We believe there is a clear connection between high standards of ethical business practices and excellent financial results. As an industry leader, we go beyond simply obeying the law: we embrace the spirit of integrity and uphold ethical business conduct wherever we operate.
Code of Conduct sets the basic requirements
The Fortum Code of Conduct and Fortum Supplier Code of Conduct define how we treat others, engage in business, and safeguard our corporate assets, and how we expect our suppliers and business partners to operate. We have zero tolerance for corruption and fraud. Fortum’s Board of Directors is responsible for the company’s mission and values and has approved the Fortum Code of Conduct. The Supplier Code of Conduct, based on the 10 principles of the UN Global Compact, has been approved by the Head of Procurement in collaboration with the purchasing steering group.
Fortum’s Code of Conduct and the related online training were updated in 2015. By the end of the year more than 95% of the personnel had completed the updated online training. The members of Fortum’s Board of Directors had also completed the training. The online training on the Code of Conduct is part of the induction programme for new employees.
The Supplier Code of Conduct was revised towards the end of 2014 by updating e.g. the anti-corruption guidelines. Training related to the Supplier Code of Conduct was held in 2015 in Finland, Sweden, Poland and in India in January 2016. The training will be held for other countries during 2016. The Code of Conduct has been included in new contracts and is part of any purchase agreement exceeding EUR 50,000. These agreements account for about 95% of our total purchasing volume, and geographically they target mainly Finland, Sweden, Russia, Poland and Estonia.
In line with our Code of Conduct, Fortum does not award donations to political parties nor to any kind of political activities, religious organisations, authorities, municipalities or local administrators.
Risk identification and management
The compliance risks targeting our business operations are related to the potential for bribery or corruption, fraud and embezzlement, non-compliance with legislation or company guidelines, conflicts of interest, improper use of company assets, and working under the influence of alcohol or drugs. These risks are managed as part of Fortum’s operational risk management framework and control procedures. This process also includes risks related to sustainability. A systematic compliance risk assessment is included in the annual business planning process and reporting, and follow-up is a part of the operational performance review.
In addition to internal reporting channels, Fortum has an external “Raise a concern
” channel. The same mechanism is used for reporting any suspected misconduct relating to the environment, labour practices or human rights violations, and it is available to all stakeholders. In Russia, Fortum has a separate compliance organisation in place and employees there are encouraged to use the channels provided by the compliance organisation. They may, however, also use the “Raise a concern” channel should they so wish.
Suspected misconduct and measures related to ethical business practices and compliance with regulations are regularly reported to the Fortum Executive Management Team and to the Board’s Audit and Risk Committee.
Suspected cases of misconduct in 2015
A total of 159 (2014: 225) reports of suspected misconduct were made. Of these cases, 115 (2014: 98) led to an investigation; at the end of the year, there were 26 ongoing investigations.
More than half of the investigated cases were related to non-compliance either with company rules or with laws and regulations. In these cases, corrective action was taken by reviewing and developing existing processes and instructions and by providing training to employees. Fortum has zero tolerance towards alcohol and drug use. About a third of the cases were related to alcohol abuse during working hours.
As the result of the investigations, 9 (2014: 9) employment contracts were terminated either by immediate dismissal or by mutual agreement, and 7 (2014: 11) written warnings were given. There were 8 (2014: 4) cases of misconduct reported to the police. There was no cause for action to be taken in 5 (2014: 23) of the cases investigated.
No cases of suspected corruption or bribery related to Fortum’s operations were detected in 2015. Regarding the two misconduct cases reported in 2014, the local district court in Sweden issued a final ruling. In both cases, the former Fortum employees were found guilty of accepting a bribe.
Fortum also requires its goods and service suppliers as well as its business partners to comply with a zero tolerance policy towards corruption and bribery. As part of supply chain management, we requested a report from a few goods and service suppliers regarding possible cases of misconduct and the corrective measures taken related to the operator’s own activities. The reports were considered sufficient and didn’t lead to the termination of a contract.
We deal with potential cases of corruption in a professional manner, in accordance with the defined compliance investigation process, in line with applicable laws and with respect to the rights and personal integrity of all parties involved.
There were three ongoing investigations cases in Russia in 2015 targeting the Russia Division’s heat business. All three cases involved technical disputes related to a customer’s connection to the heat network. In Russian legislation, these kinds of cases are assessed within the framework of the regulation on abuse of a dominant market position.
One of the investigations cases was completed during the year. The Russian competition authority noted found that the Russia Division’s heat business had not violated the competition law.
During the year Fortum was not subject to any significant monetary fines for competition law violations.
Other significant fines
In Sweden, the Värmland district court issued a final ruling ordering Fortum a fine of SEK 2 million (EUR 210,000) for a May 2014 hydropower plant accident that resulted in the fatality of a contractor’s employee.