Stora Enso Oyj – Annual report – 31 December 2020
[Note: this is a summary of a longer report in the Sustainability report which forms part of the Annual report]
Industry: forestry, manufacturing
When we grow and harvest trees, make renewable products, or transport materials, we have an impact on people.
Opportunities and challenges
Developments in human rights regulation
Many of the human rights challenges we face are deeply rooted in local communities and can only be effectively addressed through a long-term commitment and close cooperation with global and local stakeholders.
The UN Guiding Principles on Business and Human Rights (UNGPs) highlight that companies have an ongoing responsibility to respect human rights and to conduct related due diligence, even where government actions and regulatory frameworks are inadequate. In addition, the Covid-19 pandemic has highlighted the importance of protecting people from human and labour rights violations in global supply chains, especially in times of crisis, and has consequently sped up the development of EU-level legislation on human rights due diligence. Stora Enso supports human rights regulation that puts companies on an equal standing and helps to ensure that people are treated with decency and respect.
Integrated into our sustainability work
Human rights are integrated into our Sustainability Agenda, which is aligned with the ten principles of the UN Global Compact. We are also committed to the UNGPs, 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 – our code of conduct that expresses our respect for human and labour rights.
- Supplier Code of Conduct – imposes strict contractual requirements on our suppliers regarding human rights.
- Human Rights Policy – sets out our commitment to respect human rights throughout our operations and in all relationships involving Stora Enso and expresses our respect for international human rights instruments.
- Human Rights Guidelines – provide more insight into how we work towards our policy objectives and with our highest priority human rights.
Human rights are also a fundamental part of several internal policies and guidelines such as our Environmental Guidelines, Diversity Policy, and our Minimum Human Resources Requirements for labour conditions.
How we work
Assessing and addressing our human rights impacts
Our commitment to respect human rights covers all our operations, including our employees, contractors, suppliers, and neighbouring communities. We require that human rights risks and impacts are taken into account throughout our operations, including investment decisions related to mergers, acquisitions, and divestments. Our investment guidelines stipulate that environmental and social risks and impacts, including those related to human rights, must be duly identified, assessed, and addressed prior to approval in projects with business-critical risks.
Stora Enso’s key tools for human rights due diligence
Continuous or periodic monitoring with:
- Stora Enso Code
- Business Practice Policy
- Minimum Human Resources Requirements for labour conditions
- Supplier Code of Conduct
- Safety standards and tools for all units
- Grievance mechanisms
Project-specific human rights due diligence with:
- Investment guidelines
- Environmental and social due diligence for mergers and acquisitions
- Environmental and Social Impact Assessments (ESIAs)
- Community consultations, including Free, Prior, and Informed Consent (FPIC)
- Sustainability Assessment checklist for innovation projects
Environmental and Social Impact Assessments (ESIAs)
We conduct ESIAs for new projects that could directly or indirectly cause significant adverse effects in local communities. Such projects include board, pulp, paper, or sawmills built on greenfield sites, industrial scale plantation projects, and any large-scale investments in or expansions of existing facilities.
An important element of any ESIA involves assessing the operational context from a social impact perspective, including human rights, and establishing dialogues with local residents, members of local organisations, experts, and other stakeholders. This is done through interviews, meetings, workshops, and public hearings. ESIA results give us valuable information on how local communities may be affected by changes in their socio-economic situation and any impacts on cultural heritage, while also setting out implications for community health and safety.
Respecting human rights, including Free, Prior, and Informed Consent (FPIC), in land identification, acquisition, and management is one of our highest priorities. These processes are implemented together with local communities and authorities. Community consultations, such as FPIC, are a key element in our human rights due diligence and forestry operations, especially concerning land leasing and indigenous peoples’ rights. Together with partners, we have developed various FPIC tools to ensure that communities understand the information that is shared with them, and regularly train our employees in community engagement and consultation. We also continue to enhance gender inclusion in community consultation meetings, which is an important part of FPIC.
The form and frequency of our engagement with local communities is shaped by the local context. In some areas, the interaction is done through community representatives while other communities prefer direct and inclusive contact. Many of our employees live in the communities and have a deeper understanding of the local context.
Stora Enso is a major forest owner in Sweden (see page 53) and a significant forestry operator in both Finland and Sweden. We recognise our responsibilities regarding the rights of indigenous Sámi people living on areas that are located on or neighbouring our lands or where we procure wood, and we maintain good relations with them in Finland and Sweden. In Central Sweden, for example, we have had special agreements on land use with five Sámi communities since 1992. We have well-established routines for dialogue, including regular discussions on forestry, reindeer herding, and each other’s opportunities and challenges. An evaluation meeting is held annually. We always consult the concerned Sámi villages before any forestry operations, and all consultation meetings are documented. For more information about our land use and wood procurement, see pages 49–54.
