Ethics and human rights

Danfoss conducts business and creates financial results in an ethical manner. We are committed to upholding international human rights throughout our business operations. Our policies ensure that business ethics, proper working conditions and anti-corruption are core elements of our company’s behaviors.

Business ethics

Sustainability and ethical behavior are integral parts of our DNA. The respect for human rights, proper working conditions, and social and environmental considerations are integral parts of our identity.

Since 2002, Danfoss has been part of the UN Global Compact and its 10 principles for responsible business behavior. We are committed to aligning our business practices with the UN Guiding Principles for business and human rights.

Ethical guidelines and governance

We have implemented comprehensive compliance programs with mandatory training to minimize the risk of ethical non-compliance. The programs define clear ownership, and policies, including the Danfoss Ethics Handbook and Policies on Danfoss Business Conduct. Danfoss also conducts mandatory training on ethics, export control, fair competition, anti-corruption, and data privacy. For each topic, a target group is defined to cover all colleagues who have touchpoints with the respective subjects.

The Danfoss Board of Directors is responsible for oversight of ethics and compliance, and our Audit Committee assesses the effectiveness of the compliance programs. Responsibility for day-to-day ethics and compliance activities is anchored with the respective business segments and functions.

In addition, regular compliance awareness communication is provided to refresh colleagues on the ethical guidelines in our ethics handbook.

Danfoss Ethics Handbook

Whistleblower function

The Danfoss Ethics Hotline serves as our whistleblower function and grievance mechanism for human rights. It is hosted by an external operator, ensuring that colleagues and external stakeholders can report violations of legislation or internal ethics guidelines anonymously without risk of retaliation. In 2023, our whistleblower setup was updated to meet the requirements of the European Whistleblower Protection Directive.

Data privacy and data ethics

As processes in Danfoss become increasingly digitalized, we maintain a high focus on data privacy processes and compliance with data privacy regulations. We adhere to our Data Privacy Handbook, conduct training, and comply with data privacy legislation where we operate. Danfoss applies the same ethical values and guidelines to the processing of all data across the organization, going beyond compliance with data privacy legislation.

Ethics Hotline/Whistleblower

Danfoss has a whistleblower-function, Ethics Hotline, where you anonymously can report concerns or suspicions about violations of Danfoss ethical guidelines, criminal actions or human rights violations. The reporting line is open to employees, business partners and other impacted parties.

Additionally, employees can contact ‘AskEthics’ if they need advice on how to handle a difficult situation related to business ethics or how to apply company policy on a specific situation.

Go to the Ethics Hotline

Danfoss human and labor rights program

At Danfoss, human and labor rights have always been a priority. We believe that human rights are about respecting and promoting the dignity of all people. Since our founding in 1933, Danfoss has embraced a strong sense of social responsibility. Supporting our people and their families, as well as local communities, has been a fundamental part of who we are, shaping the way we operate and grow.

We recognize our business responsibility and are deeply committed to ensuring respect for and promotion of human and labor rights across our value chain. Our human rights due diligence process is guided by the UN Guiding Principles (UNGPs) and the OECD Guidelines for Multinational Enterprises which prescribe a risk-based, continuous approach to identification, assessment and mitigation of adverse human rights impacts across the value chain. Based on our due diligence efforts conducted to date, we have identified a list of salient human rights – i.e., human rights with a heightened risk of potential severe adverse impacts occurring – which has formed the base of our human rights program. The program rests on 3 pillars:

Human and labor rights at work across our value chain

As part of our value chain, there is a vast number of workers employed. Inherent to our industry, we face several human and labor rights challenges across our value chain. The salient risks are:

Due to the consequences, our biggest focus is related to the right to health and right to life. Safety is a priority in everything we do, and we continuously work on eliminating any work-
related risks.
Another serious issue we tackle in our value chain is any form of modern slavery, forced labor or child labor. We recognize the seriousness of the topic and work with our business partners to ensure that the products we buy, or services we received are not connected to any form of modern slavery, forced or child labor.
Since many of the jobs in our value chain are considered as low-skilled, we recognize the risk of the workers being paid below the living wage, working long hours, and not being paid for overtime. This is connected to several human rights, but especially the right to decent living standard and fair working conditions. We have already internally committed to paying our employees a living wage and are actively encouraging our business partners to do so as well.
In a world where businesses constantly try to increase their profit margins, the right to freedom of association and collective bargaining, and to strike might be infringed on. These rights are also structurally infringed on in specific countries around the world, which structurally prevent or limit these rights. For that reason, we have identified these rights as salient and ensure that our own employees or their representatives are able to meet with management to discuss their working conditions. We require the same also from our suppliers.
Inherent to our global footprint and human biases, we recognize the risks connected to the right to equal opportunities and protection against discrimination and harassment. For that reason, Inclusion has been anchored as one of our step change initiatives, and we continuously work on creating a more inclusive and fair working environment.
With the world getting more digitalized every day, we see an increased occurrence of cyber criminality. Combined with the fact that more and more personal data is being collected, we acknowledge the importance to foster the right to privacy and protect personal data of our own as well as workers in our value chain.

