Outokumpu and society

Outokumpu’s operations have economic impacts on the local, national and global communities in which the Group operates. Outokumpu contributes to the community's well-being through paying taxes, through direct and indirect employment, and other means of community involvement.

Outokumpu operates in a competitive industry where demand and supply meet in global markets. On the other hand, our production sites are often located in relatively small cities or towns. This means that Outokumpu is significant to the economies of the small local communities, and often one of very few private-sector employers in the area. Finding a balance between global market trends and responsibility towards communities is sometimes difficult, especially in economic downturns. Decisions might have a major impact on communities, Outokumpu personnel and their families, and local goods suppliers and service providers as well. Outokumpu surveys its stakeholders view on what are material issues in sustainability.

Economic impact

Being a global leader in stainless steel means that a larger share of the global stainless steel demand is satisfied by Outokumpu. Therefore, because of our sustainability practices, the global society benefits overall. Our main areas of direct economic impact are our financial interactions with customers, suppliers, employees, the public sector, creditors and shareholders. Outokumpu contributes to the well-being of local, national and international communities through tax payments, through direct and indirect employment and by participating in other societal activities. The impact of taxes on societal well-being is both direct and indirect.

In 2017, employee benefit expenses decreased to EUR 684 million (2016: EUR 713 million). Total wages and salaries decreased to EUR 549 million (2016: EUR 562 million), and indirect employee benefit expenses totaled EUR 135 million (2016: EUR 151 million).

The Group taxes totaled EUR 6 million (2016: EUR 12 million). Check taxes by country in our sustainability data tool, and for more information in the UK, please check our Outokumpu UK tax strategy 2017.

In 2017, Outokumpu received some EUR 0.5 million (2016: EUR 0.9 million), of which a clear majority from Finland, from the public sector to support Group research and development of new technologies, products and applications.

Customers 

Outokumpu has a strong global base of customers spread across every continent and balanced over a range of industries. Our operations are organized according to the market demand and structure. Continuous feedback and interaction with customers help us to improve our understanding of customer needs, the challenges they face and the business environment our customers operate in. Customer orientation is one of the main themes on our way to the vision 2020.

We collect regularly feedback from our customers. Latest major customer survey was done in late 2016 with the next round coming up in spring 2018. Around 1,222 customers in 45 countries participated in this latest Group-level customer survey. 57% of our customers were very or absolutely satisfied, while counting in also satisfied customers the 93%. Customers’ feedback helps us to achieve our growth targets and is used to enable continuous improvement of our performance, at both strategic and operational levels. The overall aim is to have a mutually beneficial process that helps us improve the three basic building blocks of customer satisfaction: customer support, delivery performance and product quality. Overall, Outokumpu’s customer satisfaction continued on a good level. Customer feedback shows that while we have been scoring well on customer support and product quality, we have been inconsistent in our delivery performance. We benchmark our customer satisfaction performance against a group of industrial companies, and our long-term ambition is to reach the level of 75% of overall absolutely or very satisfied customers by 2020.

Suppliers

Outokumpu’s purchasing decisions are made solely based on Outokumpu Group’s best interests, taking into account the environmental, economic and social aspects of its Corporate Responsibility Policy. Suppliers will win Outokumpu’s business based on best value in use of product or service offered. Value in use means the total amount spent on a particular commitment, including, among other things, the initial contract price, life cycle cost of investment, effect on Outokumpu’s production efficiency and quality, commission fees, handling as well as other transaction costs and taxes.

As our customers require a lot from us as a supplier, we place the most stringent requirements on ourselves, and require the same from our suppliers. All suppliers and subcontractors must comply with our Code of Conduct and meet our supplier requirements, which expect our suppliers to act according to applicable laws and regulations, maintain a quality management system, sign general terms and conditions and be able to clearly define, document and share their supply and production control processes including material traceability.

