Greetings from the management

A year in sustainability: our transparency and own example promote ethics throughout the tyre industry

Ari Lehtoranta

Company operations on a strategic and operational level require continuous development efforts. We at Nokian Tyres have been conducting sustainable business for decades, constantly aiming for better products and business functions and a more open dialogue with our stakeholders. Starting in 2012, we have published group-level sustainability reports in line with the GRI guidelines, and before that we published several annual EMAS reports. In December 2015, we joined the United Nations Global Compact initiative, after which we have started our efforts for better meeting the initiative’s requirements.

A good example of our desire to improve the practices in our company and the entire tyre industry is our disclosure regarding the ethics of the industry and magazine tests (Kauppalehti, 24 February 2016). This created a media stir, which ultimately focused on something other than the integrity of the ethical chain and improving sustainability in the tyre industry. Based on the media coverage, one might think that our sustainability efforts had a setback in 2016. To me, however, the situation is the exact opposite. In the past year, we took steps in the right directions in many areas. Naturally, our most visible action was our rectified approach to magazine testing, which was extensively covered by the media. I believe that our continued success despite the media reaction shows that our customers and consumers alike took the message in a constructive way, believing that this makes us an even more responsible company and a better provider of safety.

In order to improve transparency throughout the industry, we proposed consistent rules for testing practices to the ETRMA, the European Tyre and Rubber Manufacturers’ Association. Even though our proposal was not accepted at this time, we decided to apply these rules to our own business. Through our own example, we want to improve the reliability of testing and the entire industry. As a relatively small company, we only have modest means to influence the industry through our membership in various organisations. However, we have a strong history in making a difference by setting an example. By discontinuing the use of high aromatic oils faster than other companies, we contributed to the tyre industry abandoning them several years earlier than planned. With initiatives like this, we can influence tyre production positively as an industry pioneer.

Enabling consumers to drive safely has been and will always be one of our essential sustainability goals. Our tyres that succeed in transparent, reliable tests are the component of our sustainability efforts that consumers see in their everyday life. We have made winter traffic safer through each new generation of Hakkapeliitta tyres. Our work for safe driving has continued for decades and, during the fiscal period, the Hakkapeliitta tyre celebrated its 80th anniversary.

However, safety is important for our working environment as well as our products. The positive development in occupational health and safety continued in 2016: the number of accidents decreased nearly 30%, we improved the reporting rate of safety observations and we established a new kind of safety culture and enthusiasm together with the personnel. We will continue our work for ensuring a safe working environment, and the positive trend in safety will continue in the coming years.

The agreement that we signed with our personnel in early 2016 provided more flexibility and allowed us to enjoy mutual benefits. With the new agreement, we have been able to complete the fiscal period without temporary or permanent layoffs – for the first time in years. We will continue this at least for the next couple of years. Late last year, we agreed on the details of the competitiveness pact with our Finnish personnel. The company also donated €500,000 to the personnel fund as a thank you for everyone’s contributions and flexibility. These actions lay a good foundation for improving the working environment and motivating our personnel in the future.

In 2016, as one main owner and investor, we helped commission a new biomass power plant in Nokia, Finland. With the plant, we took a leap forward in the use of renewable energy sources. There were also other good developments with our production: we improved productivity and reduced the amount of waste. This affects our carbon footprint as well as our consumption of natural resources. Climate change is connected with everything we do. Especially in energy production, today’s business decisions will continue to affect our means to mitigate the effects of climate change for decades.

We are committed to our sustainability goals and external initiatives, which will give us an opportunity to reach an even better and sustainable future.

I hope you enjoy our report,

Ari Lehtoranta
President and CEO

The sustainability goals guide us in the right directionTeppo Huovila

For decades, we have worked for safer and eco-friendlier transportation and improved our social, economic and environmental responsibility. External assessments also show that we are on a good level. In the annual Dow Jones Sustainability Index assessment, for example, we once again improved our total score and exceeded the industry average in 17 out of 18 assessment criteria. However, despite the improvements and our long-term development efforts, we still have work to do.

In the near future, we will especially focus on reducing greenhouse gases through better energy-efficiency in production and lower rolling resistance of our tyres. Further improvements in terms of rolling resistance enable reducing CO2 and other exhaust emissions from traffic by millions of kilograms per year.

Resource-efficient operation has been one of our priorities for years. In the past three years, we have managed to reduce waste generation in our production by a third. Our unit in Nokia is already now a zero landfill factory, which means that all waste generated in its production is utilised. We have set the same goal for our Vsevolozhsk factory.

In order to improve the sustainability of the purchasing chain and the coverage of our supplier assessments, we stared partnering with an external auditor. We aim for more detailed supplier assessments especially in the natural rubber purchasing chain. Moreover, all of our raw material suppliers must conduct a sustainability self-assessment in 2017. The above examples and our other corporate sustainability goals aim for improving our results in the various sustainability categories and the transparency of our operations in the future.

We also focus on our personnel and company culture, emphasising sustainability more than before. Every day, each Nokian Tyres’ employee should make decisions that ensure ethical behaviour and excellent results. One concrete example of our efforts is our online training course on sustainability, which we published in late 2016 for our personnel in several languages. Our clear sustainability goals act as beacons that guide the actions of our personnel.

We promise to continue promoting sustainability and ethical behaviour in the tyre industry by working hard and setting a good example.

Teppo Huovila
Vice President, Quality, Sustainability and ICT

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