Revised June 2020

Illinois Tool Works Inc.

155 Harlem Avenue // Glenview, Illinois 60025 // itw.com

 

ITW Modern Slavery and Human Trafficking Statement

This Statement relates to our fiscal year ended December 31, 2019. It describes the activities of

Illinois Tool Works Inc. and its consolidated subsidiaries (the “Company,” “ITW,” “we,” “us” and

“our”) to eliminate slavery and human trafficking from its business and supply chains.

 

Overview

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.

 

The Company is a global manufacturer of a diversified range of industrial products and

equipment with 84 divisions in 53 countries. 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 Labor 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.

 

We have prepared this Statement on a combined basis to comply with both the California

Transparency in Supply Chains Act and the UK Modern Slavery Act and for our entire company,

because our Core Values, Statement of Principles of Conduct, Human Rights Policy, Supplier

Code of Conduct, Supplier Expectations and Conflict Minerals Policy Statement, together

provide the over-arching compliance framework relating to slavery and human trafficking across

our entire enterprise (which we sometimes refer to herein collectively as “modern slavery”).

However, not all of the entities that are part of the Company are subject to the California

Transparency in Supply Chains Act or the UK Modern Slavery Act.

 

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. Where we

have identified risks inherent in suppliers, as further discussed below, we have established

procedures to mitigate the risks of modern slavery in our supply chains for products from those

suppliers.

 

Where practicable, we seek to maintain long-term relationships with local suppliers, to help us

source more responsibly and reduce the risk of sourcing from an unethical supplier.

 

Codes of Conduct

The ITW Statement of Principles 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 laws against slavery, human trafficking and child labor. The ITW

Statement of Principles of Conduct applies to all of our employees and internal business

operations.

 

In addition, ITW’s Supplier Code of Conduct holds our suppliers accountable to the same

standards of conduct set forth in our Statement of Principles of Conduct. The Supplier Code of

Conduct specifically prohibits our suppliers from employing workers that are younger than

minimum age (and in any case, under the age of 15) or from knowingly sourcing from suppliers

associated with human trafficking. 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 be in compliance with the Supplier Code of Conduct, and we do not knowingly do

business with suppliers who violate laws for the protection of human rights or human health and

safety.

 

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 and laws against slavery, human trafficking

and child labor.

 

Furthermore, we have published a Human Rights Policy. 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 compliance with all

applicable laws regarding slavery, human trafficking and child labor.

 

Steps to Mitigate Slavery and Human Trafficking Risk

We engage in the activities discussed below to mitigate the risk of modern slavery in our supply

chains.

 

Consistent with our decentralized operating structure, our individual businesses are responsible

for assessing and addressing risks of modern slavery in their supply chains, based on their

particular business and risk profile. In recognition of the different risk profiles of our businesses,

we have elected not to take a prescriptive approach to this area of compliance as we believe

that enabling individual businesses to take a thoughtful, tailored approach to addressing modern

slavery risk is more effective than a prescriptive approach, and our business units are expected

to operate in accordance with our Core Values, the ITW Statement of Principles of Conduct, the

Supplier Code of Conduct, the Supplier Expectations, the Human Rights Policy and other ITW

policies.

 

Supplier and Risk Assessments; Supply Chain Verification. Our businesses evaluate

prospective suppliers during supplier selection and periodically thereafter based on their

business and risk profile and role in our supply chain. The evaluation may include steps to

assess risks of modern slavery. The steps taken to assess modern slavery risk typically include

a request that suppliers complete a supplier questionnaire detailing supplier capabilities related

to manufacturing processes, quality control, delivery, and technology, and requesting other

information relative to overall management of the supplier company.

 

ITW also conducts internal research relating to modern slavery risk using U.S. government and

non-governmental organization resources, conducts supplier outreach in connection with our

conflict minerals country of origin inquiries and participates in industry groups and engagement

with other stakeholders. As part of our supplier risk assessment process, we also use a

proprietary supply chain risk checklist that guides us in identifying suppliers with the highest

risks of modern slavery in their operations. In addition, as discussed below, we require

certifications from the highest risk suppliers.

 

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 modern

slavery, compliance with Company standards for modern slavery is covered within the overall

supplier assessment, and we believe that onsite supplier visits by ITW personnel discourage

abusive working conditions.

 

Contract Terms. Our standard Terms and Conditions of Purchase provide that direct suppliers

must comply with all applicable laws against slavery, human trafficking and child labor. Terms

and Conditions of Purchase also require direct suppliers to comply with our Supplier Code of

Conduct.

 

Supplier Certifications. We evaluate our purchased products against the U.S. Department of

Labor’s List of Goods Produced by Child Labor or Forced Labor for likely countries and industries

prone to modern slavery to help identify high-risk suppliers ITW may utilize. Based on this

evaluation, we provide education on our Supplier Code of Conduct to identified possible high-risk

suppliers and ask them to sign a declaration that they are aware of and comply with our Supplier

Code of Conduct, including its provisions regarding slavery and human trafficking. We have

obtained certification of compliance from 100 percent of these identified possible high-risk

suppliers.

 

We require annual re-certifications from any identified high-risk suppliers. In addition, we require

substantial suppliers who sell us product that contains so-called “conflict minerals” to certify as to

the origin of the minerals or other requested material to determine whether such minerals or

materials may be supporting conflict in central Africa. These certifications are in part intended to

help identify and mitigate the risk of modern slavery, human trafficking, child labor and other

violations of human rights.

 

Grievance Mechanism. The Company maintains a confidential whistleblower help line by which

all employees, suppliers and other third parties may report compliance failures by employees,

suppliers or contractors, including with respect to modern slavery. The contact information for our

helpline is http://www.itwhelpline.ethicspoint.com.

 

Internal Accountability and Training

 

Compliance Team. At the corporate level, we have a Responsible Sourcing Committee that

meets regularly on human rights and other topics related to responsible sourcing. Employees at

our decentralized business units also are involved in compliance efforts and are responsible to

ensure they are sourcing appropriately, including consideration of the risks related to modern

slavery in the supply chain.

 

Training and Knowledge Management. Our sourcing personnel are trained in overall supplier

expectations, including the requirement to act ethically and according to our Supplier 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 intended to generate awareness and

examples of best practices, particularly with respect to mitigating risks within our product supply

chains, and to enable our sourcing professionals to better recognize the signs of modern slavery

and act to address any identified issues. In 2018, we enhanced the content of our modern

slavery training and expanded the group of employees required to undergo such training to the

groups mentioned above. In 2019, we continued providing enhanced training to all new

employees in those groups. We also host an internal website that contains this training and

additional materials on this topic. To date, no issues of concern have been identified by our

personnel regarding any potential modern slavery at our suppliers.

 

Employee Certifications. Employees are periodically required to certify to their compliance

with the ITW Statement of Principles of Conduct. In addition, our modern slavery training,

mentioned above, also requires the employee groups described above to undergo periodic

certification of compliance.

 

Additional Corporate Social Responsibility Efforts

For more information on our efforts and our achievements relating to corporate social

responsibility, see our Corporate Social Responsibility Report, which is available at

http://www.itw.com/social-responsibility/.

 

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 24, 2020 and signed by a director of that entity

as indicated below.

 

Giles Hudson, Director

June 24, 2020