Stora Enso Oyj – Annual report – 31 December 2022
Industry: forestry, manufacturing
When growing and harvesting trees, producing products or transporting materials, Stora Enso has an impact on people. As a global company, Stora Enso directly impacts over 20,000 forest owners, 21,000 employees, over 20,000 suppliers and thousands of customers.
Respecting human rights is integrated into the company’s sustainability approach. This section represents how human rights impacts are connected to the environmental and social foundation of the approach. Supplier Ethical Data Exchange (Sedex) is an ethical trade membership organisation. Audits are counted in based on the audit date. Stora Enso’s audit cycle is three years.
Targets and performance
Actions to drive performance
- Continuous alignment with EU proposal on Corporate Sustainability Due Diligence (CSDD)
- Long- and short-term remuneration incentives linked to improved performance on safety and diversity
- Continued focus on Sedex Member Ethical Data Audits (SMETA) and new labour requirements in the Forest Stewardship Council (FSC) chain-of-custody certification audits
Continued focus on due diligence
Improving value chain transparency is a key component of due diligence. Stora Enso has been a member of the Supplier Ethical Data Exchange (Sedex) since 2011, a platform where companies share sustainability information with customers on unit level and Sedex Member Ethical Data Audits (SMETA) are carried out on a regular basis. Furthermore, Stora Enso is a member of EcoVadis where group level information is shared with customers to enhance transparency.
Stora Enso shares its journey towards better due diligence and learns from peers and experts by engaging through membership organisations such as the Global Business Initiative for Human Rights (GBI) and the World Business Council for Sustainable Development (WBCSD).
Training is another integral part of due diligence to enable integration of human rights into key business processes. Human rights is a core element in several training modules for Stora Enso employees, for example in Stora Enso’s Code training for all employees. In 2022, a mobile friendly Code e-learning was rolled out to reach production workers, now covering all employees, and at the end of the year 92% of all employees had completed the training.
This year’s COMPLY training also addressed the close relationship between corruption and human rights. The annual mandatory Human Rights training for security guards at the 50/50 joint venture Veracel operations was carried out according to plan.
Actions related to the Group’s highest priority human rights issues
While Stora Enso considers all human rights to be important and respects them, the human rights identified as having highest priority remain its primary focus. Human rights are embedded in the day-to-day business activities. Actions and progress are reported in the relevant sections of the report.
Health and safety
- Three fatal accidents occurred in Stora Enso’s sites. Read more in chapter Safety.
- The Stora Enso Supplier Day 2022 focused on safety and climate change. Read more in chapter Sustainable sourcing.
- Short-term incentives linked to improved performance on safety. Read more in Remuneration.
- FSC chain-of-custody audits started in all divisions in 2022, covering new requirements on core labour rights.
- Contracts terminated with several labour agencies in China following breaches of SCoC related to, e.g., working hours and social insurance payments. Read more in chapter Sustainable sourcing.
- Stora Enso remains committed to freedom of association. A testament to that is the Global Framework Agreement. Read more in chapter Employees.
- ’We belong here’ workshops promoting inclusion and combating discrimination and harassment reached over 90% of all employees at the end of 2022. Read more in Our people.
- Long-term incentives linked to improved performance on diversity. Read more in Remuneration.
Acquisition and management of land and natural resource rights
- Sustainable resettlement in Brazil, Bahia: At the end of 2022, 182 hectares or 0.2% of productive land owned by Veracel remained occupied by social landless movements not involved in the agreements. Read more here.
- Monitoring state land recovery in China, Guangxi: Recovery of occupied land continued in 2022 with 6,124 (2021: 6,650) hectares of land under occupation at the end on the year. Parts of the land leased by Stora Enso in Guangxi province of China have been occupied for up to ten years for the purpose of growing crops and trees on a small scale. In some cases, the occupiers are claiming rights to the land based on historical land ownership documents that have been superseded by state ownership in successive land reform processes. Stora Enso leases 73,133 (2021: 77,000) hectares of land in Guangxi, of which 53,437 (2021: 53,600) hectares is leased from state-owned forest farms. The remaining 19,696 (2021: 23,400) hectares, or 27% of the total area, is leased from village collectives, individual households and local forest farms, so-called social land. Stora Enso has returned some social land throughout the years in order to improve the operability of its land base.
