S2 Workers in the value chain
Strategy
Material impacts, risks and opportunities and their interaction with strategy and business model
Höegh Autoliners operates a global fleet of Pure Car and Truck Carriers (PCTCs), transporting vehicles and high-and-heavy cargo across major trade routes globally. The business model depends on a broad value chain that includes workers involved in shipbuilding activities, dry-dock maintenance, port operations, fuel supply, future recycling activities and external seafarers sailing Höegh operated vessels. These value chain activities are essential to delivering reliable and sustainable transport solutions, but they also expose us to systemic risks related to workers’ rights and health and safety.
The following categories of value chain workers are identified as part of the materiality assessment:
• Shipyard workers involved in newbuildings, maintenance projects and recycling activities, where tight schedules and subcontracting practices increase exposure to unsafe conditions and labour rights violations.
• Port and bunkering workers in regions with varying labour standards, where health and safety risks and poor working conditions may occur.
• Raw material supply chain workers, particularly in steel production and fuel refining, where complex supply chains make monitoring difficult and increase the risk of forced labour and/or unsafe working conditions.
• External crew employed on three owned and six time-chartered vessels at year end, where adherence to Höegh standards is required, while the underlying risks of adverse impacts remain systemic across the industry.
None of these workers are employed in Höegh Autoliners’ offices or onboard our vessels during trading, except for the external crew serving on Höegh-operated vessels.
The materiality assessment identified the following material impacts related to workers in Höegh Autoliners’ value chain. They relate to the sub-topics: working conditions and other work-related rights.
Impacts, risks and opportunities (IROs)
| Location in the value chain | Time Horizon | ||||||
| Upstream | Own Operations | Downstream | Short-term | Medium-term | Long-term | ||
| Actual negative impact on human rights and decent working conditions | Actual negative impact | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | |
| Actual negative impact on health and safety | Actual negative impact | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | |
Actual negative impact on human rights and decent working conditions
It is likely that workers across Höegh Autoliners’ supply chain may encounter adverse negative impacts on human rights and decent working conditions, including inadequate wages, insufficient social insurance, excessive working hours, and risks of forced labour. These adverse impacts may arise both in the upstream and the downstream value chain, with a heightened likelihood in regions where labour protections are weak. Given the nature of our operations, such impacts are considered systemic and may occur over the short, medium, and long term.
Actual negative impact on health and safety
In addition to the social impacts outlined above, the nature of our business inherently involves health and safety impacts for workers throughout the value chain. These impacts may arise as part of shipbuilding, dry-dock maintenance, port- and fuel operations, vessel operations at sea, and in future recycling activities. Adverse impacts as part of newbuilding and recycling activities are largely time-bound to the periods in which these activities occur. On the other hand, impacts associated with port, fuel and vessel operations, and dry-dock maintenance are considered systemic to the industry and remain relevant across short-, medium-, and long-term horizons.
Impact, risk and opportunity management
Policies related to value chain workers
Höegh Autoliners’ Human Rights Policy promotes ethical business practices and the protection of human rights for everyone involved in our operations and value chain. The policy is based on the UN Guiding Principles on Business and Human Rights and addresses human rights topics relevant for our supply chain such as forced labour, child labour, any practice that constitutes trafficking in person or slavery, fair and equal treatment, and respect of regulations in all locations where we operate.
For more details of our Human Rights policy, please refer to “Our approach to human rights” in ESRS S1-1.
We detail our requirements and expectations for our suppliers in our “Supplier Code of Conduct” , including forced labour, working hours, wages, and benefits, as well as health and safety. The policy is available for all employees through our internal document management system and is made public on our website.
For more information on our Supplier Code of Conduct, please refer to ESRS G1-1.
Our “Whistleblowing Policy” acknowledges the importance of anonymous reporting and ensures that whistleblowers are protected from retaliation for raising concerns and reporting violations.
For more information on our Whistleblowing Policy and availability of the Whistleblower channel, please refer to ESRS G1-1.
Processes for engaging with value chain workers about impacts
Höegh Autoliners conducts both internal and external audits of the shipyard contracted for our newbuilding program, which currently is our largest supplier. These audits are designed to ensure compliance with social, environmental, and safety standards, as well as to verify continuous improvement in line with our sustainability objectives.
External audits are carried out regularly by the classification society DNV on behalf of Höegh Autoliners. These audits follow a comprehensive review process that includes a desktop assessment of publicly available information, examination of the shipyard’s internal policies, onsite inspections, and interviews with key members of the shipyard’s management team as well as randomly selected workers.
The scope of these audits covers a wide range of topics, including but not limited to social management practices, working hours, wages, social insurance, environmental protection, and health and safety measures. In addition to these third-party audits, our internal newbuilding team conducts an annual onsite audit at the yard to verify whether any findings from previous external audits have been effectively remediated. While the shipyard audit is under the responsibility of the Chief Operating Officer, we have not yet established a formal process for engaging with value chain workers beyond our shipbuilding operations and existing grievance mechanisms.
