Materiality assessment at Nokian Tyres
Material sustainability topics
In order to specify our company’s material sustainability topics, we used a materiality analysis in the reporting period. The analysis is based on 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.
As the materiality analysis is based on the GRI G4 reporting framework, we kept its tabular presentation and descriptions intact. In the current Standard reporting model, the concept of “impact” changes the way the material topics are presented. Based on this concept, a material topic is assessed such that one axis in the table indicates the company’s impact on the surrounding community. We will go through this process in 2018. In this report, the impacts of each material topic are described briefly when discussing the topic. For more information on how Nokian Tyres’ impacts are positioned in our value chain, see here.
The prioritisation of material 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 material topics are presented in the table below. The horizontal axis indicates the significance of a topic to Nokian Tyres and the vertical axis indicates its 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. Rolling resistance of tyres
- 21. Developing innovative and eco-friendlier products
- 22. Giving the highest priority to product safety
The senior management of the company has approved the list of the special sustainability topics as well as the GRI-compliant management system descriptions, topics and indicators that are based on the special topics.
Scope and measurement methods of the report
We publish our Corporate Sustainability Report annually on our website, and it is also available as an automatically generated PDF copy. This report has been prepared in accordance with the GRI Standards: Core option. The easiest way to review the online report is to use the GRI comparison table.
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 previous years.
In the social responsibility indicators, the figures for the Nokian Tyres' equity-owned 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 reporting covers all the functions of Nokian Tyres plc, excluding the environmental responsibility indicators of Vianor service centers. The indicators for economic responsibility are based on our company’s financial statement, which is prepared and presented in accordance with 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 that we identified go beyond our 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. We do not currently employ any methods for forming clear indicators in order to track our progress with these special topics. However, through international organisations as well as our voluntary commitments and conduct, we aim to promote sustainability across the functions in our company’s value chain.
Reporting period, publication frequency and external assurance
The contents of the Corporate Sustainability Report for the 2017 reporting period have been verified by the independent third party KPMG Oy Ab. Furthermore, the assurance confirms that the English sustainability report matches the Finnish original. KPMG’s conclusions, findings and recommendations are presented here. The assurance was commissioned by the executive management of Nokian Tyres plc.
Material topics: five main areas
Hakkapeliitta Way – our way of doing business
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
Impact: more open interaction with stakeholders
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
Impact: ethically sustainable business
Nokian Tyres’ business across the group is guided by the ethical principles presented in the board-approved Ethics Guidelines for Nokian Tyres Group. The document has been published in several languages, and it specifies the ethical principles for Nokian Tyres’ business, instructions for various ethical issues and a procedure for all group personnel. Furthermore, the document discusses the enforcement and supervision of the rules. While local and international documents provide additional instructions, the Ethics 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 Ethics Guidelines provide every employee with instructions on what to do in case they see something in our operation that may conflict with the applicable legislation.
Responsible purchasing of raw materials, goods and services
Impact: products that support sustainable development, fair conduct in developing economies
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 supply chain.
Furthermore, we require all of our raw material suppliers to adhere to our Supplier Code of Conduct. All raw material suppliers must, at a minimum, have an ISO 9001-certified quality management system in place. We also prefer suppliers with an ISO 14001-certified environmental management system.
One of the basic raw materials of 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. We only purchase natural rubber from processors that we have approved. We supervise their activities through audits, among other things.
In recent years, Nokian Tyres has participated 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. Despite the good principles behind the initiative, the development has not fully met our company’s expectations. We will, however, continue to support the initiative in the coming fiscal period.
Read more about sustainability in our procurement here
Good corporate citizenship
Impact: interaction and better communication with society and the local community
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. We are 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 Ethics Guidelines.
In addition to trade associations, Nokian Tyres participates in the activities of 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 various training materials on occupational 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 early on in our value chain, when possible.
Active stakeholder engagement in corporate sustainability
Impact: insight on the impact of our business and interacting with stakeholders
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
Impact: safer transport
Product safety is the most important special area of sustainability with regard to our company as well as our customers and end users. The development and functional testing of tyres’ safety characteristics requires constant effort. Extreme weather phenomena that are caused by climate change and varying road conditions increase the importance of safe tyres and drive the demand for All-Season and All-Weather tyres. As a leading manufacturer of studded and non-studded winter tyres, we have a special responsibility for making transportation better and safer. We are responding to the changing needs by developing a more comprehensive range of non-studded winter tyres and All-Season tyres.
Rolling resistance of tyres
Impact: reduced environmental impact from traffic
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 EU tyre label’s best class A rolling resistance rating. We are continuing our work on further reducing our tyres’ rolling resistance.
Developing innovative and eco-friendlier products
Impact: reduced environmental impact from traffic
In line with the product life cycle approach, our company pays attention to the environmental aspects in addition to safety already when buying raw materials and designing our products. 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.