- Community consultations, including Free, Prior and Informed Consent (FPIC), are a key element in Stora Enso’s human rights due diligence and forestry operations, especially concerning land leasing and indigenous peoples’ rights. In Brazil, Bahia, Stora Enso’s joint operation Veracel maintains good relations with local Pataxó and Tupinambá communities. Some of the indigenous communities are calling for the expansion of the Barra Velha Indian Reserve. The extension would cover hundreds of land properties, including 3,219 hectares of land acquired by Veracel before the indigenous peoples first made claim to the land. At the end of 2022, this case was still being processed by the regional federal court. Veracel remains committed to complying fully with the court’s eventual decision. Read more about how we work with indigenous people here.
- Speak-Up Hotline is accessible for internal and external stakeholders and all cases are investigated. Read more in chapter Business ethics.
- The Stora Enso Code training rolled out to reach production workers promoted grievance mechanisms. Read more in chapter Business ethics.
- Local grievance channels for communities and other external stakeholders associated with Stora Enso’s plantations and site in Guangxi, China, as well as the joint operations Veracel in Brazil and Montes del Plata in Uruguay.
- The child labour remediation programme1 in Pakistan continued to focus on providing vocational training to students to improve their future employability as the programme reaches its completion early in 2023. Read more here.
1 As part of our responsible exit from Pakistan following the 2017 divestment of the 35% minority holding in the equity accounted investment.
Ways of working
The commitment to respect human rights covers all operations, including the Group’s employees, contractors, suppliers and neighbouring communities. Stora Enso takes human rights into account across its operations starting from the investment decisions, paying special attention to vulnerable groups, and encouraging the Group’s partners to do the same. Stora Enso is committed to remedy situations where its activities have caused or contributed to adverse human rights impacts. Stora Enso reports on its human rights work annually and strives to align its reporting with the United Nation’s Guiding Principles (UNGP) reporting framework. Stora Enso annually publishes a Slavery and Human Trafficking Statement in accordance with the United Kingdom’s Modern Slavery Act 2015 and the Australian Modern Slavery Act 2018. Read more about how human rights are integrated into the business activities in Stora Enso’s Human Rights Guidelines.
Policies and guidelines
Stora Enso is committed to the UNGP, which require companies to conduct due diligence to identify, assess, and remedy the impacts that their activities may have on people.
Relevant Stora Enso policies on human rights include:
- Stora Enso Code
- Human Rights Policy
- Supplier Code of Conduct
- Human Rights Guidelines
- Environmental Guidelines
Why it matters
Stora Enso supports human rights regulations that put all companies on an equal standing and help to ensure that people are treated with decency and respect. During 2022 two proposals for regulation embedding human rights were presented to the EU Parliament and Council: the Corporate Sustainability Reporting Directive (approved in November 2022) and the Directive on Corporate Sustainability Due Diligence. Guidance for alignment with the Taxonomy Minimum Safeguards were published in the interim until the aforementioned regulations are in effect. Readmore about the EU Taxonomy alignment in the Report of the Board of Directors.
In preparation for the upcoming EU Corporate Sustainability Due Diligence (CSDD) directive, Stora Enso, together with an external business and human rights consultancy, carried out three pilot projects focused on improving our internal controls for two high risk supply chains, as well as the due diligence processes in our own operations.
With a global presence, Stora Enso engages with local communities around the world. By sharing time and materials, the Group aims for increased involvement in the communities and thereby strengthening its impact.
Unless otherwise stated, Stora Enso’s community investment includes cash, and time- and in-kind donations converted to euros from all operations. Employee work time for community projects is converted to euros based on country-specific salary averages. 50%-owned joint operations in Brazil and Uruguay are consolidated following Stora Enso’s ownership share. The Group’s target is to increase the share of volunteer work and in-kind contributions, with continued growth in the total community investment. The target excludes 50%-owned joint operations due the nature of community investment projects in these countries, where programmes cover wider societal issues with long-term investment needs.