Our forestry employees in Guangxi, China, work in dialogue with local communities to understand the potential social impacts of our operations. For example, ethnic minorities, formally recognised by the Guangxi government, live in many areas of the province. This was re-confirmed in a community mapping completed by Stora Enso’s forestry operations in China during 2020, as part of new forest certification requirements to map all local indigenous communities. Whereas previous mappings by Stora Enso focused on two regions around our plantations where the presence of ethnic minorities was known, the new mapping included all four neighbouring regions with eight prefecture-level cities. The mapping concluded that 15% of all communities in these regions can be considered ethnic minorities. In two prefecture-level cities, Nanning and Chongzou, the combined share of such communities is 88%. The assessment gives us a more comprehensive understanding of the structure and customs of the communities around our plantations, which will help us further develop our social engagement activities.
Veracel, our 50%-owned joint operation in Brazil, has a team of community liaison officers who are in regular contact with community representatives to agree on actions and next steps.
In southern Laos, in the Saravane and Savannakhet provinces, our trial eucalyptus plantations are located near culturally and ethnically diverse villages. Despite the decision made in 2020 to downsize our Laos operations, we will continue to engage with local communities in a culturally appropriate way, based on informed consultation and participation.
For more information about how Stora Enso supports and works with local communities, see pages 23–27.
Access to remedy and grievance channels
In accordance with the UN Guiding Principles on Business and Human Rights and our own Human Rights Policy, Stora Enso is committed to remedy situations where our activities have caused or contributed to adverse human rights impacts. Where violations are committed by third parties with links to Stora Enso through our operations, products, or services, we strive to use our influence together with the relevant stakeholders to ensure that those impacts are remedied. For example, our joint operation Veracel in Brazil has worked closely with landless movements and authorities for several years to find and implement solutions to land distribution disputes. Veracel has also helped stakeholders understand their rights to various services, including access to legal support. For more information, see page 15.
Access to grievance mechanisms is one of Stora Enso’s highest priority human rights. Our formal grievance mechanism enables any stakeholder to report instances where their rights may have been infringed, or where they have observed potential violations of the Stora Enso Code, including those related to human rights. This service is independently administered by an external service provider. For more information, see page 30.
We have also established grievance channels in local languages for communities and other external stakeholders associated with our plantations and mill in Guangxi, China. We encourage anyone with concerns to call our anonymous hotline number, write to us, visit us, or talk to our field personnel. Stora Enso’s employees are trained to distribute information about our operations in local villages and to duly process grievances, also in villages not engaged in any kind of business relationship with the company.
Similar local grievance channels exist for our project in Laos, and our joint operations Veracel in Brazil and Montes del Plata in Uruguay. In Laos, Stora Enso works with communities to raise awareness of villager rights and the channels they can use if concerns arise.
Reporting on our performance
Stora Enso reports on its human rights work annually and strives to align its reporting with the UNGP reporting framework. In addition, our annual Slavery and Human Trafficking Statement is available at storaenso.com/sustainability. In 2020, Stora Enso’s human rights reporting was top-ranked in a study by the multi-stakeholder SIHTI project. The study assessed the human rights reporting of companies using the Corporate Human Rights Benchmark methodology.
Continued focus on due diligence
While we respect and consider all human rights to be important, our highest priority human rights remain the primary focus of our work:
- Health and safety
- Fair labour (fair employment conditions, forced labour, freedom of association, non-discrimination and non-harassment)
- Land and natural resource rights acquisition and management
- Grievance mechanisms
- Children’s rights (relevant to the forest sector).
We continued to develop our human rights due diligence programme in 2020. By the end of the year, we had finalised 22 out of 24 actions addressing development areas that were identified for Group function processes in 2019. In addition, integrating human rights into Stora Enso’s enterprise risk management (ERM) process proceeded during the year. The work focused on ensuring that our highest priority human rights are reflected in the risk register with associated risk factors, impacts, and responses. The goal of this on-going work is to ensure that both financial risk and the risk to people are considered in our ERM process.
In 2020, we joined the Global Business Initiative for Human Rights (GBI) to advance respect for human rights in business through peer learning.
In Finland, we continued to voice our support for human rights due diligence legislation during the year. We also joined a campaign in Sweden calling for similar development in the EU. The campaign is led by a coalition of Swedish civil society organisations.
We updated and published externally our Human Rights Guidelines to provide our stakeholders with more detailed insight into how we work with human rights.
