Materiality assessment at Nokian Tyres
Identifying and assessing the material topics
During the reporting period, we applied the materiality analysis that was compiled based on the responses to the 2015 sustainability survey and comments by business unit leaders. We did not modify the 22 special sustainability topics that were determined by the analysis or their priorities.
We moved two special sustainability topics, “Rolling resistance of tyres” and “Developing innovative and eco-friendlier products”, to the World on Wheels category. We want to clarify the reporting concerning product liability and communicate our commitment to develop eco-friendlier products for consumers. In order to enable better assessment of material topics regarding sustainability, this report also discusses how relevant risks and opportunities and the megatrends in sustainability impact our business.
This report is also Nokian Tyres’ first Communication On Progress (COP) report in line with the UN Global Compact (UNGC) requirements. The principles are combined with the materiality analysis and the company’s value chain. You can read more in the Value chain section.
Scope, changes and measurement methods of the report
We publish our Corporate Sustainability Report annually online and as a PDF document. Our Corporate Sustainability Report meets the CORE level requirements of the GRI G4 guidelines. The GRI comparison table allows for easy navigation of the online report and especially its General Standard Disclosures section.
As the indicators for our group’s environmental responsibility are compiled and calculated by the same methods as in our earlier reports, this year’s results are comparable to our previous reports.
In the social responsibility indicators, the figures for the Vianor chain are combined to cover all the companies in the chain, but the indicators are calculated by the same principles as in the previous reports. The report covers all the functions of Nokian Tyres plc, excluding the environmental responsibility indicators of Vianor outlets. The indicators for economic responsibility are based on our company’s financial statement, which is prepared and presented according to the IFRS standards. The indicators for environmental responsibility are divided between our locations in Nokia and Vsevolozhsk. The EMAS reporting that was previously employed in Nokia has generated the current systems for calculation and data collection.
Some of the special sustainability topics identified by Nokian Tyres go beyond the company’s calculation limits. Such topics include “Business ethics and compliance with the laws and regulations” and human rights questions, whose significance is emphasised early on in the rubber purchasing chain. At the moment, the company does not employ any methods for obtaining clear indicators for tracking progress with these special topics. However, through international organisations, our voluntary commitments and our own conduct, we aim to promote sustainability throughout the functions in our company’s value chain.
Reporting period, publication frequency and external assurance
The contents of the Corporate Sustainability Report from the 2016 reporting period have been assured by an independent third party, KPMG Oy Ab. Furthermore, the English sustainability report has been checked for consistency with the Finnish original. KPMG’s conclusions, findings and recommendations are presented in the assurance statement. The assurance was an assignment from the executive management of Nokian Tyres Plc.
Prioritisation of the material topics
The prioritisation of special topics enables us to further develop our business, define the focus areas for sustainability reporting and improve our communication on sustainability to stakeholders. The identified special GRI G4 Topics are presented in the table below. The horizontal axis indicates the significance of a topic to Nokian Tyres and the vertical axis indicates the significance to stakeholders. Different stakeholder groups may have diverse and conflicting requests and demands and, likewise, their expectations for the company operations may vary. Instead of looking for synergies, the table separates stakeholders’ expectations from those of the company. This avoids prioritising topics that are only important for both parties.
Significance of economic, environmental and social impacts of Nokian Tyres
- 1. Reducing the use of water in tyre production
- 2. Preserving and improving biodiversity at the production sites
- 3. Eco-friendliness, energy efficiency and emissions in production
- 4. Reducing greenhouse gas emissions in transport and production
- 5. Reducing waste volumes in tyre production
- 6. Human rights in Nokian Tyres’ business operations
- 7. Promoting equal treatment of people
- 8. High level of occupational health and safety in all operations
- 9. Ensuring employee satisfaction and motivation
- 10. Professional development of employees
- 11. Transparent and comprehensive reporting
- 12. Business ethics and compliance with the laws and regulations
- 13. Responsible purchasing of raw materials, goods and services
- 14. Good corporate citizenship (social support and work with organisations and communities)
- 15. Active stakeholder engagement in corporate sustainability
- 16. Ensuring profitable growth and maintaining a good profit level
- 17. Customer satisfaction
- 18. Sustainability as a competitive factor
- 19. Systematic business risk management, including sustainability
World on Wheels
- 20. Giving the highest priority to product safety
- 21. Rolling resistance of tyres
- 22. Developing innovative and eco-friendlier products
Validation of the material topics
The senior management of the company has approved the list of the special sustainability topics as well as the GRI-compliant management system descriptions, GRI Aspects and indicators that are based on the special topics. Here, you can see a graph of the relationships between the company’s special topics and the topics from the GRI reporting framework.
