ITW Human Rights and Modern Slavery Statement
This Statement relates to our fiscal year ended December 31, 2023. It describes the activities of Illinois Tool Works Inc. and its consolidated subsidiaries (the “Company,” “ITW,” “we,” “us” and “our”), to promote respect for human rights, including the elimination of forced labour and human trafficking (collectively referred to herein as “modern slavery”) and child labour from our business and our supply chains, and to promote decent working conditions.
ITW recognizes that our impact extends far beyond our own walls. To further our positive impact on our shared world, we are committed to fostering responsibility across our value chain, through the impact of our products, as well as via our global supplier network.
We have prepared this Statement to comply with the California Transparency in Supply Chains Act, the UK Modern Slavery Act, the Australian Commonwealth Modern Slavery Act, the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act, and the Norwegian Transparency Act (collectively, the “Acts”). However, not all entities that are part of the Company are subject to the Acts. To the extent applicable, the signature pages to this Statement include additional disclosures specific to the entities required to prepare a statement under one or more of the Acts.
Our Business and Supply Chain
The Company, headquartered in Glenview, Illinois, USA and publicly traded on the New York Stock Exchange, is a decentralized global manufacturer of a diversified range of industrial products and equipment employing approximately 45,000 people at 84 divisions in 51 countries.
ITW’s operations are organized and managed based on similar product offerings and end markets and are reported to senior management as the following seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Company owns and operates over 400 plants and facilities which in turn source from thousands of suppliers located in over 100 countries. ITW divisions range from OEMs to Tier 1, 2, 3 and potentially Tier 4 suppliers depending on the market served.
Where practicable, we seek to maintain long-term relationships with local suppliers to help us source responsibly and reduce the risk of sourcing from suppliers that do not meet our standards. In 2023, in our overall supply chain, approximately 85 percent of global spend was with suppliers who are located in an area that aligns with ITW’s strategy to buy materials from suppliers within regions where we manufacture and sell product.
Our Policies and Approach to Human Rights
The ITW Culture is one of the key drivers of our enterprise strategy and encompasses our Core Values of Integrity, Respect, Trust, Shared Risk and Simplicity. We integrate into our Core Values the principles of the United Nations Global Compact, Universal Declaration of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. Our Core Values, communicated throughout the Company, call for the highest ethical standards in all interactions with all stakeholders.
Our Core Values, ITW Code of Conduct, Human Rights Policy, Supplier Code of Conduct, Supplier Expectations and Responsible Sourcing Policy, together provide the over-arching compliance framework relating to human rights and decent working conditions, across our entire enterprise.
Our Code of Conduct reflects our commitment to a safe and healthy workplace for our colleagues and business partners. We never tolerate violence, threats or physical intimidation in our facilities. We strive to foster a proactive safety culture with a goal of zero accidents.
We believe that the risks of modern slavery in our own businesses are remote given the nature of our businesses and workforce coupled with our internal policies and procedures and strong Core Values. Where we have identified risks inherent in suppliers, as further discussed below, we have established procedures and work in the spirit of continuous improvement to mitigate the risks of either contributing to or being linked to modern slavery in our supply chains.
Codes of Conduct
The ITW Code of Conduct mandates compliance with human rights requirements around the globe, including environmental, health and safety laws that protect the well-being of employees and promote decent working conditions, and laws against slavery, human trafficking and child labour. The ITW Code of Conduct applies to all of our colleagues, directors, businesses and subsidiaries around the world.
In addition, ITW’s Supplier Code of Conduct holds our suppliers accountable to the same standards of conduct set forth in the ITW Code of Conduct. The Supplier Code of Conduct requires our suppliers to treat all workers with dignity and respect, and specifically prohibits our suppliers from employing workers that are younger than 15 or knowingly sourcing from suppliers associated with human trafficking. It further prohibits unlawful discrimination and any form of inhumane treatment, including sexual harassment, sexual abuse, corporal punishment, mental or physical coercion or verbal abuse. The Supplier Code of Conduct also requires our suppliers to take reasonable efforts to ensure that their suppliers comply with our policies. We expect our suppliers to comply with the Supplier Code of Conduct, and we do not knowingly do business with suppliers who violate human rights or health and safety laws.
Suppliers are required to establish and maintain a process for ensuring compliance with the ITW Supplier Code of Conduct. This includes communicating the requirements of the code to all employees, affiliates, distributors, subcontractors, agents and other representatives of the supplier who provide products or services to ITW or to ITW’s customers on behalf of ITW. Any violation of the Supplier Code of Conduct may result in immediate termination of the supplier’s relationship with ITW.
We also have published Supplier Expectations. Among other things, our Supplier Expectations indicate that we expect suppliers to comply with all applicable laws and regulations around the globe, including those pertaining to human rights.