Processes to remediate negative impacts and channels for value chain workers to raise concerns
If any material negative impacts on supply chain workers come to Höegh Autoliners’ attention, each case will be diligently evaluated and investigated by the Legal Department and Human Resources depending on the case and circumstances. Relevant stakeholders, including impacted workers where applicable, will be informed and consulted to determine the necessary actions to effectively address and mitigate the issue. An appropriate action plan will be developed, outlining corrective actions and a timeline for implementation. A proper feedback loop will be established to monitor the implementation of these actions. The effectiveness of the plan will be continuously monitored and documented, with the ultimate goal of preventing similar issues in the future.
All external parties, including our value chain workers, can raise concerns about any suspected legal or financial misconduct through our independent whistleblowing mechanism, available on our website. Our supplier code of conduct includes a dedicated section outlining the availability of the whistleblowing hotline for value chain workers, allowing them to report issues either openly or confidentially. This channel facilitates direct dialogue with value chain workers when concerns are raised.
Further information about the whistleblowing process and policies can be found in section ESRS G1-1 of our business conduct reporting.
Taking action on material impacts on value chain workers, and approaches to managing risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions
We have established a continuous process to identify and address potential adverse impacts on workers in our value chain. These measures are embedded in internal procedures and supplier management practices rather than specific short-term actions. Key actions include ongoing risk assessments, integration of human rights requirements into supplier contracts, and regular compliance monitoring. These actions support our policy objectives of securing human rights for workers in the value chain and maintaining strong relationships with our suppliers.
These efforts are designed to mitigate potential negative impacts and will remain a priority in the coming years. While no specific budget is allocated for future actions, we continuously monitor performance for selected suppliers to ensure adherence to our standards.
Our supplier registration procedure, standardized across the organization in 2024, is now fully embedded and consistently applied across all relevant functions. As part of this process, we conduct a comprehensive third-party sanction screening to ensure that all new suppliers comply with regulatory requirements and uphold ethical standards. Effectiveness is monitored by confirming that no suppliers identified as non-compliant through the screening process are engaged. Suppliers are also required to sign our Supplier Code of Conduct, reinforcing their commitment to responsible business practices, including respect for human rights and decent working conditions.
Further details on this procedure are provided under ESRS G1-1.
To address potential adverse human rights impacts among supply chain workers, we have implemented a two-layered approach. First, we conduct an internal risk assessment at each functional level to identify areas where breaches of human rights are most likely to occur. This screening process enables us to prioritize functions and activities that require closer attention.
Building on these insights, we apply a targeted supplier due diligence process. In late 2024, we introduced a third-party platform to streamline and strengthen this effort. The platform assesses suppliers using a combination of risk indicators, such as geographic location, industry profile, and spend data, allowing us to categorize suppliers based on their risk exposure. High-risk suppliers identified through this process are subject to enhanced due diligence measures, including self-assessment questionnaires and further engagement to verify compliance with human rights standards.
By focusing resources on the most critical areas, this approach helps us prevent and mitigate adverse impacts on human rights and promote decent working conditions throughout our supply chain. We are committed to continuously improving these processes to ensure robust and effective risk management.
China Merchant Heavy Industry is Höegh Autoliners’ largest supplier, and we are conducting regular ESG audits of the yard. These audits, conducted by DNV on our behalf, include a comprehensive review process encompassing a desktop review of public information, internal policies, onsite visits, and interviews with management and randomly selected workers.
The audits cover various aspects of social management, including working hours, wages, social insurance, environmental protection, and health and safety. The aim is to identify potential negative impacts on both the health and safety and general working conditions of yard workers.
Additionally, our internal newbuilding team conducts annual on-site audits to assess if previous findings made by DNV have been properly solved. It is expected that both audits will continue on a regular basis going forward.
No severe human rights violations, nor any breaches of the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises involving value chain workers in Höegh Autoliners’ upstream or downstream operations were reported during the reporting year.
Consequently, no incidents causing negative impacts on workers in our value chain that required remediation occurred within this period.
For further information on Höegh Autoliners’ work related to human rights and decent working conditions, please refer to the Transparency Act Report which will be published by 30.06.2026, available on the company’s website.
Metrics and targets
Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities
Currently, we have not set specific targets for managing potential material negative impacts on value chain workers. Nevertheless, we actively monitor potential cases through several channels, including our external grievance mechanisms, findings from supplier audits, and ongoing stakeholder engagement.
At present, no formal qualitative or quantitative indicators are applied in this monitoring process. We are assessing the appropriateness of introducing measurable targets and related indicators for our supplier due diligence activities.