We assess our new and existing suppliers and if there is evidence of any kind of violation of our requirements, the suppliers are requested to provide an improvement plan and evidence of improvement. If the situation continues and there has been no improvement, Outokumpu will discontinue purchasing from the supplier. Outokumpu has declined business opportunities in cases where it has been established that the business partner is not following the principles of our Code of Conduct.

Outokumpu monitors its suppliers through self-assessment, screenings and audits. Outokumpu has a regular compliance screening in place that covers the majority of the suppliers. In addition, 60% of the suppliers are going through a monthly compliance screening for sanctions. Outokumpu renewed and enhanced its supplier requirements and the related supplier assessment approach in 2017. The new approach was piloted with six suppliers, who completed self-assessment, and two on-site audits including environmental and social aspects. No misconducts were identified in the assessments. Approximately 40 suppliers completed the previous version of the self-assessment, which was less comprehensive.

In 2017, Outokumpu had 10,173 suppliers in 60 different countries. Clear majority of suppliers are located in those countries in Europe, USA, and Mexico, where Outokumpu has its production units. On the average, the proportion of spending on local suppliers at significant Outokumpu locations of operation was 12% in 2017. There were no significant changes in Outokumpu's supply chain. Some purchase volumes between the raw materials suppliers shifted, but no new major suppliers were introduced. No suppliers were identified to have negative human rights impacts.

Current and future employees

Current and future employees are both very important stakeholders for Outokumpu, their engagement and commitment being a fundamental part of the Group’s business. Outokumpu’s employees are the vital element in achieving outstanding performance.

Alongside a range of safety developments to ensure that all employees go home again safely, there has been an increase in the number of company sites promoting health and wellbeing supported by our occupational health facilities. There are currently no global level wellbeing programs in place but there are various local actions ongoing at Outokumpu sites. Read more about health and safety at Outokumpu.

Outokumpu’s long-term target is to be an employer of choice, and we want to provide challenging career opportunities and to offer varied career paths. Outokumpu continues to work on its employer branding. Direct cooperation with key universities and technical colleges in all the countries that Outokumpu operates in plays a big role in future resourcing so that we would have professional workforce for our locations also in the future. In some locations, Outokumpu also strive to ensure that colleges remain in the location and that they are found interesting.

Outokumpu has a long tradition of offering summer jobs and traineeships in its major production locations in Finland, Germany and Sweden. This provides an opportunity for students to become acquainted with Outokumpu as an employer and experience some of the career opportunities that exist. Outokumpu remains committed to this process to ensure the continued strength and diversity of our talent base. During the summer of 2017, the Group employed more than 500 summer workers in Finland, mainly for engineering students in Tornio, and more than 100 in Sweden. For instance, in Tornio in the most recent school-term in 2016–2017 we had some 70 interns for 8-24 weeks. We have also been part of planning the metal processing studies with a local Vocational College Lappia, where those who have studied metal processing can be directly employed by Outokumpu in our production processes, and we are also represented in the college’s professional council for the process industry. We also host various visits for university, college and school students in our mills, as much as possible. For example, in Tornio it is a tradition that all local 8-grade students visit our mill. Outokumpu also commissions thesis work from university and college students. For example, in Finland, approximately 20 theses are done annually for Outokumpu. In Germany, 46 trainees finished their apprenticeships in 2017 and 32 new technical and commercial apprenticeships started in Dahlerbrück, Dillenburg and Krefeld. Furthermore, Outokumpu employed 21 interns, who were mainly engineer and technical students. Sparking the interest in the next-generation workforce has been a goal of the Calvert, Alabama mill, Outokumpu sponsors summer internship with a local high-school for students in their last 2 years. This is an ongoing program with 15 students participating in 2017. Every year a select group of ninth graders and their teachers are invited to visit the Calvert mill and learn more about the manufacturing process and related support functions required to operate the integrated stainless mill.

More information on our people. Please also check our latest Annual report for a yearly sustainability review.

For more information on remuneration in the UK, please check our UK gender pay report 2017.

Investors and analysts

Outokumpu continued its regular and active dialogue with investors and analysts in 2017.