Our Human Rights Policy indicates that we are committed to human rights in the workplace. Among other things, this includes providing a workplace that protects employee well-being and safety and complies with all applicable laws, including laws against modern slavery and child labour.
Risk Areas in our Operations and Supply Chain
We believe that the risk of adverse human rights impacts, material violations of working conditions and modern slavery and child labour in our own businesses are low given the nature of our businesses and workforce coupled with our internal policies and procedures and strong Core Values (as described in this Statement). Information is provided below regarding the risk of adverse human rights impacts that we have identified in our supply chain.
Unsafe Working Conditions. Our Enterprise Safety Strategy and Safety Policy are based on the core principles of: Goal of zero accidents; shared ownership for safety (business and individual); proactive approach focused on accident prevention; continuous improvement philosophy; and compliance with applicable national, regional and local health and safety laws and regulations. From 2019 to 2023, ITW’s total recordable incident rate decreased by 28% and our lost time incident rate decreased by 22%.
Modern Slavery. We recognize that modern slavery is a risk in manufacturing supply chains. The expansive nature of our materials supply chain requires us to conduct business with a variety of suppliers, across a variety of jurisdictions, some of which may be considered high-risk for modern slavery. A modern slavery risk in our supply chain is forced labour that could occur without our knowledge in violation of our policies. While we believe that our existing policies and procedures are effective in mitigating this risk at our direct suppliers, forced labour could take place in upper tiers of the supply chain from which we may be several levels removed. Under our Supplier Code of Conduct, suppliers are prohibited from sourcing products or utilizing services from entities associated with modern slavery.
We recognize there are potential risks associated with the production of certain commodities and with the use of temporary labour in our supply chains. In line with UN Guiding Principles 17 and 24, we evaluate our purchased products against the U.S. Department of Labour’s List of Goods Produced by Child Labour or Forced Labour for countries and industries prone to modern slavery to help identify high-risk suppliers. ITW also conducts internal research relating to modern slavery risk using other U.S. government and non-governmental organization resources, including review of Withhold Release Orders (“WROs”) issued by U.S. Customs and Border Protection. In addition, we host an internal website and training for our businesses which contains pertinent global customs information. ITW also conducts supplier outreach in connection with our conflict minerals country of origin inquiries and participates in industry groups and engagement with other stakeholders.
Steps to Mitigate Risks relating to Human Rights and Working Conditions
We engage in the activities discussed below to mitigate risks relating to adverse human rights impacts and ensure decent working conditions in our enterprise and in our supply chains. ITW’s processes are intended to align with the OECD Guidelines for Multinational Enterprises.
Consistent with our decentralized operating structure, our individual businesses are responsible for assessing and addressing human rights risks, including those related to modern slavery and child labour, in their own businesses and in their supply chains, based on their particular business and risk profile. However, ITW’s corporate compliance team administers trainings for our colleagues around the world, as appropriate, including training on identifying and avoiding harassment in the workplace and mitigating modern slavery risk. Additionally, our business units are expected to operate in accordance with our Core Values, the ITW Code of Conduct, the Supplier Code of Conduct, the Supplier Expectations, the Human Rights Policy and other ITW policies and procedures (as described in this Statement).
Supplier and Risk Assessments; Supply Chain Verification. Our businesses evaluate prospective suppliers during supplier selection and periodically thereafter based on financial, legal and sanctions risk. The evaluation may include steps to assess human rights-related risks, such as a supplier questionnaire requesting information about the supplier’s manufacturing processes, quality control, delivery, technology, and other information relative to overall management of the supplier company.
We continue to consider how best to support and enhance our framework and processes to further identify and respond to human rights-related risks in our supply chains and assess the effectiveness of our program.
Audits. Prior to placing business with a supplier, an onsite supplier visit may be made by ITW personnel for purposes of confirming supplier overall capabilities related to manufacturing, quality, delivery, and technology, and assessing overall supplier risk. Additionally, after business has commenced with a supplier, onsite supplier visits may be performed periodically by ITW personnel. Although the specific purpose of onsite visits is not typically to assess human rights-related risks, non-compliance with ITW’s Supplier Code of Conduct, which sets our expectations for respecting human rights and ensuring decent working conditions, may be identified during the overall supplier assessment. We believe that onsite supplier visits by ITW personnel discourage abusive working conditions and human rights violations. If a violation of human rights were to be identified, ITW would take appropriate steps to remediate the situation.
Contract Terms. Our Standard Terms and Conditions of Purchase provide that direct suppliers must comply with all applicable laws relating to modern slavery and child labour and require direct suppliers to comply with our Supplier Code of Conduct.
