We check the backgrounds of all new suppliers according to Nokian Tyres’ Due Diligence process before supplier approval. Our supplier governance model includes risk assessment on several factors of all suppliers. Sustainability critical suppliers are committed to our Supplier Code of Conduct, which requires compliance with international human rights, and labor rights and anti-corruption measures.
Sustainability training is provided for the purchasing and other relevant personnel. One example of this is the Nokian Tyres internal CO2 and product carbon footprint trainings held during spring 2023 for raw material procurement and R&D material development teams. Another example is ISCC Plus certification training for procurement personnel held in May 2024.
In addition, Sustainability Manager responsible for the Supply chain sustainability, trains the category managers, buyers and R&D personnel related to each category’s relevant sustainability topics in frequent cross functional category meetings.
Assessing the sustainability of our suppliers
In addition to Due Diligence, we assess the possible risks attached to the suppliers. The assessment model has four different categories: quality, sustainability (environmental, social & governance), business/strategic criticality, and safety at work.
Following the same logic, suppliers with identified potential quality risk 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 critical categories. The supplier governance model is approved and overseen by the Vice president, Procurement.
Each raw material category has its own category strategy, which is reviewed annually. The category strategy includes various topics, such as commercial, risk management, sustainability and market analysis. Sustainability topics include both procurement-level and category-level sustainability KPIs and analysis of suppliers’ alignment on the Nokian Tyres sustainability requirements.
Actions are taken with all new suppliers that are classified as critical or medium critical in any of the four categories in the classification model. The actions are, for example, sustainability on-site audits, desk assessments and requesting a management system certification in terms of quality, environment, or safety. Potential risks identified with desk assessments are additionally confirmed and verified through on-site audits.
If non-conformances are identified during the audit, these are fed back to supplier and corrective actions are required. When supplier shows active improvement, the business can continue as usual. In exceptional cases, if supplier cooperation and development was not successful, the business relationship with the supplier has been discontinued. Suppliers are given at least one month time to create a first corrective action plan after receiving the audit report. We assist all suppliers that require support with their corrective action plan.
All Nokian Tyres' relevant contract manufacturing partners have been audited by respected 3rd party auditing agency.
Sourcing natural rubber
Natural rubber is one of the main ingredients for tires, and the livelihood of hundreds of thousands of families living in countries where the local legislation and working conditions have not been fully developed. Sourcing natural rubber in a sustainable way is considered the most critical stage in a tire company’s supply chain.
Natural rubber is cultivated in forests, often on small farms. Most of the natural rubber that we use comes from Malaysia and Indonesia.
Traceability remains problematic as the supply chain is fragmented. There are approximately 3–6 million farmers of natural rubber who collect the milky latex or cup lumps and sell them to local dealers. They collect them from several farmers and then sell the latex forward to processing plants.
More than 85 percent of the world’s natural rubber is produced on farms smaller than two hectares in size whose daily output may be just a couple of kilograms of latex.
Processing plants purify the natural rubber, process it as specified, pack it for further use, and sell it to the global traders or customers. Nokian Tyres exclusively purchases rubber, which is being processed in the plants our company has approved. You can read more of our sustainability audits here.
Nokian Tyres considers cooperation with the industry and other stakeholders to be vital in improving these conditions. The tire industry has made a joint effort to move towards sustainable natural rubber, also as concerns labor rights. In 2019, Nokian Tyres joined the Global Platform for Sustainable Natural Rubber (GPSNR), which is a platform established by WWF, several other nonprofit organizations, rubber traders and processors, and large tire manufacturers.
GPSNR strives to increase the supply and uptake of sustainable natural rubber in the global marketplace. Members of the platform will develop sustainable natural rubber standards, mechanisms and guidance on the implementation, monitoring, and verification of sustainable natural rubber commitments from companies.
In 2021, we adopted a Sustainable Natural Rubber Policy that is fully aligned with the policy framework of the GPSNR. The policy was approved by a member of the Group’s Management Team, who’s responsible for sustainability, and the company’s sustainability in natural rubber is developed through the framework of this policy. The policy includes eight major components:
- commitment to legal compliance
- healthy functioning ecosystems
- respecting human rights
- community livelihoods
- increased production efficiency
- supply chain assessment and traceability
- monitoring & reporting and
- driving effective implementation of all these components.
In 2023, 100 percent of Nokian Tyres’ approved natural rubber processors were either members of the GPSNR or committed to develop their operations according to Nokian Tyres Sustainable Natural Rubber Policy.