on a regular basis, and review and align our policies and processes accordingly.

Our policies related to modern slavery and human trafficking

Our policies cover our commitment to ensure human rights standards are met globally and help make sure our suppliers uphold similar standards. We seek to take relevant legislation and the views of internal and external stakeholders into account in the development of any group level policy. Any proposed new group policy or revisions to an existing policy is subject to review and approval by the Chief Governance Officer and General Counsel.

Human rights, including modern slavery and human trafficking, is embedded within a series of policy; we do not have a standalone specific modern slavery policy.

Our Code of Conduct (the Code) underpins all that we do as a company by setting out our principles and how they apply to our business activities. It applies to all employees, our subsidiaries and controlled joint ventures, wherever they are located. We encourage our non-controlled joint ventures to adopt the principles of our Code and will only work with partners with companies who demonstrate the same commitment to high standards of ethical conduct. Our Code is available in multiple formats, including hardcopy, online and in a mobile application.

Our Code is supported by our Group Policies manual, which brings together all our Group-wide policies. Our Human Rights policy sits within this and sets out our commitment to respect the human rights of our employees and those working on our behalf through core labour standards. The policy draws from broader people-related policies, including our anti-discrimination policy; health, safety and environment (HSE) policy; diversity and inclusion policy; immigration policy; and relocation policy.

All employees are required to adhere to our Code and Group policies, in addition to any specific local requirements. Our all-employee performance management processes include an assessment of how individuals embody our company values, behaviours and ethical conduct.

We extend our ethical principles to our suppliers and partners through our Supplier Code of Conduct (Supplier Code). In order to do business together, we expect all suppliers to be ethical, responsible and to fully comply with all applicable laws and regulations. Our Supplier Code sets out the behaviours, practices and standards we expect our suppliers to demonstrate and comply with, all of which are based on our own Rolls-Royce Code of Conduct, policies and standards.

Our policies are made available to employees in English and our core business languages. These can be accessed through our employee intranet and are made physically available at our operational sites and office locations. Our policies and business conduct expectations are a core part of our employee on-boarding and induction experience, as well as employee learning and development activities.

Our policies are made publicly available in English and can be accessed and downloaded at rolls-royce.com. Our Supplier Code is publicly available in multiple languages to support our global supply chain.

Mitigating modern slavery risk in our supply chain

Our Supplier Code of Conduct (Supplier Code) is the foundation of our approach to managing modern slavery risk within our supply chain. It states, “All suppliers must comply with applicable international and national laws and standards in relation to labour practices and human rights, including slavery and human trafficking legislation”.

Adherence with our Supplier Code is mandated for all suppliers through our General Conditions of Purchase and precedent contractual terms. This is in addition to all applicable laws and regulations in the country or countries where our suppliers operate. In the event that our Supplier Code sets out a higher requirement than local regulation, suppliers are expected to adhere to that higher requirement.

We review and consider potential new suppliers’ ability to adhere to our Supplier Code as part of our supplier selection and on-boarding processes, prior to entering contractual negotiations. In addition, certain new and existing suppliers where they present a particular level of risk, are subject to screening assessments through the Dow Jones Risk and Compliance Platform on sanctions, watch-lists and adverse media reports, through a process we call “Know Your Partner”.

In addition, our Supplier Code contains requirements related to the responsible procurement of raw materials, an area we recognise as being at higher exposure of human rights risk. This requires suppliers to provide us with products and materials, including constituent minerals that are sourced responsibly and verified as “conflict free” in accordance with OECD guidelines.

If a supplier’s practices are found unsatisfactory or non-conformant to our Supplier Code, we address these issues on a case-by-case basis, seeking advice from subject matter experts and legal counsel where appropriate. We have not experienced any significant breaches of the Supplier Code related to modern slavery to date. In the event of significant non-conformance, we retain the right to terminate any contractual agreement with immediate effect.

We are committed to work in the best interests and protection of any confirmed or potential victims of modern slavery.

Mitigating modern slavery risk in our business operations and activities

The management of human rights risk and impact in our business operations is embedded into existing management systems and processes. Our management teams are responsible for ensuring compliance with local laws and regulations. Our functional teams work with the business leaders to ensure compliance with this policy.

All employees receive regular communications and mandated training on ethical behaviours; we track completion of this training as part of our all employee performance metrics. Where appropriate, we provide additional training on the standards and principles referred to in our Global Human Rights policy. In particular we support awareness training with groups that have direct oversight into human rights related concerns.

We encourage the raising of questions and concerns related to ethical business practices and provide a range of channels for raising questions or concerns, anonymously if desired. This includes an externally hosted Ethics Line service, which is available to all employees, customers, suppliers or external stakeholders 24/7. Concerns raised are reviewed by subject matter experts within the Group and by the Safety, Ethics & Sustainability Committee; we also seek external counsel where required. During 2020 no concerns were raised related to modern slavery or human trafficking via the Ethics Line or any other channel.

In the event that any future investigation identifies confirmed or potential victims of modern slavery we will work to the best interests and protection of these individuals or groups.

Progress on human rights policy and due diligence

During 2020 we initiated a review of our Human Rights policy and associated due diligence, including a comprehensive benchmarking of industry practice, emerging legal requirements and voluntary guiding frameworks. Through this we have identified four focus areas for future activity: rights of employees; communities local to operations; business relationships in the supply chain; and the sale and use of products and services. From this review we expect to publish a revised Human Rights policy during 2021.

Declaration

This statement has been made in accordance with the reporting requirements of Clause 54, Part 6 of the UK Modern Slavery Act and the California Transparency in Supply Chains

Act of 2010 (SB 657), for the year ending 31 December 2021. This statement applies to all parts of the Rolls-Royce Group.

This statement was approved at the Board meeting on 09 March 2021, and has been signed by the Chairman, on behalf of the Board of Directors.