Supplier Certifications. Based on our supplier risk evaluation, we ask suppliers deemed to be high-risk to review and sign our Supplier Code of Conduct. In addition, we require substantial suppliers who sell us product containing tin, tantalum, tungsten and/or gold to certify as to the origin of the minerals to determine whether such minerals or materials may be supporting conflict. In addition, while cobalt and mica are non-regulated minerals, some ITW divisions are collecting and reporting information with respect to these minerals as well. This certification process helps to identify and mitigate the risk of modern slavery, child labour and other violations of human rights.
Grievance Mechanisms. All ITW colleagues are encouraged to share any ethics or compliance concerns through multiple channels, including to their local management teams, the Legal Department, Internal Audit or the ITW Confidential Helpline. ITW partners with an external third-party supplier that provides a web- and telephone-based confidential reporting system in 51 countries. Web-based reporting is offered in 16 languages, and telephone-based reporting is offered in more than 200 languages. The ITW Confidential Helpline is also available to suppliers and other external stakeholders. ITW has a no-retaliation policy for good-faith reporting. All reports are investigated promptly and appropriately, and regular updates are provided to the Audit Committee of the Board of Directors.
Internal Accountability and Training
Compliance Team. Employees at our decentralized business units are involved in compliance efforts and are responsible for mitigating risks relating to human rights and working conditions in our enterprise and in our supply chains. At the corporate level, we have a cross-functional Responsible Sourcing Committee headed by ITW’s Vice President, Strategic Sourcing and EHSS, who reports to ITW’s CFO. The Committee includes Strategic Sourcing, Environmental, Legal, Internal Audit, IT, Trade Compliance, Corporate Communications and other selected personnel who meet regularly to discuss responsible sourcing practices, including those related to modern slavery.
Training and Knowledge Management. Our sourcing personnel are trained in the requirement to act ethically and in accordance with the ITW Code of Conduct. In addition, we require our global sourcing employees, global employees who work with suppliers and customers on conflict minerals requests, and our Responsible Sourcing Committee members to undergo specific modern slavery training. This training is intended to generate awareness of modern slavery among our sourcing professionals and to enable them to address identified issues within our product supply chains. We believe our sourcing professionals who have received training regarding modern slavery indicators are better able to identify and mitigate these risks at their respective suppliers. We host an internal website that contains this training and additional materials on this topic. We also track employees’ participation in such training to ensure that our sourcing personnel learn these lessons.
Employee Certifications. Employees are required to annually certify their compliance with the ITW Code of Conduct, which includes a commitment to compliance with human rights-related laws, including those prohibiting modern slavery and child labour.
Assessing the Effectiveness of Our Actions. We utilize information that we receive from audits and grievance mechanisms to understand the performance of ITW’s work to respect and promote human rights and decent working conditions.
Additional Corporate Social Responsibility Efforts
For more information on our efforts and our achievements relating to corporate social responsibility, see our Sustainability Report, which is available at www.itw.com/sustainability.
Required Approval Under the UK Modern Slavery Act
ITW Limited is required to prepare a statement pursuant to the UK Modern Slavery Act. Solely for purposes of compliance with the UK Modern Slavery Act, this Statement was approved by the Board of Directors of ITW Limited on June 14, 2024 and signed by a director of that entity as indicated below.
/s/ Giles Hudson, Director
June 14, 2024
MTS Systems Limited is required to prepare a statement pursuant to the UK Modern Slavery Act. Solely for purposes of compliance with the UK Modern Slavery Act, this Statement was approved by the Board of Directors of MTS Systems Limited on June 14, 2024 and signed by a director of that entity as indicated below.
/s/ Sven Castle, Director
June 14, 2024
Requirements Under the Australian Commonwealth Modern Slavery Act
ITW Holdings Australia L.P. is required to prepare a statement pursuant to the Commonwealth Modern Slavery Act. ITW Holdings Australia L.P. is a limited partnership that is indirectly wholly-owned by ITW and holds 100% of the equity interests of ITW Australia Holdings Pty Ltd., a proprietary limited company, which in turn holds 100% of the equity interests of ITW Australia Pty Ltd. ("ITW Australia"), a proprietary limited company with operations in Dandenong South, Kawana, Melrose Park, Moorabbin, Morningside, Chirnside Park, Ingleburn and Wetherhill Park. ITW Holdings Australia L.P. consulted each of these controlled companies in the development of this Statement. No other entity for the 2023 reporting period is subject to the Commonwealth Modern Slavery Act. As of December 31, 2023, ITW employed approximately 1,000 employees in Australia.
ITW Holdings Australia L.P., through its operating subsidiary ITW Australia and its various divisions, is engaged in the following businesses: (i) manufacturing and distributing of fastening solutions and services for the construction market; (ii) distributing machines and equipment for warewashing and cleaning technology, and cooking and food preparation; (iii) distributing testing equipment; (iv) distributing welding equipment, supplies and accessories; (v) distributing an extensive array of resealable packaging solutions for a wide variety of products; (vi) manufacturing and distributing quality branded consumable products used in the industrial, consumer, mining, and construction markets; and (vii) manufacturing and distributing automotive aftermarket products for the Do It Yourself and Do It For Me markets.