Profitable growth and a good profit level
Impact: investment opportunities, employee well-being and providing added financial values for shareholders
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 is, the better the productivity becomes. 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 improving 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, in turn, enables higher salaries or dividends for our stakeholders, for example.
Impact: developing our own operations, improving business and service quality
Customer satisfaction covers Nokian Tyres’ direct customers as well as the end users of our products. We aim for the continuous improvement of customer satisfaction through innovative new products, flexible and smooth logistics, regular product testing, safe and high-quality products and excellent service. Among other things, we measure our success with customer satisfaction surveys and use their results for developing our operations further.
Sustainability improving our competitiveness
Impact: driving sustainable business thinking, reaching consumers who value sustainable business and products
As a manufacturer of high-quality, innovative premium tyres, we also want to be an industry pioneer in terms of sustainability. We invest in eco-friendly products and processes. We have developed tyres with the EU tyre label’s best class A rolling resistance 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 reach sustainability-conscious customers and consumers. Improved competitiveness, including in terms of sustainability, supports our goal of profitable growth.
Business risk management, including sustainability
Impact: driving profitable business
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.
Human rights in Nokian Tyres’ business operations
Impact: developing an open and ethically sustainable working environment
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 data in line with this principle. Employment in our group is based on employment contracts in accordance with the local legislation and any collective agreements. Nokian Tyres’ wages are always equal to or above the local statutory minimum wage. We respect our employees’ right to organise and we cooperate with the appointed representatives of trade unions.
Promoting equal treatment of people
Impact: developing an open and ethically sustainable working environment, promoting equal treatment
Through our commitment to our Ethics Guidelines, local legislation and external social responsibilities, we ensure equal opportunities for all of our employees and promote fair and equal treatment at each of our locations.
High level of occupational health and safety in all functions
Impact: arranging a safe working environment
The health, safety and well-being of our employees and partners are important for everyone at Nokian Tyres. We are committed to arranging a safe working environment for our employees and partners and ensuring that they get to go home healthy every day. Every accident can be prevented and we are working towards a workplace with zero accidents. Through better working conditions and providing training for our personnel and partners, we are continuously improving workplace safety.
Employee satisfaction and motivation
Impact: motivating and inspiring working environment, joy from work and colleagues
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 have the opportunity and means to 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
Impact: higher product quality, motivating working environment
Producing safe and high-quality products requires a high level of professional competence. With the automation of the industrial environment, the work is becoming even more demanding. This emphasises the need for professional development of employees. In addition, development opportunities improve job satisfaction. We develop competence in a strategic and proactive manner that anticipates future needs.
Reducing water consumption in tyre production
Impact: conserving natural resources
With the global water shortage, we also want to reduce water consumption in our production. Tyre production uses large quantities 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 promoting biodiversity at the production sites
Impact: natural diversity
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 local environments and preserving endangered species, including the asp, freshwater pearl mussel and red-throated loon.
Eco-friendliness, energy efficiency and emissions in production
Impact: improving air quality in local environments, improving energy-efficiency
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 from our operations in order to combat climate change. Furthermore, an EC directive requires corporations to carry out energy audits and other energy-efficiency measures. By increasing the proportion of renewable energy sources, we can cut down our GHG emissions from energy consumption. Improved energy efficiency will also result in cost savings.
Reducing greenhouse gas emissions in transport and production
Impact: participating in climate change mitigation
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 from our operations. We annually calculate the GHG emissions from our operations, including emissions from the transport of raw materials to us, and aim to reduce them systematically as planned. The biomass boiler plant commissioned in 2016 will significantly reduce our GHG emissions in Nokia.
Reducing production waste volumes
Impact: promoting circular economy, reducing our ecological footprint
Quantitatively, waste accounts for our highest environmental impact. Our factory in Nokia utilises all of the generated waste. The local infrastructure in Russia is not yet on par with our facilities in Nokia. We are, therefore, working towards improving the safety of waste management in our Russian factory. Our goal is that all waste is utilised also in our Russian factory by 2020.
Commitment to external corporate social responsibility initiatives and organisations
In September 2017, Nokian Tyre was selected for Dow Jones’ DJSI World sustainability index. With a total sustainability score nearly twice as high as the industry average, we significantly improved our results in the 2017 assessment. Our score of 78 points was only one point behind the world’s highest score in the Auto Components sector. Dow Jones Sustainability Index (DJSI) is an annual sustainability assessment for large publicly traded companies, performed by the Swiss RobecoSAM.
Nokian Tyres has been included in 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) aspects.
This report is also Nokian Tyres’ Communication On Progress (COP) report, which complies with the UN Global Compact (UNGC) requirements. The principles are combined with the materiality analysis and the company’s value chain. For more information about the COP report, click here.
We also 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:
- Chemical Industry Federation of Finland
- Rubber Manufacturers’ Association of Finland
- National automotive and tyre industry associations in various 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.