Actions related to our highest priority human rights in 2020 included:
Health and safety
It is our goal that everyone who works for us, either directly or indirectly, returns home safely from a healthy workplace every day. Despite our strong efforts to ensure this, two fatal accidents occurred in our forestry operations in China in 2020. For more information on fatal and other accidents in 2020 as well as our progress in health and safety, including our response to the Covid-19 pandemic, see pages 18-23.
In Brazil, Veracel, our 50/50 joint operation with the Brazilian company Suzano, manages a pulp mill, eucalyptus plantations, and related logistics in southern Bahía State. In 2020, Veracel supported the construction of a field hospital and donated personal protection equipment during the Covid-19 pandemic. For more information, see page 26.
In Guangxi province, China, we continued to focus on road safety in rural areas in 2020. For more information, see page 26.
Our joint operation Montes del Plata in Uruguay continued to address and raise awareness of road safety. For more information, see page 27.
We set strict standards for our operations to ensure fair employment conditions for all employees, on-site contractors, and our suppliers’ employees. Our Minimum Human Resources Requirements for labour conditions cover these topics for our own employees, including compensation (see page 22), working hours, forced labour, freedom of association, discrimination, and harassment. Our Supplier Code of Conduct sets similar requirements for our suppliers and contractors.
In 2020, we updated our Supplier Code of Conduct (SCoC), with additions around fair employment conditions, including requirements for recruitment agency use and reasonable remuneration for employees. For more information, see page 62.
For several years, Stora Enso has been monitoring labour rights in its bagasse supply chain in the United States to ensure that working hour schedules do not have adverse impacts on contractor health and safety. For more information, see page 62.
Our commitment to combat forced labour in our operations and supply chains is expressed in our Human Rights Guidelines and the Stora Enso Code. For more information about how we manage potential forced labour and human trafficking, see our annual Slavery and Human Trafficking Statement.
In 2020, approximately 80% of our employees were covered by collective bargaining agreements (read more in the GRI Index). In addition, to further strengthen our commitment to freedom of association, we continued to address areas in the global framework agreement that we have signed with the labour unions IndustriAll, UniGlobal, and BWI.
In 2020, we initiated an internal campaign raising awareness on harassment and discrimination. For more information, see page 31. For more information about diversity, inclusion, and gender equality, see pages 21–22.
During the year, to strengthen its activities around diversity and inclusion, our joint operation Veracel added a Brazilian Sign Language (BSL) reader on its website and Intranet and began using a BSL interpreter for internal meetings and events.
Land and natural resource rights acquisition and management
Sustainable resettlement in Brazil
Illegal land invasions of private property are a long-running challenge in Brazil that has affected various actors that use land, such as mining companies and farming businesses. Some areas of our joint operation Veracel’s land have been illegally occupied since 2008. While Veracel is not the root cause of the problems that landless people face, it aims to be part of the local solution without taking on the role of the state.
Veracel strives to maintain continuous dialogue with landless movements and supports land allocations through the Sustainable Settlements Initiative, launched in 2012. In 2020, the initiative continued to provide farmland and technical and educational support to hundreds of families to improve their incomes. The Sustainable Settlements Initiative is facilitated by the Government of the State of Bahía and is conducted in cooperation with the National Institute of Colonisation and Agrarian Reform (INCRA) and the representatives of six officially recognised landless people’s social movements.
The movements have pledged to leave areas occupied since July 2011, while Veracel has agreed not to seek to repossess areas occupied before this date. The initiative relates to a total area of approximately 16 500 hectares of Veracel’s lands designated for the settlements to be purchased from the company by INCRA.
Veracel continues to support the transition of families from these settlements to more permanent residencies on the same land, as the legal processes regarding their claim to the land are resolved over time. In 2020, this support included assisting farmers in improving productivity, the construction of food production units, and help with the commercialisation and marketing of the produce. The goal is to gradually transfer full responsibility of the area to the families by 2022. To minimise the impacts of the Covid-19 pandemic on this transition, and to protect the health and safety of the families, Veracel created emergency plans in 2020 that included, for example, ways to secure food production during the pandemic.
In line with a 2018 agreement that complements the earlier Sustainable Settlement Initiative, Veracel has agreed to sell approximately 3 500 hectares of previously occupied land to the movements on which to grow food. In 2020, Veracel began cooperation with the Federal University of Southern Bahía (UFSB) to support these new settlements by conducting socio-environmental profiles of the families, training farmers in, for example, productivity planning, and monitoring results. The total value of the 5-year agreement with UFSB, to be carried out in stages, is over EUR 750 000.