Key topics discussed with investors were Outokumpu’s progress in reaching its vision and financial targets for 2020, the improving performance of the Americas business area, the balance sheet, as well as market-related topics. Outokumpu held its Annual General Meeting in Helsinki, Finland, in March. The Capital Markets Day was held in London, the UK, in November. Outokumpu arranged 18 roadshows in Europe and in the US during the year. The company also met investors at three industry seminars in New York, Barcelona and London. In total, over 260 one-on-one meetings and 30 conference calls were held with investors during the year.

Local communities

Many Outokumpu production sites have long and interesting histories. For example, most of our sites in Finland, Germany, Sweden and in the UK have been in use by the metal industry and integral parts of their local communities for centuries already. It is natural for Outokumpu, as a major employer in several locations, to have a strong presence in local society and activities in many ways.

As a major employer, Outokumpu’s decisions may have significant impacts on the lives of local communities. Important Outokumpu locations include Avesta and Degerfors in Sweden, the Kemi-Tornio region in Finland, and Dahlerbrück, Dillenburg and Krefeld in Germany. In all these locations, the main impact comes from direct and indirect employment: we are economically important for local society through the incomes and taxes Outokumpu creates in the region. We maintain continuous cooperation with community officials and representatives, other commercial companies, schools and universities. We aim to actively listen to local communities.

Beyond a major impact on Outokumpu personnel and their families, the Group’s operations also affect local communities through creating demand for local goods suppliers and service providers. In the recent years, investments in our production assets have included EUR 108 million to increase stainless quarto plate production capacity in Degerfors, Sweden, EUR 108 million to modernize the cold-rolling mill in Krefeld, Germany and EUR 410 million investment in the expansion of the ferrochrome production in Tornio. In 2017, Outokumpu announced that it would expand its mine in Kemi towards 1,000 meters underground – the overall investment is EUR 250 million.

Because of the restructuring of its industrial operations, Outokumpu has closed down some of its mills over in 2013–2016 in Germany and in Sweden. Outokumpu completed its European restructuring in 2016. In all restructuring and layoffs Outokumpu complied with local legislation, collective bargaining agreements and other applicable regulations. In some cases we have been able to find new positions for the employees in our other sites, and we have also arranged trainings and help in looking for new employment, while some employees have retired.

Community engagement

As a heavy industry company, Outokumpu has at least some local community engagement, impact assessment or development programs in every production location, but typically not in smaller units such as service centers and sales offices. The units with local community engagement cover some 45% of Outokumpu’s global units (including small sales offices), and over 90% of Outokumpu personnel work at these sites.

At the largest production units, such as Tornio, Outokumpu has, in the past, organized social (SIA) and environment impact assessments (EIA) related to the expansion of production. In 2017 there were no such expansions or assessments.

Every year, there are numerous local engagement projects or actions at our production units. Typically, units have yearly discussions or information exchanges with neighbors or local community representatives on relevant topics such as employment, the environment, energy or sponsoring of local events. Outokumpu’s employees have given presentations at local schools and universities, and we have worked with local employment agencies to find positions for people within the Group. Schoolchildren and local students have been introduced to Outokumpu’s working environment through tours and discussions with employees.

Typically, Outokumpu also organizes open-door events at its production sites for neighbors. Based on feedback and participation in 2017, these events were successes. The production units received a lot of good and constructive feedback, as well as some helpful ideas on how to reduce environmental impacts on the surrounding community. In Krefeld, Germany, yearly meetings on the Neighbors’ Dialogue took place.

Traffic loads also have an impact on local communities, with the Kemi-Tornio region and Sheffield being good examples. Our Tornio site has participated in the new railway connection project in northern Sweden, called the North Bothnia Line (Norrbotniabanan), which would mean a 270-km extension of the Bothnia Line north of Umeå to Luleå and would provide a new transport route for the Tornio plant. The detailed planning of the project is ongoing. In Sheffield, Outokumpu is located very close to the UK’s M1 motorway, and steps are being taken to ensure that our operations have minimal impact on this primary transportation route.

