Stora Enso Oyj – Annual report – 31 December 2021
Industry: forestry, manufacturing
When growing and harvesting trees, making products or transporting materials, Stora Enso has an impact on people.
Opportunities and challenges
Developments in human rights regulation
Many of the human rights challenges Stora Enso faces are deeply rooted in local communities and can only be effectively addressed through a long-term commitment to and close cooperation with global and local stakeholders.
During 2021, EU regulations embedding human rights were presented for companies’ consultation or implementation, for example the Corporate Sustainability Reporting Directive (CSRD), the EU Whistleblower Directive and the Directive on Corporate Due Diligence and Corporate Accountability. Stora Enso supports human rights regulations that put companies on an equal standing and help to ensure that people are treated with decency and respect.
Continued focus on due diligence
In preparation for the upcoming EU directive on mandatory human rights due diligence, Stora Enso carried out a number of initiatives, including a workshop with key employees across the company and an external law firm, and initiated a working group to help bring the organisation into compliance.
Stora Enso is a member of the Supplier Ethical Data Exchange (Sedex), a platform where companies share sustainability information with multiple customers in an agreed format and level of detail to improve transparency in the value chain. By the end of 2021, 29 (30 in 2020) of 60 Stora Enso’s production units were registered in Sedex. By the end of the year, 17 of the units (16 in 2020) had been audited through Sedex Member Ethical Data Audits (SMETA) at least once since 2011.
In 2019 Stora Enso identified 24 human rights-related development actions in Group function processes. Twenty-two of the actions were completed in 2020, and the two remaining actions were completed in 2021.
Through membership of the Global Business Initiative for Human Rights (GBI) and of the World Business Council for Sustainable Development (WBCSD) Stora Enso continues to learn from peers and experts as the journey continues to embed human rights more effectively into operations and due diligence.
Actions related to the Group’s highest priority human rights issues in 2021
While Stora Enso considers all human rights to be important, and respects them, the human rights identified as having highest priority remain the primary focus of work. 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
- Enhancing safety performance. Read more here.
- Covid-pandemic response. Read more on page 153.
- Enso’s Internal Audit discovered working hour recording errors in the operations of Stora Enso’s China Packaging. Read more on page 146.
- Audits of labour agency service providers in China. Read more on page 155.
- Union relations: Global Framework Agreement, Stora Enso’s commitment to freedom of association is firm. A testament to that is the Global Framework Agreement that Stora Enso signed in 2018 with the labour unions IndustriAll, UniGlobal and BWI. Approximately 80% of Stora Enso’s employees were covered by CBAs.
- An inclusive workplace. Read more on pages 26 and 145.
- Slavery and Human Trafficking Statement
Land and natural resource rights acquisition and management
- Sustainable resettlement in Brazil, Bahia. At the end of 2021, 111 hectares or 0.1% of productive land owned by Veracel remained occupied by social landless movements not involved in the agreements. Read more here.
- Monitoring land recovery in China, Guangxi. Recovery of occupied land continued in 2021, with 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 77,000 hectares of land in Guangxi, of which 53,600 hectares is leased from state-owned forest farms. The remaining 23,400 hectares, or 30% of the total area, is social land leased from village collectives, individual households and local forest farms.
- Indigenous communities’ community consultations, including Free, Prior and Informed Consent (FPIC), are a key element in our human rights due diligence and forestry operations, especially concerning land leasing and indigenous peoples’ rights. In Central Sweden, for example, we have had special agreements on land use with five Sámi communities since 1992 and continue to maintain good relations with them. 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 2021, 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 here.
- Access for all stakeholders. Read more on page 149.
- The child labour remediation programme1 in Pakistan continues to focus on providing vocational training to students to improve their future employability. Read more here.
Enhancing human rights training
Human rights are covered in several training modules for Stora Enso’s employees. Human rights is a core element in Stora Enso’s Code of Conduct and its respective training sessions. Read more here. In 2021, Stora Enso also launched updated internal minimum labour standards e-learning material designed at first for Stora Enso’s unit managers, and all 68 of the targeted unit managers completed the e-learning by the end of the year. The introductory e-learning material on human rights and the deep dive on Sedex audits were also completed by a group of 400 selected employees across the company during 2021. In addition, the roll-out and awareness-raising of the updated supplier code of conduct continued throughout the year, via meetings and workshops with purchasers and suppliers.
How we work
Assessing and addressing the Group’s human rights impacts
The commitment to respect human rights covers all operations, including the Group’s employees, contractors, suppliers and neighbouring communities. Read more in Stora Enso’s Human Rights Guidelines.
Access to remedy and grievance channels
Stora Enso is committed to remedy situations where its activities have caused or contributed to adverse human rights impacts. For more information, see the Human Rights Guidelines. The Group has also established grievance channels in five local languages for communities and other external stakeholders associated with Stora Enso’s plantations and site in Guangxi, China. Similar local grievance channels exist for the joint operations Veracel in Brazil and Montes del Plata in Uruguay.
Reporting on performance
Stora Enso reports on its human rights work annually and strives to align its reporting with the 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.
Stora Enso is committed to the United Nations Guiding Principles, which require companies to conduct due diligence to identify, assess, and remedy the impacts that their activities may have on people. The Stora Enso Human Rights Guideline lays out how human rights are integrated into our day-to-day operations.
Relevant Stora Enso policies on human rights include:
- Stora Enso Code
- Human Rights Policy
- Supplier Code of Conduct
- Human Rights Guidelines
- Environmental Guidelines
1 As part of our responsible exit from Pakistan following the 2017 divestment of the 35% minority holding in the equity accounted investment.