In total, since 2012, Veracel has voluntarily approved the transfer of approximately 20 000 hectares of land to benefit landless people. By the end of 2020, 215 hectares of productive land owned by Veracel remained occupied by movements not involved in the Sustainable Settlement Initiative or in the new agreement. Veracel will continue to seek repossessions of the remaining occupied areas through legal processes. Stora Enso also reports on the occupied areas in the Group’s Interim Reports.
Veracel also maintains good relations with local indigenous villages and supports educational, infrastructure, and cultural programmes for 29 Pataxó and three Tupinambá communities. Within these programmes in 2020, Veracel donated school supplies to approximately 5 000 indigenous elementary and high school students and teachers, supported the construction of classrooms, and supported infrastructure improvements in local indigenous villages.
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 2020, this case was still being processed by the regional federal court. Veracel remains committed to fully comply with the court’s eventual decision.
Monitoring land recovery in China
Stora Enso leases 81 000 hectares of land in Guangxi province, China, of which 53 600 hectares is leased from state-owned forest farms. The remaining 27 400 hectares, or 34% of the total area, is social land leased from village collectives, individual households, and local forest farms.
Parts of the land leased by Stora Enso 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.
At the end of the year, 5 350 hectares of productive land leased by Stora Enso was occupied, including 4 870 hectares of state-owned land and 480 hectares of social land. Approximately 4 000 people were growing crops and trees on the occupied land. In 2020, the Guangxi government’s recent efforts to recover occupied land in the province reached areas where Stora Enso leases land from state-owned forest farms. Stora Enso is carefully monitoring the land recovery process and, for example, reserves the right to stop the proceedings at any point. We have also trained our local staff to identify causes for concern, to promote our grievance channel, and to engage with the occupiers to ensure that they are informed and do not feel threatened.
Our grievance hotline is available to all employees, on-site contractors, suppliers, and any other external stakeholders. In 2020, we took steps to improve external stakeholder access to the hotline. For more information about our grievance channels and reports received through them in 2020, see pages 29–31.
Children’s rights (relevant to the forest sector)
Stora Enso’s work on children’s rights and business is integrated into our implementation of the UN Guiding Principles of Business and Human Rights framework. We support the Children’s Rights and Business Principles developed by UNICEF, Save the Children, and the UN Global Compact, and we focus on those principles where we can have the biggest impact.
For several years, Veracel has successfully cooperated with the NGO Childhood Brasil to combat child abuse and exploitation in the nearby municipalities of Belmonte, Porto Seguro, Santa Cruz de Cabralia, and Eunápolis. The goal is to improve the capacity of the municipalities to handle cases of child abuse and adolescent violence through strengthening public policies and providing training to professionals. In 2020, Childhood Brasil and Veracel, together with judiciary, civil society, and municipal representatives, agreed on a ten-year plan to continue this work.
In 2020, Veracel began supporting a three-year extra-curricular programme that aims to strengthen the cultural development of socially vulnerable children and adolescents in the city of Porto Seguro. The programme includes ballet, music, and theatre workshops during after-school hours.
Montes del Plata, our joint venture in Uruguay, together with local educational institutions and other organisations initiated an English learning programme for the students of a local secondary school in 2020. The goal is to motivate the students to continue their studies further through recreational and cultural activities.
Stora Enso continues to support six schools in cooperation with the non-governmental organisation Idara-e-Taleem-o-Aagahi (ITA) in Pakistan as part of a remediation programme targeting 640 children identified as child workers in 2015 in the supply chain of our former 35% minority holding in the equity accounted investment Bulleh Shah Packaging (Private) Ltd. (BSP). The programme will continue until 2023 when the youngest children complete compulsory primary school education. However, most of the children will be young workers by 2023, which is why the programme began to shift its focus to vocational training in 2020 to improve their future employability. In 2020, ITA also created an outreach programme to ensure that education continued during the local Covid-19 lockdown. The programme used low-tech digital learning, such as with mobile phones, and mobilised community members to take an active role in educating the children.
Enhancing human rights training
In 2020, we launched a human rights e-learning that will be rolled out in our divisions and functions during 2021 to build on our existing employee training. The e-learning explains what respecting human rights means for individuals, companies in general, and Stora Enso specifically.
We have included a section on human rights in the e-learning for the Stora Enso Code, which is mandatory for all employees.
In Brazil, Veracel continues training, auditing, and follow-up procedures related to its supplier code of conduct. Additional human rights training is provided to employees working as guards for Veracel’s security service provider, as required by national law, when they begin employment and then every two years.