Hakkapeliitta Way in corporate sustainability
The Hakkapeliitta Way category comprises five sustainability principles that are seen throughout our operations and connected to our company’s strategic goals and vision.
Transparent and comprehensive reporting
As a public company, Nokian Tyres is bound by the statutory requirements and the rules of the stock exchange on the publicity of information which is relevant to the company’s business. In order to meet our stakeholders’ expectations, we follow the requirements of the Global Reporting Initiative framework. Based on these requirements, we aim at meeting all of the reasonable requirements that our stakeholders have on corporate sustainability. In this respect, Nokian Tyres’ communication on sustainability exceeds the minimum communication requirements for public companies.
Business ethics and compliance with the laws and regulations
We follow the board-approved Ethical Guidelines in operations throughout the Nokian Tyres group. The document has been published in several languages, and it specifies the ethical principles for Nokian Tyres’ business, instructions for ethical issues and a procedure for the group personnel. Furthermore, the document discusses the enforcement and supervision of the rules. While local and international documents provide additional instructions, the ethical guidelines establish a strong foundation and we expect all employees to follow them. This ensures conducting ethical business at all levels of our operations.
We follow the law in letter and spirit in every country of operation. Our ethical guidelines provide every employee with instructions in case they see something in our operation that may conflict with the applicable legislation.
Responsible purchasing of raw materials, goods and services
As a participant in the UN Global Compact initiative, we follow the UNGC’s ethical principles as well as our own, which also address the issues of responsibility in the purchasing chain. Furthermore, we require all of our raw material suppliers to adhere to our Supplier Code of Conduct that both parties sign, and all suppliers must, at the minimum, have an ISO 9001 certified quality system in place. We also prefer suppliers with valid ISO 14001 certification. The basic raw material for tyres is natural rubber. As an agricultural product, it is the livelihood of many families living in countries where the local legislation and working conditions have not been fully developed. Nokian Tyres only purchases natural rubber from processors that we have approved. We supervise their activities through audits and collaboration with local parties.
Nokian Tyres participates in the Sustainable Natural Rubber Initiative (SNR-i, IRSG), which promotes sustainable development throughout the supply chain of natural rubber and commits everyone in the supply chain to mutual goals.
Good corporate citizenship
We are a member of various industrial and employer organisations. Our participation in such organisations depends on the current topics and our opportunities to offer our expertise. Nokian Tyres is also a member of various communities and organisations that participate in the development of the legislation and political decision-making. Nokian Tyres is not involved in political activities, fundraising or political contributions as per our ethical guidelines.
In addition to trade associations, Nokian Tyres supports various non-profits and charities. We also offer expert services for communities free of charge. In Finland, for example, we provide the police with technical assistance in investigations of accidents that may have been caused due to the poor condition of tyres and we produce training materials on occupational health and safety for the rubber and tyre industry together with the Centre for Occupational Safety.
As an internationally expanding company, our impact on our surroundings is increasing and we continue to be a significant job creator and developer of local infrastructure. We support the development of local communities and the improvement of working conditions at the start of our value chain, when possible.
Active stakeholder engagement in corporate sustainability
Active stakeholder engagement helps us to better understand our stakeholders’ expectations. Different stakeholders may have conflicting expectations towards sustainability in our operations. This poses a communication challenge in stakeholder engagement.
World on Wheels
Product safety is the most important area of sustainability with regard to our company as well as our customers and end users. We improve safety through continuous product development and testing. Extreme weather phenomena that are caused by climate change increase the importance of tyre safety and especially contribute to the increased use of winter tyres. As a leading manufacturer of winter tyres, we have a special responsibility for making transportation better and safer.
Rolling resistance of tyres
The most significant environmental impacts during the use of a tyre are caused by the vehicle’s fuel consumption. Lower fuel consumption reduces the quantities of greenhouse gases released into the air. Tyres with low rolling resistance can save fuel, thereby reducing CO2 emissions. Through determined product development efforts we have managed to reduce the rolling resistance of our tyres, and our current product line includes several products with the best A class rolling resistance according to the EU tyre label. We are continuing our efforts on further reducing the rolling resistance of our tyres.