Local stakeholders are also taken into account in the Group’s emergency planning. In Sheffield, representatives of the local police force, fire and emergency services, and national health organizations have attended health and safety days organized for Outokumpu employees. In Avesta, Sweden, the renovation of our former, centuries-old production site, Koppardalen, received excellent feedback due to its efforts to preserve local cultural history. Yearly, 30,000 visitors visit the old mill building and art exhibition “Avesta Art”.

As part of its community engagement, some Outokumpu sites also continued their dialogue with environmental NGOs related to ongoing permit processes or other environmental issues. The Finnish Network for Sustainable Mining (www.kaivosvastuu.fi) was founded in May 2014. Network is a forum of discussion and co-operation for mining sector and its stakeholders. Network developed a new liability standard based on Canadian ”Towards Sustainable Mining”-system. Kemi Mine committed to adopt the reporting system. Outokumpu aims to further increase transparency and information related to these and to our products’ sustainability properties.

Public sector and sponsoring

Outokumpu updated sponsorship instruction in 2017. In sponsorships, Outokumpu prioritizes connections to stainless steel, sustainability, talent and education. Outokumpu also makes discretionary donations for the common good as a responsible corporate citizen. These donations are approved by the Leadership Team or by the Board of Directors. Total grants and community support have decreased during the recent economically difficult years. In 2017, these amounted to some EUR 28,000 (2016: EUR 55,000). Local sponsorship follows the same guidelines, and locally Outokumpu has sponsored for instance artworks by donating stainless steel, significant local projects and sports associations.

Outokumpu does not take part in or otherwise support political activities, whether they are local or national. This is clearly stated in our Code of Conduct, communicated internally and also including training as a part of the Code of Conduct by the global e-learning course for all white-collar employees. Outokumpu did not make any donations to any political parties or groups in any country in 2016, directly or indirectly. However, Outokumpu’s grants, donations or sponsorships are mainly for local events or communities. Typically, we offer scholarships to students, sponsor local sporting or cultural activities or charity work. Organizations that arrange activities for children are also supported. Outokumpu supports research related to its field of industry and maintains close cooperation with educational institutes. Apprenticeships have been offered to local colleges and student placements have been made available in the form of one-year programs, and schoolchildren and local students have been introduced to the Group’s operations. In Germany, Sweden, the UK, Finland and in the US, local cooperation with schools and universities is typical at every production site.

Outokumpu has also been among the founders of a number of national technology, research or educational funds. These funds support and promote university-level research and teaching and business opportunities. Examples of these type of funds are the Technology Industries of Finland Centennial Foundation and the Fund for the Association of Finnish Steel and Metal Producers.

Associations and federations

Outokumpu is an active and responsible actor in society. Outokumpu is committed to sustainability and is a signatory to the International Chamber of Commerce (ICC) charter, follows and supports the United Nations Global Compact, and is an active member of the UN Global Compact Nordic Network. To demonstrate the Group’s support for sustainability, Outokumpu has signed the World Steel Association's Sustainable Development Charter and the ISSF’s Sustainable Stainless Charter. Under the conditions of the Group’s publicly available Code of Conduct, participation in these networks is a way to promote sustainable progress throughout the whole business landscape, and outside the Group’s own supply chain as well.

In 2017, Outokumpu’s experts and top management continued to maintain contacts with numerous organizations. Top management of Outokumpu participated in several stakeholder seminars and events, and highlighted our views on employee issues, megatrends, related to creating a competitive environment and the future of the stainless steel business. Within the Group, comprehension of approaches to social responsibility is expanded through active engagement with a variety of companies and organizations.

Outokumpu is a member of international organizations and confederations, including International Chamber of Commerce (ICC), International Stainless Steel Forum (ISSF), International Chromium Development Association (ICDA), Specialty Steel Industry of North America (SSINA), Eurofer, EUROALLIAGES and EUROSLAG. Outokumpu is also an associate member of the World Steel Association (worldsteel). Outokumpu provides relevant information to decision-makers and experts relating to the development of the business environment and legislation. The Group participates in the work of trade organizations.

