Materiality assessment at Nokian Tyres
In April 2015, we reorganised our sustainability management. To coordinate the sustainability efforts in our company, we appointed an environmental and responsibility manager and a Sustainability Team, which comprises experts from various fields. The Sustainability Team invents and plans measures for improving sustainability and oversees their implementation.
In the spring, we also started a project for reviewing our current status with sustainability and identifying areas for improvement. Over the course of the project, we interviewed a total of 12 managers and experts in different aspects of sustainability. We also responded to the Dow Jones Sustainability Index survey for finding development needs. This resulted in a Sustainability Roadmap for 2015–2017, which comprises 51 different tasks. The tasks include specification and improvement measures regarding the procedures, risk assessments, purchasing chain, HR development and environmental aspects.
In 2015, the internal auditing of Product Development uncovered some problems concerning magazine testing policies. We discovered that, previously, Nokian Tyres had manufactured special tyres with improved characteristics and submitted them for tyre tests. In light of the evidence obtained from the audit, the company issued new procedures regarding magazine testing and published its findings in February 2016 in a magazine interview and a stock exchange release. More information about the topic is available here. Our new procedures regarding tyre testing are available in the World on Wheels section of this report. We completed other tasks, such as the stakeholder review and stakeholder sustainability survey, according to the roadmap schedule in late 2015. We want to be a tyre industry pioneer also in terms of sustainability.
Starting in 2012, we have published sustainability reports in line with the GRI guidelines. The 2015 Corporate Sustainability Report is our company’s third GRI G4 compliant report. We publish our Corporate Sustainability Report annually on our website, and it is possible to print out specific sections or the full PDF report.
Our Corporate Sustainability Report meets the CORE level requirements of the GRI G4 guidelines. The publishing platform and the GRI comparison table allow for easy navigation of the 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 earlier reports. Our reporting covers all the functions of Nokian Tyres plc, excluding the environmental responsibility indicators of Vianor outlets. The indicators for financial 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.
The Corporate Sustainability Report for 2015 is part of our Corporate Sustainability site. The footers of all verified pages are marked as follows: The contents on this page are covered by the assurance performed by KPMG. The externally assured PDF report created at the time of publication can be found under Certificates, reports and awards.
In the autumn of 2015, Nokian Tyres Plc decided to have the Corporate Sustainability Report externally assured. The contents of the CSR from the 2015 reporting period have been verified by an 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 in the assurance statement. The assurance was an assignment from the executive management of Nokian Tyres plc.
We revised our focus areas of sustainability in 2015 and conducted a comprehensive sustainability survey for our stakeholders late in the year. We sent out survey invitations to a total of 835 persons who represent the different stakeholder groups in our key markets. We received 345 responses, which we used for determining the significance of different sustainability aspects to our stakeholders in the materiality analysis. The same questions were answered by the directors of our business units. Their answers were used for determining the aspects’ significance to business operations in the analysis.
The survey included 22 sustainability topics (GRI G4 Topics) and eight of them were identified as very important for the company.
Focusing on the important: prioritisation of the relevant matters
The prioritisation of special topics enables us to develop our business, define the focus areas for Corporate 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. Rolling resistance of tyres
- 7. Developing innovative and eco-friendlier products
- 8. Human rights in Nokian Tyres’ business operations
- 9. Promoting equal treatment of people
- 10. High level of occupational health and safety in all operations
- 11. Ensuring employee satisfaction and motivation
- 12. Professional development of employees
- 13. Transparent and comprehensive reporting
- 14. Business ethics and compliance with the laws and regulations
- 15. Responsible purchasing of raw materials, goods and services
- 16. Good corporate citizenship (social support and work with organisations and communities)
- 17. Active stakeholder engagement in corporate sustainability
- 18. Ensuring profitable growth and maintaining a good profit level
- 19. Customer satisfaction
- 20. Sustainability as a competitive factor
- 21. Systematic business risk management, including sustainability
World on Wheels
- 22. Giving the highest priority to product safety
Sustainability through value-based management
In order to ensure the continuous improvement of sustainability management and our operations, we have divided the special sustainability topics into five categories. These five categories comprise the themes of sustainability for our company.