Developing innovative and eco-friendlier products
In line with the product life cycle approach, our company pays attention to environmental aspects already when buying raw materials and designing our products, in addition to safety. We work continuously towards reducing tyre noise as well as rolling resistance. Natural materials and safe, eco-friendly products that reduce fuel consumption, harmful emissions and rolling noise will also pave the way for us in the future.
Ensuring profitable growth and maintaining a good profit level
In industrial operations, the positive development of productivity is a prerequisite for a company’s success. In tyre manufacture, capacity utilisation is crucial in terms of productivity: the higher the capacity utilisation, the better the productivity. Automation of machinery and process improvements also contribute to better productivity. Our indicator for measuring production efficiency is kg/effort-hour.
Furthermore, we focus our production on core products with a good margin and invest in measures for continuously developing quality, productivity and logistics. Profitable growth requires that we continuously expand our capacity, and we invest in new production capacity according to our growth targets and the development of the market. Better productivity supports profitability, which enables higher salaries or dividends for our stakeholders, for example.
Customer satisfaction refers to Nokian Tyres’ direct customers as well as the end users of our products. We aim for continuous improvement of customer satisfaction through innovative new products, flexible and smooth logistics, regular product testing, safe and high-quality products and excellent service. We measure our success with customer satisfaction surveys and use their results for improving our operations further.
Using corporate sustainability for improving competitiveness
As a manufacturer of high-quality, innovative premium tyres designed for demanding conditions, we want to be an industry pioneer also in terms of sustainability. We invest in eco-friendly products and processes. We have developed tyres with the best A class rolling resistance according to the EU tyre label and use eco-friendly raw materials in their production. The more often our brand is associated with sustainability in addition to safety and high quality, the more we can attract sustainability-conscious customers. Improved competitiveness also in terms of sustainability supports our primary goal of profitable growth.
Systematic business risk management, including sustainability
The basic functions of every sustainable company include risk management, which involves identifying and prioritising the applicable risk factors and preparing for the main risks. At Nokian Tyres, Corporate Risk Management (CRM) also includes sustainability aspects. In 2016, we conducted in-depth assessments of sustainability risks in accordance with our roadmap, and included detailed assessments of sustainability risks. Read more about our risk management here.
Human rights in Nokian Tyres’ business operations
Wherever we conduct business, we follow the local laws and regulations as well as good Western business practices and the local customs. In addition to the law, our operations must follow the group’s internal rules and guidelines. We respect the privacy of our personnel, and we handle personal information according to this principle. Employment in our group is based on employment contracts in accordance with the local legislation and any collective agreements. Nokian Tyres’ salaries are always equal to or above the local statutory minimum wage. We respect our employees’ right to organise and we co-operate with the appointed representatives of trade unions.
Promoting equal treatment of people
Through commitment to our ethical guidelines, local legislation and external social responsibilities, we ensure equal opportunities for all of our employees and promote equal treatment at each of our locations.
High level of occupational health and safety in all operations
The health, safety and well-being of our employees and partners are essential matters for everyone at Nokian Tyres. We are committed to arranging a safe work environment for our employees and partners and ensuring that they get to go home healthy every day. We believe that every accident can be prevented and work towards a workplace with zero accidents. Through better working conditions and arranging training for our personnel and partners, we are continuously improving occupational health and safety.
Ensuring employee satisfaction and motivation
Our company develops and maintains a company culture that promotes fair and equal treatment and respect. Everyone contributes to our profitable growth and success regardless of his or her position. All of our employees can influence their own work and the working environment. Our inventiveness programme is one way to support leadership and the active participation of our personnel in line with our company culture.
Professional development of employees
Producing safe and high-quality products requires a high level of professional competence. With the automation of the industrial environment, work is becoming even more demanding. This emphasises the need for professional development of employees. Development opportunities also improve job satisfaction. We develop competence in a strategic and proactive manner that addresses future needs.
Reducing the use of water in tyre production
With the global water shortage, we also want to reduce the use of water in our production. Tyre production uses high volumes of cooling water: Our factory in Nokia takes the cooling water from the nearby river and our factories in Vsevolozhsk use a closed recirculating cooling water system that minimises water consumption.
Preserving and improving biodiversity at the production sites
Like many other manufacturing industries, we also greatly care about biodiversity, as all the raw materials for our products come from nature. Harm to biodiversity can result in the shortage of some raw materials. We also care about maintaining the biodiversity of our surrounding environments and preserving endangered species such as the asp, freshwater pearl mussel and red-throated loon.