Environmental issues impacting human rights

We recognize the importance of the transition to a low carbon economy and acknowledge that protection of the environment and the climate is inseparably linked to the realization of human rights, particularly the right to healthy environment, and sustainable living standard related to the communities surrounding our value chain.

As part of our DNA, we work to continuously decrease the impacts our value chain has on the environment and the climate. In particular, we focus on reducing our emissions, waste, water consumption and on improving our handling of chemicals, oils, and solvents. We apply the same requirements to our value chain partners. Furthermore, we also collaborate with our business partners on reducing the presence of hazardous materials in our products.

Human rights in conflict affected and other high-risk areas

We acknowledge that presence in conflict-affected and other high-risk areas comes with inherent human rights risks. We have therefore implemented a heightened due diligence related to our
operations, sourcing, and sales connected to these areas.

To deliver products and solutions to our customers, we rely on raw materials and the sourcing of minerals. Some of these minerals and metals could originate from conflict-affected and
other high-risk areas. The mining in such areas is associated with an increased risk of human rights violations, for instance violations of labor rights or the right to own a property resulting
in community displacements. To ensure that our products do not contribute to these violations, we have established a responsible minerals sourcing program, anchored in the Responsible
Minerals Initiative.
Some of our customers serve the defense and law enforcement industry. We support sales to actors who protect democratic values and fundamental freedoms. In doing so, to ensure that our product do not violate the internationally recognized human rights or the International Humanitarian Law, we have established a military committee responsible for due diligence of any sale to the defense or law enforcement industry.
In our own operations, we actively monitor our presence in conflict-affected and other high-risk areas, and where risks are identified, we work on an action plan minimizing human rights risks.

Human rights due diligence

Danfoss is committed to the UN Guiding Principles for Human Rights, which entails that we must carry out a human rights’ due diligence process where potential or actual human rights impacts are identified. To fulfil our responsibility, we continuously conduct human and labor rights due diligence and have further embedded human and labor rights considerations into various processes across different business functions, e.g., HR, procurement, sales, product compliance, real estate, or mergers and acquisitions. Any identified impacts are assessed, prioritized, and mitigation actions are put in place.

The Danfoss human rights due diligence process follows a risk-based approach and is structured around the steps listed in the picture below. It is an ongoing process and any lessons learned are used to improve the existing processes and content of our policies.

As part of our due diligence, we engage with various stakeholder groups across our value chain. This includes our own employees, workers in value chain, and several multistakeholder initiatives. For example, we engage and participate in the UN Global Compact Network Denmark and the Nordic Business Network for Human Rights, coordinated by the Danish Institute for Human Rights. These multistakeholder networks represented by human rights experts enable us to deep dive into the issues we have identified as salient for our business; connect with peers and foster collaboration and knowledge sharing with other Nordic businesses dealing with similar challenges.

Danfoss human rights policies and reporting

Mitigating modern slavery

Modern slavery is an umbrella term that covers forced labor, servitude, and human trafficking, as well as work performed involuntarily or under any threat of penalty. Danfoss fully acknowledges the gravity and extent of modern slavery instances happening globally every day, and that the private sector plays a critical role in eliminating this challenge. In line with the UN´s goal of abolishing forced labor, modern slavery, and human trafficking by 2030, we are resolute in our responsibility to conduct business ethically and are committed to being a driving force for positive change in our value chain.

As part of our due diligence process, we analyze the inherent modern slavery risks across our value chain. Following a risk-based approach, we have identified few materials and services in our upstream value chain with increased risk. Recruitment remains one of the sectors with the highest risk of forced labor in our value chain. As part of our contractual compliance, as well as our supplier due diligence toolbox, we ensure that our suppliers do not use or benefit from forced labor.

Danfoss Modern Slavery Act Statement

Responsible supplier management

A stable, sustainable, and transparent supply chain is fundamental to Danfoss’ operational success and our ability to deliver on our commitments. Across our three segments, we continuously work to mitigate supply chain risks and build strategic, value-adding relationships with our suppliers. This approach is anchored in two core elements: 1. contractual compliance, and 2. continuous due diligence we conduct throughout the supplier lifecycle management.

