Sustainability in procurement

From raw materials to premium tyres

The long and complex journey from raw materials to finished premium tyres involves the effort and quality assurance of thousands of professionals. It is, therefore, justified to say that all of our personnel are linked to product responsibility. 

The work of Nokian Tyres’ own procurement unit is guided by the internal purchasing policy, which establishes the general principles of sustainable procurement. 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. In May 2017, we updated the Supplier Code of Conduct to include environmental aspects and revised the existing content. Our new Ethics Guidelines have been submitted to our raw material suppliers for approval, and the process will continue in 2018.

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. In 2017, 71% of our raw material suppliers had the ISO 14001 certification.

External audits help partners improve their sustainability

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 approved by Nokian Tyres. 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.

In order to improve supply chain sustainability, we started a partnership with an external auditor in 2016. Our separate sustainability auditing process has been developed together with a consulting company and it is based, among other things, on Nokian Tyres’ Supplier Code of Conduct and principles that comply with the UN Global Compact goals.

We have set a goal to audit all of our major rubber processor partners by 2020, comprising at least 80% of our natural rubber purchasing volume. The audits enable the processor companies to improve their occupational safety and develop their operations further. In 2017, we audited four locations and initiated corrective programmes to address the shortcomings identified in the process. Among other things, the programmes include providing first aid training and revising employment contracts as well as the repair and cleaning of accommodation facilities. We will review the implementation of the corrective actions in 2018.

We intend to conduct at least four new audits in 2018.

Self-assessments and quality audits focus the attention on occupational safety, quality and human rights

In addition to the audits by external parties, we track the sustainability of our raw material suppliers in connection with quality audits by our in-house personnel and raw material suppliers’ self-assessments. During the quality audits, we review the supplier’s production and evaluate the company’s quality management system. The audits specifically focus on the quality of the activities and raw materials. Our goal is to have quality audits performed at 15 suppliers per year, at a minimum. Furthermore, our purchasing personnel conduct smaller-scale supplier visits that include an assessment of the working conditions, among other things.

We sent out a self-assessment survey to all material suppliers in 2017. 85% of the suppliers responded. The supplier self-assessments discuss sustainability topics important to Nokian Tyres, including human rights and occupational safety. The assessments also seek to determine whether the supplier has set targets for developing their operations, the progress of the goals is tracked and they are supervising their own suppliers’ activities. This work will continue in 2018.

This page is included in KPMG’s assurance scope. Assurance report can be found here.