- Hakkapeliitta Way in corporate sustainability is the theme for the sustainability principles that are seen throughout our operations. It is connected to our company’s strategic goals and vision.
- World on Wheels comprises our work on product safety and quality as well as our impact on traffic safety and the future of the rubber industry via expert organisations.
- Economy focuses on the economic impacts of our operations.
- People form the community around us: our employees, local communities and subcontractors around the world.
- Planet describes our environmental footprint.
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 ‘transparency imperative’ concept of the Global Reporting Initiative guidelines. Based on this concept, 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 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 guidelines 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 ethical business practices at all of the 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
We follow the UN Global Compact principles as well as our own ethical guidelines, 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 to have an ISO 9001 certified quality management 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.
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 support 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.
Product safety is the most important area of sustainability with regard to our company as well as our customers and end users. We develop 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.
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 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 the continuous development of 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. Productivity increases support profitability, which benefits our stakeholders as higher salaries or dividends, for example.
Customer satisfaction refers to Nokian Tyres’ direct customers as well as the end users of our products. We aim for continuous improvements of customer satisfaction through innovative new products, flexible and smooth logistics, regular product testing, safe, high quality products and excellent service. We measure our success through customer satisfaction surveys and use their results for the further improvement of our operations.
Sustainability as a competitive factor
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 system 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 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. We have started in-depth assessment of sustainability risks in accordance with our roadmap and will revise our risk assessment regarding sustainability during 2016.
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 operation 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. Our salaries are equal to or above the statutory local minimum wage. Furthermore, our employee stock options and bonus programmes cover everyone employed by the group. 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 in 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 further 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 contribute to further developing their own work and the working environment.
For us, personnel well-being comprises physical and mental well-being as well as cognitive and social well-being. Work that focuses on inventiveness is one way to support leadership and the active participation of our personnel in line with our company culture. We develop competence in a strategic and proactive manner that addresses future needs.
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 contribute to job satisfaction.
Reducing the use of water in tyre production
There is a global water shortage, and 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.
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. 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 caused by energy consumption. Improved energy efficiency will also result in cost savings.
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 annual GHG emissions from our operations, including emissions from the transport of raw materials to us, and aim to reduce them systematically according to a plan. The new biomass boiler plant is a joint venture that will significantly reduce our GHG emissions in Nokia.
Quantitatively, waste accounts for our highest environmental impact. In Nokia our factory reuse of 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.
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 system. 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, in addition to safety, our company pays attention to environmental issues 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.
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. Here, you can view our value chain closer.
In December 2015, Nokian Tyres joined the United Nations Global Compact initiative (UNGC). The ten UNGC principles cover human rights, labour, environment and anti-corruption processes. The GRI G4 indicators that measure adherence to these principles can be seen in the GRI comparison table in this report.
Since 2012, Nokian Tyres has been a member of the OMX GES Sustainability Finland Index, which provides 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 their work 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.
We are engaged in international marketing collaboration with the International Orienteering Federation and the organisation behind the Tough Mudder events. Our agreement with the International Orienteering Federation provides us with high visibility during the annual World Orienteering Championships and World Cup events. Focused on Central Europe, our partnership with Tough Mudder supports the image that our specially reinforced SUV tyres deserve, and we have had diverse marketing visibility around Europe.
Tough Mudder organises obstacle course races that put strength, endurance, teamwork and mental grit to the test. The Nokian Tyres’ brand and Tough Mudder both demonstrate the same mentality: succeeding under exceptionally demanding conditions through intelligence and relentlessness. These elements can also be found in the annual Swamp Soccer World Championships in Hyrynsalmi, Finland. We have been the main sponsor for the championships for nearly 10 years.
Furthermore, we have been one of the main sponsors of the youth road safety campaign “Turvassa tiellä” and the “Rosvopaisti” events for Finnish war veterans. We have also offered minor contributions to local activity clubs and organisations that focus on substance abuse prevention.