Ethical behavior

  • In 2016, Danfoss continued the efforts to ensure high ethical standards and good business conduct by updating the Ethics Handbook and training people managers. One of the updates covered slavery and human trafficking in order to accommodate recent regulations.

    All new managers as well as all white-collar employees in India and Asia-Pacific receive training via Danfoss’ global e-learning Ethics@work as part of their on-boarding. All other managers are trained in Ethics@work on a bi-annual basis. During 2016, 1,576 new managers and white-collar employees have been trained in Ethics@work.

    In order to keep track on how ethics is handled in Danfoss, we monitor the number of dismissals due to unethical behavior. In 2016, a total of 39 employees left Danfoss due to unethical behavior, against 31 in 2015 and 30 in 2014. The figures include both dismissals and voluntary resignations connected with ethical issues.


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    Human rights
    We monitor our human rights impact and mitigate where relevant. As a member of the UN Global Compact, we are committed to live up to the UN Guiding Principles for Human Rights. During 2016, a new process for human rights due diligence and integration has been developed.

    The handling of human rights is rather complex. For that reason, we have decided to implement internal actions before introducing it in the supply chain. Accordingly, in 2016, a pilot project on human rights due diligence and integration was carried out in Poland, Slovakia and Romania. The pilot project showed that the implemented processes are working, and during 2017-2019, the project will be rolled out across all regions with few adjustments.

    Compliance programs
    We support the growing international focus on regulation and legislation in areas such as anti-corruption, competition law, export control and good business ethics.
    Internal compliance programs and control mechanisms have been established to minimize the risk of rule violations. These programs contain clear ownership, policy setting, operational procedures, as well as recurring training and awareness activities.

    In 2016, Danfoss worked with Data Privacy and had its internal rules approved by the EU data protection authorities to be ready for the EU data privacy regulation becoming effective in 2018. The export control compliance program was further strengthened, introducing improved processes for product and sanctioned party screening.

    All employees who have contact with business partners, primarily in sales and procurement, must complete the anti-corruption program by completing an e-learning course and passing a test. The purpose of the program is to minimize the risk of corruption internally at Danfoss and to ensure that third parties doing business on behalf of Danfoss are not involved in corruption.

    An upgraded process for integrity screening of certain business partners was finalized, lowering the risk of corruption, and more than 9,300 employees were trained in anti-corruptive behavior.

    Competition law
    As Danfoss is a major player in many geographical and product markets, it is important that every employee within the Danfoss Group, who deals with business partners, is aware of the main rules relating to competition law.

    The program has been set up to ensure that Danfoss employees respect the free market and comply with competition law around the globe. Some four thousand employees, who are in contact with business partners or industry organizations, have completed the mandatory e-learning program on competition law

    Compliance hotlines
    In addition to the compliance programs, Danfoss operates two hotlines available for our business partners and employees.
    The Group’s employees can find answers to any questions and doubts regarding ethics and compliance through the dilemma driven “AskUs”. The purpose is to minimize uncertainty among the Group’s employees and prevent unintended non-compliance. This hotline has been in place since 2012, and provided answers in 2016 to 90 dilemmas posed by employees and managers.

    Danfoss also has a whistle-blower function, the Ethics Hotline, which employees can use to anonymously report suspected breaches of internal guidelines and legislation. In 2016, a total of 112 reports were managed by the Ethics Hotline. Corrective actions, including disciplinary action, were taken for all substantiated allegations, and none of the reports have had a material impact on Danfoss.

    Focus on human rights abuses
    The UN has approved guiding principles for how businesses should ensure they are not complicit in human rights abuses. Among other measures, businesses must conduct a due diligence process to identify, remedy and prevent potential adverse impacts on human rights.

    Danfoss has carried out due diligence to identify any risks associated with the Company’s activities. The due diligence process was carried out in the form of an extensive questionnaire on human rights and labor rights. Danfoss’ policies to counter any abuse of human rights and labor rights are generally complied with. Potential abuse was identified in a few areas, and remedial action has been taken.

    Responsible supplier management
    We work systematically with risk assessment and supplier management. Our Code of Conduct for Suppliers defines the Group’s environmental and social requirements. All suppliers are required to sign the Code, and we perform regular supplier audits to verify compliance and to ensure that any non- compliance is addressed.

    Further, a supplier risk assessment model has been implemented. It forms the basis for measures taken at the individual supplier. The risk assessment model includes the location of the supplier, which ensures that the highest priority is given to suppliers in the areas which pose the greatest risk of non-compliance.

    Danfoss’ Code of Conduct Competence Center conducts the training of all employees who are in contact with suppliers on an ongoing basis. This is to ensure that they are familiar with Danfoss’ Code of Conduct and the roles and responsibilities within the area. The training consists of multiple modules, primarily as online training.

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