Fortum as a responsible and sustainable investment

Fortum is an energy company highly committed to sustainability. We strive to respond to the needs of our customers by generating and selling low-carbon electricity and heat and by offering energy-sector expert services.

Fortum strives for balanced management of economic, social and environmental responsibility in the company’s operations.  In our operations, we take into consideration climate and resource issues as well as our impact on personnel and society. The focus areas reflect not only the views of our personnel and stakeholders regarding our fundamental impacts, but also our values – curiosity, responsibility, integrity and respect towards each other and our stakeholder groups.

Sustainability focus areas 2018

Sustainability targets

The Group-level sustainability targets are linked to the main sustainability focus areas and emphasise Fortum’s role in society. They measure not only environmental and safety targets, but also Fortum’s reputation, customer satisfaction, employee wellbeing, and the security of power and heat production. Targets are set annually and are based on continuous operational improvement. The achievement of the sustainability targets is monitored in monthly, quarterly and annual reporting.

Sustainability targets and performance in 2018

Sustainability indices and ratings

Fortum is included in the STOXX Global ESG Leaders, OMX Sustainability Finland Index, ECPI® as well as Euronext Vigeo Europe 120 and Eurozone 120 indices. Fortum is also ranked in category B in the annual CDP Climate Change rating 2018, and it has received a Prime Status (B-) rating by the German ISS-oekom Corporate Rating. In 2018, we received a rating of A (on a scale of AAA–CCC) in the MSCI ESG Ratings assessment. We are also among in the Equileap Gender Equality TOP 200 companies, holding place 50 and rank of B- in the 2018 ranking. As of June 2019 Fortum is a constituent of the FTSE4Good Index Series.

Sustainability risks

Fortum’s operations are exposed to risks, which, if materialised, can have adverse effects on the environment and on the safety and security of employees, contractors and neighbouring societies. Key sustainability risks are presented in the Risk management section in the Operating and financial review and in the Sustainability Report.

Fortum takes into consideration the climate-related transition risks of potential new businesses, investments and technologies. Fortum’s operations are also exposed to physical risks caused by climate change, including changes in weather patterns that could alter energy production volumes and energy demand. Fortum adapts its operations to the changing climate and takes it into consideration, for example, in evaluating growth and investment projects and in operation and maintenance planning.

Fortum believes that the growing awareness and concern about climate change will increase the demand for low-carbon and resource- and energy-efficient energy products and services. Fortum's circular economy services also respond to this demand by utilising waste stream materials as efficiently as possible.

Sustainability governance and management

Sustainability management at Fortum is strategydriven and is based on the company’s values, the Code of Conduct, the Supplier Code of Conduct, the Sustainability Policy and other policies and their specifying instructions defined at the Group level. As sustainability is an integral part of Fortum’s strategy, the highest decision making of these issues falls on the duties of the Board of Directors, who share joint responsibility on sustainability matters.

The Fortum Executive Management decides on the sustainability approach and Group-level sustainability targets that guide annual planning. The targets are ultimately approved by Fortum’s Board of Directors. Fortum Executive Management monitors the achievement of the targets in its monthly meetings and in quarterly performance reviews. The achievement of the targets is regularly reported also to Fortum’s Board of Directors. Fortum’s line management is responsible for the implementation of the Group’s policies and instructions and for day-to-day sustainability management. Realisation of the safety targets is a part of Fortum’s short-term incentive scheme. Fortum’s Corporate Sustainability unit is responsible for coordination and development of sustainability at the Group level and for maintaining an adequate situation awareness and oversight regarding sustainability.

Fortum is a participant of the UN Global Compact initiative and the UN Caring for Climate initiative. Fortum respects and supports the International Bill of Human Rights, the United Nations Convention on the Rights of the Child, and the core conventions of the International Labour Organisation (ILO). Additionally, Fortum recognises in its operations the UN Guiding Principles on Business and Human Rights, the statutes of the OECD Guidelines for Multinational Enterprises, the International Chamber of Commerce’s anti-bribery and anti-corruption guidelines, and the Bettercoal initiative’s Code on responsible coal mining.

Business ethics

The Fortum Code of Conduct and Fortum Supplier Code of Conduct define how we treat others, engage in business, safeguard our corporate assets, and how we expect our suppliers and business partners to operate. Fortum’s Board of Directors is responsible for the company’s mission and values and has approved the Fortum Code of Conduct. Fortum has zero tolerance for corruption and fraud and does not award donations to political parties or political activities, religious organisations, authorities, municipalities or local administrations.

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.

Suspected misconduct and measures related to ethical business practices and compliance with regulations are regularly reported to the Audit and Risk Committee.

No cases of suspected corruption or bribery related to Fortum’s operations were reported in 2018.

Paying taxes responsibly

We have local operations and tax contributions in more than 15 countries. We pay taxes in the country where our business operations are located and where the added value is generated, in accordance with the local regulations.

The country-specific reporting of taxes has become an important topic in international and national public and political discussions. Fortum annually publishes country-by-country taxation its Tax footprint. Download Tax footprint 2018.

We are exposed to changes in taxation and how local tax authorities interpret tax laws. We aim to identify simple and cost-efficient solutions to manage taxes in a sustainable manner. Artificial or other aggressive solutions are not being used, and legality and honesty are highly valued.

Sustainability reporting

Fortum’s sustainability reporting covers all functions under Fortum’s operational control, including subsidiaries in all countries of operation. Read more about sustainability at Fortum in www.fortum.com/sustainability and in annual Sustainability Reports.