CORPORATE GOVERNANCE
Code of Conduct
When John and James Lincoln started Lincoln Electric over 125 years ago, they envisioned a company that operated by the “Golden Rule” — treating others with respect and dignity, the way every individual wants to be treated. The Golden Rule is our guiding principle and is foundational to our culture, values, and our Code of Conduct.
It is our policy to be a good corporate citizen. Our Code Of Conduct contains our guidelines for conducting business ethically across all of our global operations. It applies to our Board and employees at every level within the organization, wherever located. Compliance is mandatory. We also expect our representatives, agents, suppliers and consultants to uphold the standards in our Code of Conduct. Our Code of Conduct covers environmental, social and community matters, in addition to other topics, and is available in 13 languages.
Our Director of Compliance, who reports to our General Counsel, manages our ethics and compliance program, supports our business leaders on compliance matters and oversees compliance training initiatives. Our Director of Compliance also leads our internal Compliance Committee, which is comprised of executive leaders from various functions (Legal, Finance, Human Resources, etc.) and helps ensure that our compliance objectives are met. The Audit Committee of our Board of Directors receives updates on our compliance program and initiatives at each meeting and reviews the compliance program overall annually.
As part of our compliance program, we require mandatory training on our Code of Conduct on an annual basis — this also applies when we acquire a new company. Each year, all non-manufacturing employees are required to attend online training on the Code of Conduct and sign an acknowledgment that they have read it and will abide by it. We also assign various other mandatory compliance training depending on job responsibility. Some of the common topics include Anti-Corruption, Conflicts of Interest, Data Privacy, Anti-Harassment, Trade Compliance, Fair Competition, Intellectual Property/Proprietary Information, Insider Trading, and Keeping Accurate Books and Records. During 2021, 100% of our salaried employees completed required online compliance training courses, and over 2,600 global employees attended live training sessions on various topics.
Our Code of Conduct also includes our non-partisan political position and our practice to neither contribute corporate funds for political candidates, nor support an employee PAC program.
Human Rights & Modern Slavery
We are determined to safeguard human rights throughout our global operations. The UN’s Universal Declaration of Human Rights serves as the foundation for our Human Rights Policy. We expect all employees to comply with this policy as part of our commitment to ethical operations.
We comply with the California Transparency in Supply Chains Act (SB 657) and the UK Modern Slavery Act of 2015 and do not knowingly use suppliers who employ slave labor or support human trafficking. Please refer to our disclosure statements here:
California Transparency in Supply Chains Act
UK Modern Slavery Act
Supply Chain Management
We encourage our suppliers to maintain rigorous ethics and compliance programs to adhere to applicable laws and regulations. We expect our suppliers to act responsibly and ensure that no illegal conditions exist in their supply chains. We outline these expectations in the Supplier Code of Conduct, which covers the following areas:
- Human rights and labor standards
- Health, safety, and the environment
- Compensation
- Ethics
We are committed to taking internal actions to leverage a responsible supply chain. We comply with federal laws and regulations requiring disclosure of the use of Conflict Minerals. With oversight from the VP, Environmental Health, Safety & Sustainability, our cross-functional Conflict Minerals team manages our Conflict Minerals Policy and related due diligence procedures globally. In 2016, we included a provision in new and renewed supplier contracts that requires suppliers to implement identification procedures and mitigate the risk of purchasing Conflict Minerals sourced from the Democratic Republic of Congo (DRC) or its surrounding areas. Please refer to our Conflict Minerals disclosures, including CMRT forms here. Inquiries regarding the conflict mineral status of any Lincoln Electric product may be submitted to conflictminerals@lincolnelectric.com.
Supplier Diversity
We also believe in supporting a supplier base that reflects the diversity of our employees, communities, and customers worldwide. We work with many small and diverse suppliers to leverage the unique value and perspectives they lend to our shared success. In 2021, our primary U.S. business directed approximately 26% of its purchasing spend to ~1,000 U.S. businesses owned by women, ethnic and racial minorities, veterans, and service-disabled veterans, as well as businesses designated as small business enterprises.
Channel Partner Code Of Conduct
We conduct our business with honesty and integrity and honor the laws and regulations of the countries in which we operate. We endeavor to choose business partners who share these same values. Our Channel Partner Code of Conduct outlines our expectations regarding business practices of our distributors, agents, integrators, and resellers. The expectations contained in this Code are factors essential to our decision whether to enter into or extend business relationships and supplement specific requirements outlined in channel partner contracts.
Data Privacy & Cybersecurity
Our Global Information Security team is dedicated to protecting digital information across the enterprise, including customer and supplier data. The team continuously monitors the threat landscape to adjust our cybersecurity strategy, making updates to software and data security processes.
As part of our focus on cybersecurity, the Global Information Security team works to secure our automated technology and digital service products. Preventing system compromises both protects our customers and establishes trust in our technology.
Every year, we conduct a penetration exercise to test our systems against breaches and vulnerabilities, like ransomware attacks. We provide biannual information technology training to employees and conduct phishing tests every two weeks. Additionally, the Global Information Security team publishes a monthly newsletter for employees, highlighting the team’s actions and providing employees with tips to protect themselves at home.
When onboarding a new supplier, we review contract provisions to ensure the proper security protocols are in place. Contractors must also maintain compliance with our cybersecurity protocols.
Product Stewardship
To ensure product compliance and reduce the environmental impact of our products, we consider life cycle impacts during the selection of raw materials. We also focus on product packaging and manufacturing process enhancements that reduce raw material consumption and waste.
The Company’s chemical information system (CIS) is a key enabler of our global compliance strategy. For consumable products, the information in our CIS, which includes hazardous product ingredients and potential fume constituents, is incorporated into product compliance specifications and outlined in Globally Harmonized System Safety Data Sheets (GHS SDS), label templates, and safe use guidelines. We distribute our GHS SDS, including any updates or revisions, directly to customers via email. The GHS SDS are available to all current and prospective customers or end users through our SDS search tool.
We recognize that product compliance is a key priority for our customers and can be challenging for them to manage. As partners, we actively consult with customers on global product compliance.
We support the European Union’s (EU) Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) objectives and comply with REACH regulations. Where required and relevant, consumable substances and mixtures manufactured in and imported into the EU by Lincoln Electric have been registered in the EU and comply with REACH. Similarly, our electrical and electronic equipment complies with applicable global regulatory requirements, such as the European Union’s Restriction of Hazardous Substances (ROHS) Directive. For more information about our product stewardship efforts or to access product certificates of conformity, please visit our website.
Open Reporting
We strive to create an environment of open, honest communication. We want employees, officers, directors, vendors, and commercial partners to feel comfortable reporting any conduct they believe violates our Code of Conduct, other policies, or laws. Our global “Speak Up” policy, available in our Code of Conduct, provides information and guidance to help individuals understand our reporting requirements and the resources available to report potential misconduct and raise questions or concerns. Employees have an option to report anonymously, and we do not tolerate retaliation against individuals who speak out.
Individual employees may speak directly with our Compliance or Legal department. We also partner with EthicsPoint® to provide a confidential helpline and email address for reporting. The toll-free telephone hotline is available 24 hours a day, seven days a week, in the local language for each of our locations. Additionally, individuals may submit a report at www.lincolnelectric.ethicspoint.com. In 2021, 100% of hotline cases were closed, with 62% of the case reporters being named individuals.