ITW Australia’s supply chains consist of sourcing various components, including fasteners, metal castings, certain chemicals and electronics, among others. The areas we identified as having the lowest risk of modern slavery include local operations handled by staff directly employed by ITW Australia’s businesses. We believe that the risks of modern slavery in ITW Australia’s businesses are low given the nature of its businesses and workforce coupled with its internal policies and procedures and strong Core Values. ITW Australia’s highest risk area relates to its supply chains (e.g., the use of temporary labour by supply chains and risks in upper tiers of supply chains from which we may be several levels removed). Where we have identified risks inherent in suppliers, we have established procedures and work in the spirit of continuous improvement to mitigate the risks of either contributing to or being directly linked to modern slavery in our supply chains. We seek to address these risks through the policies, procedures (such as audits, contract terms, supplier certifications and grievance mechanisms) and other measures described earlier in this Statement. Lastly, as part of our ongoing and evolving process, we continue to consider how best to support and enhance our framework and processes to further identify and respond to risks of modern slavery in our supply chains and assess the effectiveness of our program.
Solely for purposes of compliance with the Commonwealth Modern Slavery Act, this Statement was approved by the board of ITW UK, the General Partner of ITW Holdings Australia L.P., on June 12, 2024 and signed by a director of that entity as indicated below. ITW Holdings Australia L.P. consulted with its subsidiaries in connection with the preparation of this Statement.
ITW UK
as General Partner of ITW
Holdings Australia L.P.
/s/ Giles Hudson, Director
June 12, 2024
Norwegian Transparency Act Approval
ITW Construction Products AS is required to prepare a statement pursuant to the Norwegian Transparency Act. ITW Construction Products AS is a limited liability company that is wholly owned by ITW Gamma SARL, a Luxembourg limited liability company. All of the ownership interests in ITW Gamma SARL are indirectly owned by Illinois Tool Works Inc., a Delaware corporation. As of December 31, 2023, ITW Construction Products AS had 10 employees in Norway. ITW Construction Products AS is a sales company which supplies tools and consumables to the construction market through wholesales stores across Norway. The company has a very small export (less than 1% of revenue) to Poland.
The human rights and working environment-related risks of ITW Construction Products AS mirror those of ITW and are discussed earlier in this Statement. The policies and steps described earlier in this Statement that ITW has taken to assess and address human rights-related risks and ensure decent working conditions are applicable to ITW Construction Products AS.
Solely for purposes of compliance with the Norwegian Transparency Act, this Statement was approved by the Board of Directors of ITW Construction Products AS on June 28, 2024 and signed by a director of that entity as indicated below.
/s/ Larissa Witt, Director
July 2, 2024
/s/ Manoela Fry, Director
July 2, 2024
/s/ Amel Tursonovic, Director
July 2, 2024
Canada Fighting Against Forced Labour and Child Labour in Supply Chains Act Approval
ITW Canada Inc. is required to prepare a report pursuant to the Canada Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Canadian Act”). ITW Canada Inc. is a company which is wholly owned by ITW Gamma SARL, a Luxembourg limited liability company. Illinois Tool Works Inc. (“ITW”), a Delaware corporation, indirectly owns 100% of ITW Gamma SARL's ownership interests as of December 31, 2023. ITW Canada Inc. is comprised of various autonomous business units (divisions) that operate as manufacturers and/or distributors in the construction, specialty products, food equipment, polymers & fluids, and welding industries. The operating divisions of ITW Canada Inc. are ITW Laminations, Hobart Food Equipment Group (sales and service), Owen Sound (Ware washers), ITW Construction Products, Permatex Canada, and Tregaskiss. Combined, these divisions employ approximately 525 employees in Canada.
The supply chain of ITW, including ITW Canada Inc.’s supply chain, is discussed earlier in this Statement. The policies and procedures used by ITW, to assess, mitigate and manage the risks of forced and child labour, as described earlier in this Statement, are applicable to ITW Canada Inc.
Solely for purposes of compliance with the Canadian Act, this Statement was approved pursuant to subparagraph 11(4)(b)(i) of the Canadian Act by the Board of Directors of ITW Canada Inc.
In accordance with the requirements of the Canadian Act, and in particular section 11 thereof, I attest that I have reviewed the information contained in this Statement for ITW Canada Inc. Based on my knowledge, and having exercised reasonable diligence, I attest that the information in this Statement is true, accurate and complete in all material respects for the purposes of the Canadian Act, for the reporting year ended December 31, 2023.
Stephen Tabb Director
May 31, 2024
/s/ Stephen Tabb
I have the authority to bind ITW Canada Inc.