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 priorities

Fortum reassessed its sustainability priorities in 2021. A sustainability materiality analysis was conducted based on internal and external stakeholder surveys, and an extensive desktop review. The materiality analysis applied a two-dimensional approach. It considered the sustainability impacts of Fortum’s business activities on a number of sustainability issues as well as the impacts of these issues on Fortum.

Fortum’s sustainability priorities are presented in the table below.

Climate and resources Personnel and society Governance
Climate change and GHG emissions Health, safety and wellbeing Business ethics and compliance
Emissions to air, land and water Diversity, equity and inclusion Corporate Governance
Energy efficiency Fair and attractive employer Innovation and digitalisation
Circular economy and waste management Human rights Shared value creation
Biodiversity Stakeholder engagement Customer rights and satisfaction
Secure and affordable energy supply Just transition  
Water use and optimisation Corporate citizenship  

Continuously improving our performance

Fortum wants to excel in sustainability. The Group-level sustainability targets are linked to the main sustainability focus areas and affect every Fortum employee. 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.

Fortum updated its climate targets aligned with the goals of the Paris Agreement in December 2020 and is committed to carbon neutrality by 2050 at the latest. The target covers direct CO2 emissions (Scope 1) and indirect CO2 emissions (Scope 2 and 3). Fortum’s roadmap to reduce emissions in Europe has also been defined. Fortum is committed to at least a 50% reduction in CO2 emissions (Scope 1 and 2) in its European generation by 2030 (compared to base-year 2019) and to be carbon neutral (Scope 1 and 2) by 2035 at the latest.

Scope 3 emissions play a significant role in Fortum’s total emissions. In December 2021, Fortum committed to reduce Scope 3 greenhouse gas emissions by 35% by 2035 at the latest (compared to base-year 2021).

Fortum had a target for biodiversity to conduct a minimum of 12 major voluntary measures that improve the living conditions of species and strengthen populations, covering all countries where Fortum has hydropower production, for 2021. The projects focus on threatened species or habitats, in particular, and in 2021 included restoring aquatic and terrestrial habitats, improving fish migration and migratory fish populations, and combating invasive species.

For Fortum, excellence in safety and caring about both its own employees and contractors is the foundation of the company’s business and an absolute prerequisite for efficient and interruption-free production. Fortum’s safety target is measured as Total Recordable Injury Frequency (TRIF), for own personnel and contractors, and the ambitious goal is <1.0 by the end of 2025. Fortum also had a target for Lost Time Injury Frequency (LTIF), for own personnel and contractors: ≤1.2 in 2021.

Climate and resources targets

Climate

  • Reduction of CO2 emissions (Scope 1 and 2) in European generation by at least 50% by 2030 (compared to base-year 2019)
  • Carbon neutral (Scope 1 and 2) in European generation by 2035 at the latest
  • Carbon neutral globally (Scope 1, 2, and 3 greenhouse gas, GHG, emissions) in line with the goals of the Paris Agreement, by 2050 at the latest
  • Reduction of Scope 3 indirect GHG emissions by 35% by 2035 at the latest (compared to base-year 2021)

Biodiversity

  • Number of major voluntary measures enhancing biodiversity ≥12 in 2021

Personnel and society

Safety:

  • Total Recordable Injury Frequency (TRIF) <1.0 by the end of 2025

Gender equality:

  • Fortum, excluding Uniper: Board consisting of at least 40% of women and men each in compliance with the principles issued in the Finnish Government Resolution.
  • Uniper: women to account for 25% of top executives by June 2022

Sustainability indices and ratings

Fortum received a score of A- in the CDP Climate Change 2021 rating, and Uniper received a score of B. In the MSCI ESG Ratings 2021 assessment, Fortum received a “BBB” rating and Uniper a “BB” rating. Both companies have also participated in the ISS ESG Corporate Rating, where Fortum received a “Prime B-” rating and Uniper a “Medium C” rating. In addition, Fortum is listed on the Nasdaq Helsinki exchange and is included in the STOXX Global ESG Leaders, OMX Sustainability Finland, ECPI®, Euronext Vigeo Eurozone 120, and Euronext Vigeo Europe 120 indices. Read more

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 Climate section in the Climate and resources review 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.

As a separate listed company, Uniper applies its own processes aligned with its enterprise risk management to systematically identify, assess, and manage Environmental, Social and Governance (ESG) risks. Uniper’s ESG risk processes includes assessing external and internal ESG risks, including climate-related risks. In 2021, Uniper had no reportable ESG risks pursuant to Section 289c of the German Commercial Code. The impact of its net risks was below the reporting threshold.

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 strategy-driven 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 on sustainability and climate-related matters falls within the duties of the members of the Board of Directors, who share joint responsibility in these matters. Fortum Executive Management decides on the sustainability approach and Group-level sustainability targets that guide annual planning. The Group’s performance targets, including sustainability and climate-related targets, are approved by Fortum’s Board of Directors. Fortum’s line management is responsible for the implementation of Fortum’s policies and instructions and for day-to-day sustainability management and improvement plans.