Eco-friendliness, energy efficiency and emissions in production
We see the regulations established by the authorities as minimum requirements. Therefore, we actively follow the development of environmental and safety regulations in Finland, the EU and Russia for anticipating the effects of pending legislation.
We are committed to reducing GHG emissions caused by our operations in order to combat climate change. Furthermore, an EC directive requires corporations to carry out energy efficiency measures, such as energy audits. By increasing the proportion of renewable energy sources, we can cut down our greenhouse gas emissions from energy consumption. Improved energy efficiency will also result in cost savings.
Reducing greenhouse gas emissions in transport and production
Climate change is accelerated by greenhouse gas emissions, which are an essential issue for companies around the world. We are committed to reducing GHG emissions caused by our operations. We calculate the GHG emissions from our operations annually, including emissions from the transport of raw materials to us, and aim to reduce them systematically as planned. The new biomass boiler plant is a joint venture that will significantly reduce our GHG emissions in Nokia.
Reducing waste volumes in tyre production
Quantitatively, waste accounts for our highest environmental impact. Our factory in Nokia utilises almost all of the generated waste. The local infrastructure in Russia is not on par with our facilities in Nokia. We are, therefore, working towards ensuring the safety of waste management in our Russian factory.
Impact on the value chain
The GRI G4 reporting model requires the company to evaluate its sustainability footprint throughout the value chain of its business. In the following diagram, we have combined our special sustainability topics with our value chain. You can view our value chain closer here.
Commitment to external CSR initiatives and organisations
Nokian Tyres has been a member of the OMX GES Sustainability Finland Index since 2012. The index offers objective and reliable information for making responsible investments. The index comprises the 40 leading companies listed on NASDAQ Helsinki in terms of sustainability, and the index criteria are based on the international guidelines for environmental, social, and governance (ESG) issues.
We participate in various industrial and personnel organisations whose purpose is improving work throughout the industry. Our activity in the organisations depends on the topics that they address and our opportunities to offer our expertise.
For us, the most important organisations are the following:
- Chemical Industry Federation of Finland
- Rubber Manufacturers’ Association of Finland
- National automotive and tyre industry associations in several countries
- ETRMA/European Tyre and Rubber Manufacturers’ Association
- ETRTO/European Tyre and Rim Technical Organisation
- STRO/Scandinavian Tire and Rim Organization
- Finnish-Russian Chamber of Commerce
- International Chamber of Commerce
- Russian Tyre Manufacturers Association
- AEB (Association of European Businesses)
- AmCham (American Chamber of Commerce in Russia)
- Tampere Business Campus
- Corporate Responsibility Network FIBS
Communication on Progress: Nokian Tyres and UNGC
On 23 December 2015, Nokian Tyres became a participant in the United Nations Global Compact (UNGC) initiative. The initiative’s ten principles cover the areas of Human Rights, Labour, Environment and Anti-Corruption measures. The voluntary initiative guides companies in integrating the principles as part of their business. Joining the UN Global Compact initiative is a significant milestone in our work on sustainability internationally. By signing the initiative, our group is even further committed to conducting profitable business in a sustainable way.
The Communication on Progress (COP) report is a tool for communicating how the Global Compact principles have been joined with the company’s business. Nokian Tyres has integrated the COP report in the annual Corporate Sustainability Report in line with the GRI and UNGC instructions*. Nokian Tyres estimates that this first COP report meets the requirements of the “GC Active” level.
In the greetings from the management, you can read more about the importance of the UNGC principles and how the company is committed to their continuous development and integration.
Based on the materiality analysis, Nokian Tyres has determined the special sustainability aspects. These aspects determine the sustainability management descriptions that are presented in the report. Two of them, descriptions of the management systems for personnel and environment, cover the Labour and Environment themes of the GC principles. Nokian Tyres does not have any specific management descriptions for human rights or anti-corruption measures. Rather, these areas are covered in the company’s Ethical Guidelines. The Ethical Guidelines and the management systems that direct them are presented in the Sustainability management section.
In the report, the GC principles are combined with the materiality analysis and the company’s value chain. This enables using the GRI G4 reporting indicators for measuring the completion of the GC principles and highlighting the areas in the company’s business that are impacted the most by the principles. The GRI G4 table presents the indicators that also measure the company’s progress on the GC principles. Learn more about the company’s materiality analysis and value chain.
* Making the Connection: Using the GRI G4 Guidelines to Communicate Progress on the UN Global Compact Principles