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
With a global presence in more than 30 countries, Stora Enso engages with local communities around the world.
Opportunities and challenges
Supporting community resilience
When Stora Enso sources its main raw material wood and manufactures its products, it depends on local communities for its workforce and 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. The Covid-19 pandemic has demonstrated how important, although challenging, community engagement can be in times of crisis.
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.
Continued restrictions affected community engagement
Stora Enso’s community investments consist of cash and in-kind donations, as well as employee working hours for voluntary community work as defined in the Business for Societal Impact (B4SI) framework. The Group’s target is to increase the share of volunteer work and in-kind contributions to 70% of the total community investments by the end of 2023, with continued growth in the total community investment. The KPI excludes Stora Enso’s 50%-owned joint operations in Brazil and Uruguay due the nature of community investment projects in these countries, where programmes cover wider societal issues with more long-term investment needs. The progress towards the target was slowed down in 2020 and 2021, partly by the restrictions on volunteer work and community projects that needed to be enforced to ensure the safety of employees and community members during the pandemic. In 2021, the share of volunteer work and in-kind contributions increased to 42% (41% in 2020). When including joint operations in Brazil and Uruguay, the share was 18% (19%).
The share of community investment projects in the Education category increased to 20% (14% in 2020). The share of those related to the categories of Environment and Resilient Local Communities1 was 6% and 58% respectively (5% and 76% in 2020). During the pandemic, many of the community investment projects have consisted of donating materials, such as personal protective equipment (PPE), but also cash donations to charity organisations dedicated to health and social welfare.
In 2021, the number of Stora Enso’s employees in voluntary community work decreased to 1,432 (2,684), but total volunteered hours decreased to 4,483 (6,921). Each Stora Enso employee can volunteer for 8 hours of work time per year for charitable causes. In total, the Group’s voluntary community investments amounted to EUR 2.0 million (EUR 2.7 million), including 50% of the community investments by company’s 50/50 joint operations in Brazil and Uruguay.
The total number of Stora Enso’s voluntary community investment projects was 327 (343 in 2020), including those facilitated by joint operations.
Europe In Europe, to grow and support its potential labour pool, Stora Enso focuses its support on education and youth employability and provides public research opportunities. To contribute to the everyday vitality of communities, the company financially supports local associations, including sports clubs and cultural activities.
Stora Enso’s 50/50 joint operation Veracel runs a pulp mill in Bahía, Brazil, with associated eucalyptus plantations. The company owns 211,000 hectares of land, of which about half is reserved for rainforest restoration and conservation. Supporting communities’ income generation and employment are top priorities in Veracel’s sustainability agenda.
Veracel supports local livelihoods by, for example, making some of its land available to family farmers, by providing training and technical support, and through local sourcing programmes that give preference to and provide training for local businesses when sourcing goods and services. In 2021, more than 1,470 families benefitted from Veracel’s family farming programmes.
To help to support biodiversity and additional income for local families, Veracel allows honey producers to keep hives on company land. The reintroduction of the native bees is a great environment gain, since they are pollinator agents both for the native forest and farming. Veracel also provides training in beekeeping, as well as technical and material support. During 2021, Veracel supported more than 180 honey producers.
During late 2021, a state of emergency was declared for several municipalities in Bahia following heavy rains. The flooding destroyed critical infrastructure, livelihoods and entire villages. Veracel has supported local communities with in-kind donations to rebuild and maintain infrastructure as well as by donating food parcels and mattresses for emergency relief.
Montes del Plata, Uruguay
Stora Enso’s 50/50 joint operation runs a pulp mill in southwestern Uruguay with associated eucalyptus plantations. Montes del Plata owns 190,000 hectares and leases (Alianzas programme) 82,000 hectares of land. The Alianzas programme provides additional income for local farmers by enabling them to integrate eucalyptus plantations into their farms, and by promoting cattle grazing and honey production on company lands.
Montes del Plata also seeks to benefit local communities by maximising local hiring and participating in mentoring programmes. In 2021 Montes del Plata has invested in a mushroom harvesting livelihood programme for unemployed locals, in collaboration with a local university, including an incubator project for 25 individuals to develop entrepreneurship.
How we work
Working with communities through local projects
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 involves local stakeholders in the planning process of its community investments, to ensure benefits for communities. The company also wants to enhance the resilience and attractiveness to existing and potential employees of the communities where it operates.
Community projects are managed and funded locally to ensure that the communities close to its operations are the main beneficiaries. The community projects are categorised under strategic focus areas: Education, Environment, and Resilient Local Communities.
Managing the impacts on 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 impacts that its 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, see page 152, Stora Enso’s key tools for human right due diligence.
- Third-party certified management systems at its production units that apply international standards such as ISO 14001, ISO 45001, and ISO 50001.
- Third-party forest management certification for its own forestry operations and suppliers, such as FSC and the 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 the Group’s operations. For more information, see page 149.
Policies that guide Stora Enso’s community relations include our:
- Human Rights Policy and Guidelines
- Sponsorship and Donations Policy
- Community Investment Guidelines
- Volunteering Guideline
The joint operations in Brazil and Uruguay have each developed formal procedures for their respective community work to reflect Stora Enso’s requirements.
In 2021, our total voluntary community investment was EUR 2.0 million.
1 Resilient Local Communities include the B4SI framework areas of Economic Development, Social Welfare, Healthy Lifestyle, and Arts and Culture.