The Uniper SE Management Board bears the overall responsibility for the adoption and implementation of Uniper’s sustainability measures. Uniper’s Chief Sustainability Officer (CSO) reports periodically to the Supervisory Board on strategic sustainability activities. The Supervisory Board, which is Uniper’s highest governance board, also monitors the fulfilment of Uniper’s sustainability obligations. Four of Fortum’s Executive Managers, including the President and CEO of Fortum, are members of Uniper’s Supervisory Board.

Realisation of the safety target (LTIF, own employees and contractors combined) was a part of Fortum’s short-term incentive (STI) programme in 2021. In the 2022 STI programme, the safety target contains the severity rate per Total Recordable Injuries (TRI) of own employees and contractors combined and the execution rate of safety leadership training.

Fortum’s long-term incentive (LTI) programme includes a climate-related metric. In the 2021–2023 LTI plan, the target is linked to the reduction of coal-fired power generation capacity in line with Fortum’s coal-exit path. In the 2022–2024 LTI plan, the target is related to the reduction of absolute CO2 emissions in the European fossil fleet, based on a fossil fleetreview addressing the Group’s European generation portfolio and a pathway developed to reach Fortum Group’s 2030 and 2035 climate targets. Uniper continues to follow its own STI and LTI plans. However, the safety metric (severity rate per TRI) in the STI 2022 programme and the climate-related metric in the 2022–2024 LTI plan are applicable to both companies. Scaling of STI and LTI metrics are company-specific.

Sustainability management at Fortum is strategy-driven and based on its Values, Code of Conduct, Supplier Code of Conduct, sustainability-related policies, and other Group policies and their specifying instructions. Uniper continues to have its own separate Code of Conduct and Supplier Code of Conduct. Both companies’ Codes of Conduct are based on similar fundaments and they establish the basic principles of conduct that everyone must follow. They define how we treat each other, do business, and engage with the world. The companies’ Supplier Codes of Conduct, both based on the ten principles of the UN Global Compact, outline the requirements for Fortum’s and Uniper’s suppliers and business partners.

Fortum follows and respects 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). Fortum also recognises in its operations the UN Guiding Principles on Business and Human Rights, 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. Fortum is a participant of the UN Global Compact initiative and the UN Caring for Climate initiative. Uniper also follows the ten principles of the UN Global Compact, but is not a formal participant.

Business ethics

Zero tolerance for corruption and bribery is highlighted in both Fortum’s and Uniper’s Codes of Conduct and Supplier Codes of Conduct. In addition, separate instructions and guidelines have been created to address various topics, including but not limited to anti-bribery, compliance management, safeguarding company assets, conflict of interest, anti-money laundering, and competition law.

Fortum’s Board of Directors has approved the company’s Code of Conduct and Supplier Code of Conduct. Uniper’s Code of Conduct and Supplier Code of Conduct have been approved by the Uniper Management Board.

The Codes of Conduct are regularly reviewed in order to ensure compliance with evolving company and regulatory requirements. Fortum’s updated Code of Conduct and Supplier Code of Conduct were published in early 2021 and training on the updated Codes was organised during the year. The Code of Conduct online training, launched in November 2021, is mandatory for all employees. Uniper’s updated Code of Conduct was published in early 2020, and a new compliance eLearning module was introduced for all Uniper employees in 2021. In addition, relevant individuals are regularly trained in policies and systems that help to prevent corruption.

Internal and external reporting channels are offered for reporting suspicions of misconduct. The channels are described in the Codes of Conduct and accessible on the companies’ internal and external webpages. Suspected misconduct and measures related to ethical business practices and compliance with regulations are regularly monitored and assessed by Fortum’s Audit and Risk Committee. Uniper’s Compliance Management System includes quarterly compliance reports to the Uniper Management Board. Uniper’s Audit and Risk Committee monitors compliance issues on a regular basis. Uniper Management Board’s Compliance Commitment is published annually on the company’s webpage in accordance with the German Governance Code. During 2021, two new cases of corruption or bribery were confirmed in Fortum’s operations and one was closed as unfounded.

Paying taxes responsibly

We have local operations and tax contributions in more than 15 countries. We pay taxes always 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 2021

We are exposed to changes in taxation and how local tax authorities interpret tax laws. We aim to identify simple and cost-efficient solutions supporting our business as a whole 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. Fortum’s TCFD (the Task Force on Climate-related Financial Disclosures) report is included in the Sustainability report. The non-financial reporting, in line with the Accounting Act, is included in the Operating and Financial Review in the Financials. Read more about sustainability at Fortum's sustainability pages in and in annual Sustainability Reports.

 

Sustainability report

Learn more about our sustainability performance in 2021

Environmental friendly

Sustainability at Fortum