We expect our business partners to act responsibly and to comply with the Fortum Code of Conduct and the Supplier Code of Conduct. Fortum’s key tools in supply chain management are country and counterparty risk assessments, pre-selection of suppliers and supplier audits.
Codes of conduct cover basic requirements
The Fortum Code of Conduct forms the foundation for ethical business conduct and the Supplier Code of Conduct includes the sustainability requirements for suppliers of services and goods. The Supplier Code of Conduct is based on the principles of the United Nations Global Compact initiative and is divided into four sections: business practices, human rights, labour standards, and the environment. The country and counterparty risk assessment follows the same basic structure with regards to sustainability, and addresses issues like the implementation of the guiding principles of human rights.
The Supplier Code of Conduct is used in all our countries of operation and is included in all purchase agreements exceeding EUR 50,000. The Supplier Code of Conduct was updated in 2014, and at the beginning of 2015 we started internal training on the requirements of the updated Supplier Code of Conduct. In 2015 the training was held in Finland, Sweden and Poland. Personnel in India received training in early 2016. The training in our other countries of operation will be arranged during 2016.
Pre-selection of suppliers was renewed
We assess the level of operations of our business partners through pre-selection and supplier audits. The pre-selection process was renewed during 2015, and it is made whenever the purchase volume exceeds EUR 50,000. The goal is to better identify risk suppliers and to direct further measures towards these suppliers. During the first phase of the pre-selection, the credit check is made, and the supplier is sent a short written questionnaire. The questionnaire surveys the supplier’s possible operations in risk countries, certified management systems, and the occupational safety level of the contractors. We pay special attention also to anti-corruption practices.
If potential risks in the supplier’s operations are identified through the questionnaire, a more extensive self-assessment questionnaire may be sent or a supplier audit is conducted. The extensive self-assessment questionnaire is always sent to fuel suppliers.
The Russia Division uses its own supplier pre-selection process. Pre-selection is done in accordance with Russian procurement law, and bidding is open to all companies. In the Russian operations, we set supplier requirements for business principles and ethics.
Supplier audits support assessments
In supplier audits, we assess the supplier’s compliance with the requirements in Fortum’s Supplier Code of Conduct. Our own personnel are responsible for conducting the supplier audits. Audits are always done on-site, and they include production inspections, employee interviews, and reviews of documents and records. If non-compliances are found, the supplier makes a plan for corrective actions and we monitor the implementation of them.
Fortum is a member of the Bettercoal initiative and uses the Bettercoal Code and tools in assessing the sustainability of the coal supply chain. Bettercoal audits are always conducted by a third, accredited party. In 2015, one of Fortum’s Russian coal supplier was audited, and the audit process for another coal supplier was under way at the end of the year.
Supplier audits in 2015
In 2015 we audited a total of nine suppliers in Poland, Czech Republic, Russia, Kazakhstan and India; our focus in India was on potential solar plant contractors.
Most of the non-compliances identified in the audits were related to occupational safety, overtime hours, remuneration, and management of the suppliers’ own subcontractors. The audits conducted did not reveal non-compliances related to freedom of association, discrimination, or child or forced labour, but we did give a recommendation to an Indian contractor to strengthen its age verification practices when hiring new employees. The recommendations we gave regarding environmental issues involved, among others, measuring emissions, setting environmental targets, reducing water use, improving sorting effectiveness, and improving chemical safety.
Our goal in 2016 is to audit 15 suppliers. Our goal is also to take into use a simplified, lighter auditing model. The lighter model will enable also our purchases personnel to verify a supplier’s practices. Additionally, in 2016 we will assess the possibility to increase the number of supplier audits by collaborating with an external service provider in conducting audits.
Suppliers audited in 2015 by supplier type
Suppliers audited in 2015 by country