Targets and performance
Actions to drive performance
- Employee volunteering promoted to increase employee engagement and support to local communities
- Continued focus on building community resilience to impacts of climate change and natural or man-made disasters
During 2022, Stora Enso initiated a number of large cash donations towards humanitarian emergency relief. Three donations were directed towards the Ukraine crisis and one towards the emergency relief following the severe flooding in Pakistan. These relief donations were channelled through UNHCR. The large cash contributions resulted in the share of volunteer work and in-kind contributions decreasing to 41% (42% in 2021). When including joint operations in Brazil and Uruguay, the share was 22% (18%).
Stora Enso has a large presence in the Baltics and Poland, and employees in these locations have been actively volunteering their time, collecting in-kind donations and providing shelter to refugees. To support this, local management raised the number of annual volunteering hours from 8 to 16 per employee. The total monetary value of the community contribution towards Ukraine across the Group was EUR 0.25 million. Several operating units donated in-kind materials in response to the Ukraine crisis, such as boxes to help transport the food, clothes for the refugees and also cash donations to local charity organisations to help refugees arriving in neighbouring countries.
During 2022, the team at Stora Enso forestry operations in Guangxi, China, continued the installation of solar powered lights in local communities. A total of 390 lamps, 128 in 2022 alone, have been installed so far improving road safety as well as general feeling of safety at night. The lights utilise 40,000 kwh green power annually and benefit more than 68,000 local villagers in 32 communities.
Ways of working
The form and frequency of the Group’s engagement with local communities is shaped by the local context. In some areas, the interaction is through community representatives while other communities prefer direct and inclusive contact.
Many of Stora Enso’s employees live in the communities and have a deeper understanding of the local context. The company involves local stakeholders in the planning process of its community investments to ensure the right benefits for the communities. Community projects are managed and funded locally to ensure that the communities close to the Group’s operations are the main beneficiaries. The community projects are categorised under strategic focus areas: Education, Environment, and Resilient Local Communities.
Stora Enso takes precautionary and systematic action to mitigate and remedy potential adverse environmental and social impacts on local stakeholders in community development and/or monitoring. These include:
- Due diligence, in which the company evaluates the impact that the current or potential business operations may have on local communities and the environment. Community consultations are a key element of this work. For more information on Stora Enso’s key tools for human right due diligence, see chapter Human rights.
- Third-party certified management systems in place at production units that apply international standards such as ISO 14001, ISO 45001 and ISO 50001.
- Third-party forest management certification for the Group’s own forestry operations and suppliers, such as FSC and PEFC, which also include community considerations.
- When necessary, restructuring processes and the closure of operations are realised in cooperation with the authorities to support communities through related changes and to create opportunities for new business initiatives
- Grievance mechanisms are available to communities close to the Group’s operations, read more in chapter Business ethics.
Policies and guidelines
Policies that guide Stora Enso’s community relations include:
- Human Rights Policy and Guidelines
- Sponsorship and Donations Policy
- Community Investment Guidelines
- Volunteering Guidelines
Why it matters
When Stora Enso sources its main raw material wood and manufactures its products, it depends on local communities for its workforce and for a social licence to operate. In its efforts to be a good corporate citizen, Stora Enso supports and works with these communities to help them thrive economically, socially and environmentally.
While Stora Enso is a significant employer, taxpayer and business partner in many communities, the company’s operations also generate environmental and social impacts. Stora Enso’s tree plantations influence land use in ways that may adversely affect the rights of local communities. The company’s actions must be managed responsibly in order to minimise negative socio-environmental impacts, maximise positive influence, and maintain a constructive community dialogue that ensures a long-term license to operate. The joint operations in Brazil and Uruguay have each developed formal procedures for their respective community work to reflect Stora Enso’s requirements.