Annual Report 2015

Direct investments

Responsibility generating growth and innovations

In direct investments, an investment is made in an individual growth company. The principles of responsible investment are followed in all phases of the investment process, from preparation of the investment to exit from the portfolio company. When making an investment decision we examine how the company addresses corporate responsibility issues, and any needs for influencing the company are explored at this stage.

In managing investments, responsibility issues are an integral element of the dialogue with a portfolio company. As an active owner, we influence the way in which the company handles its corporate responsibility affairs through, for instance, board work and in the case of portfolio companies in the mining sector we have appointed members to the board who have sound experience in environmental aspects. We also participated in the Network for Sustainable Mining, a stakeholder cooperation network in the mining sector consisting of representatives from the mining industry, environmental organisations, the finance sector, the tourism sector, reindeer farming, agriculture and forestry, and labour organisations.

Corporate responsibility is a fixed element of our investment focus, alongside risk assessment and the managing of investments. In our view, sectors that promote responsibility also offer an excellent framework for creating added value that is measureable in economic terms. Our investments in cleantech companies reflect this view. The business operations of our new portfolio companies are based on reducing environmental impacts or on reducing energy consumption. As examples, Eniram produces software that makes savings in the energy consumption of ships. At the end of 2015 our investment portfolio included altogether nine cleantech companies. We also belong to the Cleantech Scandinavia network, which combines the collaboration of investors, enterprises and public sector players in the cleantech sectors of the Nordic countries.
 
Finnish Industry Investment is a majority shareholder in Aker Arctic Technology Inc., whose environmental impact is significant. The company's corporate responsibility principles are specified in more detail in the 2014 Annual Report.

Case: Kotkamills

We invested in Kotkamills, a forest products company, in the spring of 2015. Kotkamills manufactures paper and board products in two production plants in Finland and is a major employer in the Greater Kotka area. The cooperation between Kotkamills and the SOTEK foundation, a local organisation promoting the employment of people with mental disabilities and work handicaps, has been positively highlighted by the national press.

Corporate responsibility issues were addressed in the different phases of the investment process. The material aspects of environmental responsibility, social responsibility and corporate governance were charted in the screening phase. These included the impact of the investment on the Greater Kotka area, personnel health, the impact of emissions, the origin of raw materials, the Board of Directors’ procedures, and in-house cooperation. A wide-ranging environmental review was also conducted by a third-party consultant, covering issues such as emissions into soil and water. 

Corporate responsibility and sustainable development are a critical part of Kotkamills’ operating model, because the recyclability of products is important to the company’s customers. Finnish Industry Investment’s strategic objectives include bioeconomy companies, like Kotkamills, that base their operations on sustainable development.

CEO Markku Hämäläinen describes Kotkamills’s corporate responsibility:

Corporate responsibility issues occupy a central role in day-to-day activities. The CEO carries the main responsibility for these issues, while members of the management team are responsible for them in their own spheres. The main meters for corporate responsibility are environmental emissions, occupational safety, sickness leave, personnel satisfaction and economic performance.
Evidence of the company’s transparency is the abundant data available on the company’s website.

Improvement in environmental impact

Kotkamills prepares an environmental report every year and the company regularly monitors environmental impacts with continuous metering and laboratory measurement.
The environmental reports are published on the internet.

Sustainable and ethical procurement of raw materials and other inputs

Procurement policy defines the spheres of responsibility and the main principles for tendering, negotiating and approval procedures. The policy also sets out the moral and ethical principles to be applied to procurement, both in-house and by suppliers. Suppliers’ instructions regarding the requirements for general, environmental and social responsibility are reviewed in discussions with suppliers and taken into account in selecting suppliers. Annexes to supplier contracts (Values and quality policy and Corporate responsibility principles) supplement these instructions. The contract templates used by the company include requirements for sustainable development. Any reports required under the Act on the Contractor’s Obligations and Liability when Work is Contracted Out, or under other legal provisions, are obtained when making the contract.

The management system for the origin of wood is both PEFC-certified and FSC-certified. Audits can be used to ascertain whether suppliers are applying sustainable development principles. The origin of wood and the subcontractor chain can be checked if the wood is delivered from a high-risk area.
These principles and procedures also apply to the Malaysia plant.
 
Personnel wellbeing and safety

Both the employer and the employee are responsible for improving personnel’s wellbeing at work, which in practice is improved in the workplace through collaboration between management, supervisors and employees. Safe, healthy and contented personnel are the most important resource in any workplace. Wellbeing at work affects the organisation’s competitiveness, economic performance and reputation. The main agents that support wellbeing at work are occupational safety personnel and shop stewards. An occupational health service partner helps to maintain work fitness, occupational health and wellbeing at work, and is actively involved in planning and developing processes that support wellbeing at work. The policy is shifting away from monitoring sick leave absences towards proactive prevention of illnesses by giving supervisors early intervention training.

In recent years, personnel’s job satisfaction, and consequently wellbeing, has substantially increased. This change is apparent when comparing the results of the personnel survey conducted in November 2015 with the results of the 2014 survey, or of previous years. The driving force for change was participation by all personnel in the company’s decision-making. We achieved this chiefly by involving employee representatives and shop stewards in making decisions about important matters relating to the company’s operative activities and procedures.

We have collaborated with Etelä-Kymenlaakso Vocational College (Ekami) and also with the SOTEK foundation, a local organisation promoting the employment of people with mental disabilities and work handicaps. We take our social responsibility very seriously, particularly in these economically difficult times when employment is hard to find.

We have enhanced our communication in all our activities and operations. Managers spend more time on the shop floor, giving employees an opportunity to get immediate information about any matters troubling them. Communication is an important activity that supports wellbeing at work.

We have substantially improved occupational safety over the last five years. The work safety organisation has improved the effectiveness of its activities and made them more visible. One of this year’s themes is upgrading work safety to a higher and improved level. In addition to the Kotka mills, the company has production plants at Tainionkoski in Imatra as well as in Pasir Gudang, Malaysia. All our plant units use standardised personal protectors and harmonised instructions. The work safety principles in each profit centre are the same: the target is zero accidents. Our Malaysia unit, where only one accident necessitating absence from work has occurred during the last six years, is a good example of our safety performance.

Absence due to sick leave has steadily declined over the last five years. In 2015 the percentage sickness leave was 4.8% (6.0% in 2014).
 
Development of corporate responsibility

Enhancing personnel awareness of corporate responsibility is a key development area. One goal is to harmonise and unify the corporate responsibility meters of different subdivisions and departments with a view to facilitating interdepartmental communication.

 

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