Outokumpu does not pressure decision-makers. Due to limited resources, our public affairs practice is to communicate via industrial associations like Eurofer and SSINA towards governing bodies and regulators. In these organizations, Outokumpu participates in different working groups whose aim is to provide expertise to help decision-makers. In these forums, members share best practices and obtain benchmark data relating to, among other things, the environment, R&D, product life cycles, product and chemical safety, and occupational safety. Members also contribute their own data for use in official industry or authority reports, such as the World Steel Association’s, ISSF’s and ICDA’s safety and sustainability reporting.

In Europe, Outokumpu is a member of industrial federations and associations in Germany, Sweden, Finland, France, Italy, the Netherlands, the UK, the US and Australia. These cooperation organizations advance industry views and contribute to national legislation. Outokumpu’s Kemi mine has also signed the Finnish sustainability mining commitment and reporting initiative Sustainable mining network.
 
Compliance

Outokumpu is strongly committed to legal compliance and an ethical way of conducting business. Outokumpu’s Code of Conduct sets out these ethical standards and provides guidelines for a common way of working with the aim of ensuring that all Outokumpu employees live up to Outokumpu’s ethical standards. The objective of Outokumpu’s compliance program is to ensure that Outokumpu and its employees comply with laws, regulations as well as Outokumpu’s internal policies and instructions. The program also aims to globally mitigate compliance risks for the corporation as well as for each individual employee by a set of preventive and supervisory measures. Raising awareness of and training on the Code of Conduct and its topics are central elements of the program. Anti-corruption and competition law compliance are important parts of this. Outokumpu’s Code of Conduct sets zero tolerance for corrupt practices and requires compliance with antitrust and competition laws. Outokumpu has also issued an Anti-Corruption Instruction providing more detailed guidance on responsible business practices. It was implemented in 2015 with an e-learning campaign and further enhanced in 2016 and 2017 through internal communication and training.

To ensure compliance, Outokumpu regularly internally communicates on compliance related topics and trains its employees both through e-learnings and face-to-face trainings. Compliance training sessions carried out during 2017 included targeted trainings in Code of Conduct, anti-corruption, competition law and trade compliance. In 2017, Outokumpu launched two compliance related e-learnings: one in the Outokumpu Code of Conduct and the second in competition law compliance. The Code of Conduct e-learning was mandatory for white-collar employees (some 3,100 people) and achieved a completion rate of 98%. The competition law e-learning was mandatory for targeted employee groups (some 1300 people) and achieved a completion rate of 99%. Compliance communication in 2017 entailed quarterly Compliance infoshots in various compliance topics, such as know your business partner, data protection (EU GDPR) and fair competition practices. Outokumpu constantly develops its compliance program with special efforts in the defined key focus areas: competition law compliance, anti-corruption, trade compliance, data protection and internal control and corporate governance. In 2017, within the area of trade compliance, Outokumpu developed further its business partner screening processes, including the business partner identification process to ensure compliance with anti-money laundering laws and regulations.

Compliance risks, including risks related to corruption, are assessed and reviewed annually and described in the Corporate Governance statement 2017. Please check our latest Corporate Governance statement.

Outokumpu has a Helpline, a confidential contact channel through which employees and third parties can report suspected misconduct confidentially and anonymously by e-mail, mail or fax, or they can phone directly to Internal Audit. The Helpline is available on the company intranet and also on the company website at www.outokumpu.com. In 2015, Outokumpu issued a Reporting Misconduct Instruction, which is for company internal use only. The instruction describes the main principles and policy followed by Outokumpu in relation to reporting and investigating alleged breaches of Outokumpu’s Code of Conduct. Outokumpu has a non-retaliation policy for concerns reported in good faith. The top management and the Board Audit Committee receive regular updates on potential misconduct cases of specific importance. In 2017, there were 9 reports and subsequent investigations of alleged misconduct, fraud and/or theft of material or other assets.

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May 29, 2018