The Danfoss Supplier Code of Conduct establishes specific environmental, social, and ethical business requirements for our suppliers. These requirements are guided by the Ten Principles of the United Nations Global Compact, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, and relevant conventions of the International Labor Organization (ILO). The Code covers the scope of the Responsible Business Alliance´s (RBA) code of conduct.
The supplier due diligence process starts with risk screening, and where relevant, it is followed by supplier self-assessments and ultimately second- or third-party audits. The verification is triggered when onboarding a new supplier. Further, existing suppliers are reassessed on a regular basis.

Conflict and responsible minerals

Danfoss supports the efforts of governments and organizations to end violence and atrocities in conflict-affected areas. We are committed to sourcing materials and components from companies that also share our values regarding human rights, ethics, and environmental responsibility.

To ensure regulatory compliance, we engage with our suppliers regularly and support the Responsible Minerals Initiative, reviews. We run recurring campaigns to acquire supplier information on conflict minerals, including smelter/ refiner identification and country of origin. This has enabled us to provide conflict mineral reporting templates to our customers. Danfoss has also partnered with a third party to collect conflict minerals reporting templates (CMRT) from suppliers and conducts smelter due diligence campaigns.

Read about our position on Responsible Minerals Sourcing here

Handling Human Rights complaints

Initial procedures

If you decide to file a complaint, we ask you to include a description of the relevant facts (including names of alleged victims or otherwise adverse negatively impacted parties, dates, location and other evidence), with as much detail as possible.

Shortly after you’ve filed a complaint, we will send you confirmation, that we’ve received your complaint.

The goal for the initial proceedings is to reach a mutual understanding of the complaint and ensure, that all formal legal requirements to handle the complaint are met.

Collecting information

Danfoss will in co-operation with the affected parties try to collect all available and relevant information.

You can expect to be asked to send all relevant information that will shed light on facts or identify information, which needs to be collected.

The collected information will be presented to you before it is decided which actions Danfoss will take to address your complaint.  

Remediation of adverse human rights impacts

In situations where Danfoss has caused or contributed to an adverse impact, Danfoss is committed to providing reparation for harm suffered to redress any violations.

The reparation will be assessed on a case-by-case basis to ensure that it is proportional to the gravity of the violations and the specific circumstances of each case.

Frequently Asked Questions on Ethics and Human Rights

What is Danfoss policy on ethics?

Danfoss has an Ethics Handbook which describes our guidelines in different areas, e.g. human rights, working conditions, rules for cooperation with business partners, conflicts of interest etc.

Download Danfoss Ethics Handbook

How does Danfoss work with Ethics?

All employees must read the Ethics Handbook and all managers must conduct mandatory ethics training (e-learning) on an annual basis.

Does Danfoss have dismissals due to unethical behavior?

Since 2004, Danfoss has monitored and reported on the number of dismissals due to unethical behavior. We do this to maintain a high level of awareness on ethics.

What is Danfoss' policy on human rights?

Danfoss policy on human rights outlines our commitment to respecting and promoting fundamental human rights throughout operations, supply chains, and business relationships.

Download Danfoss Policy on Human Rights.

What are Danfoss’ salient human rights`?

Salient rights are the human rights which can be most severely impacted by the individual company. Danfoss’ salient rights are: Right to life, land rights, freedom from forced labor, freedom from discrimination, right to health and right to fair working conditions.

How to file a human rights or labor rights complaint to Danfoss?

You can file a human rights, labor rights or environmental complaint to Danfoss’ Ethics Hotline.

Who can file a complaint?

You can file a complaint to Danfoss, if our activities have negatively impacted human rights, labor rights or the environment.

File a complaint via Danfoss' Ethics Hotline, learn about our process in handling Human Rights complaints.

How is the process in case of a complaint regarding human rights, labor rights or the environment?

In case of a complaint, Danfoss has a process for giving access to remedy. The appropriate process to enable remediation will be dependent upon several factors. The factors could be legal obligations, stakeholder preferences, availability of mechanisms and the nature of the adverse impacts and where the adverse impacts occur.

Which compliance programs does Danfoss have?

Danfoss has compliance programs within the following areas: Ethics, Anti-corruption, Competition law, Export control and Data Privacy.

How does Danfoss avoid forced labor?

Danfoss produces an annual Modern Slavery Act statement where we communicate about our efforts to combat forced labor and other forms of involuntary work.