Stora Enso Oyj – Annual report – 31 December 2018
[Note: this is a summary of a longer report in the Sustainability report which forms part of the Annual report]
Industry: forestry, manufacturing
Our commitment to respect human rights covers all our operations, including our employees, contractors, suppliers, and neighbouring communities.
Stora Enso’s highest priority human rights were defined in 2018
Opportunities and challenges
Addressing challenges globally
When it comes to human rights, Stora Enso’s operations cover challenging markets such as Russia, China, Laos, and Brazil. Many of the human rights challenges we face are deeply rooted in local society and can only be effectively addressed through a long-term commitment and close cooperation with global and local stakeholders. We must also remain vigilant for the risk of modern slavery in all our markets.
The UN Guiding Principles on Business and Human Rights emphasise that companies have an ongoing responsibility to respect human rights, even where government actions and regulatory frameworks are inadequate. Compliance with these principles requires companies to conduct human rights due diligence procedures to identify, assess, and remedy the human rights risks and impacts of their operations, products, and services.
Guided by international human rights standards
In addition to our commitment to the UN Guiding Principles on Business and Human Rights, Stora Enso respects and follows the requirements of the UK Modern Slavery Act and we continue to monitor the development of similar legislation in other countries. Human rights are integrated into our Sustainability Agenda, which is aligned with the ten principles of the UN Global Compact, including human rights.
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 – expresses our respect for international human rights instruments including:
– The UN International Bill of Human Rights
– The core labour rights conventions of the International Labour Organisation (ILO)
– ILO Convention no.169 on the Rights of Indigenous Peoples, including the principle of Free, Prior, and Informed Consent and Participation
– The OECD’s Guidelines for Multinational Enterprises
– The Children’s Rights and Business Principles developed by UNICEF, the UN Global Compact, and Save the Children (relevant to the forest products sector).
How we work
Systematic assessment of human rights impacts
Human rights risks and impacts are required to be 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 any investments in projects with business-critical risks.
Business ethics risks and specific investment compliance with the Stora Enso Code and our Business Practice Policy are also assessed, together with environmental due diligence. On-going human rights due diligence continues with Environmental and Social Impact Assessments (ESIAs), and the periodic monitoring of compliance with Stora Enso’s Group-wide Minimum Human Resources requirements for labour conditions, and our Supplier Code of Conduct. Additional elements will be defined in our updated human rights due diligence and monitoring programme, currently under development, which will be based on our highest priority human rights, defined in 2018. We also continued to provide human rights training and expert capacity building during the year, and have initiated security risk assessments at units identified as high priority.
Environmental and social impact assessments (ESIA)
We conduct ESIAs for all 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 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, researchers, 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, safety, and security. During 2018, we conducted an ESIA in Oulu, Finland, to evaluate the potential conversion of our paper mill into a packaging board mill. The ESIA included an assessment to understand the socio-economic impacts of the project, including its indirect employment impacts.
Grievance and remediation mechanisms
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.
A third-party-administered grievance channel is available to all our employees. The channel enables employees to report instances where their rights may have been infringed, or where they have observed violations of the Stora Enso Code, including those related to human rights.
We have also established local grievance channels 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 any grievances, even 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. For more information on our formal grievance mechanism, which is also open to external stakeholders in countries where legislation allows, see page 29.
In 2018, access to grievance and remediation mechanisms was identified as one of Stora Enso’s highest priority human rights issues. In recognition of this, the results of our mapping of existing community grievance mechanisms will be incorporated into all our future due diligence efforts.
Reporting on our performance
Stora Enso reports on its human rights work annually. We also follow the legal requirements of the UK Modern Slavery Act. Our second annual Slavery and Human Trafficking Statement was published in 2018 on storaenso.com/sustainability.
Highest priority human rights confirmed
In 2018, we completed the defining of our human rights priorities with support from BSR, an international expert organisation. To reflect this, we updated and published our Human Rights Statement as a Human Rights Policy and confirmed eight Group-wide highest priority human rights:
• Health and safety
• 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 forestry sector).
While we respect and consider all human rights important, our identified highest priority human rights will be the primary focus of our future work. This includes our updated due diligence and monitoring programme, which will be finalised and implemented in 2019. We also aim to develop a new consolidated key performance indicator (KPI) for our human rights work during 2019 to monitor compliance with our eight highest priority human rights.
A long-term partnership to improve our human rights work
For four years, the global nonprofit organisation BSR has worked with Stora Enso to support the company’s human rights journey. Stora Enso is one of the first companies globally to systematically track its human rights impacts and publish the findings. During the partnership, both BSR and Stora Enso have learned valuable lessons.
“Case studies on Stora Enso’s work have been shared within the BSR Human Rights Working Group as topics for discussion and learning, which has directly impacted the group’s member companies and, more widely, the global human rights field,” BSR writes in their blog.
Read the full article at BSR.org
Country-specific actions in 2018 included:
Veracel, our 50/50 joint operation with the Brazilian company Suzano1, manages a pulp mill, eucalyptus plantations, and related logistics in southern Bahía State. Veracel’s active community engagement focuses on land use, and local social and economic development. During 2018, Veracel strengthened its commitment to human rights through activities such as:
• Continuing to implement the Sustainable Settlements Initiative (SSI) for disputes related to land and landless movements, and indigenous people’s rights. Read more on page 25.
• Together with the municipality of Belmonte, co-managing a project aimed at ensuring an effective protection system for the care of local child and adolescent victims of violence (for more information, see page 25).
• Fully implementing Veracel’s supplier code of conduct. Associated training, audits, and follow-up procedures will continue during 2019. Additional human rights training is provided annually to those employees of Veracel’s security service provider who work as guards.
Some stakeholders have criticised Veracel for issues related to land use and landless people’s social movements. In 2018, Veracel continued its dialogue with the landless movements and the Bahía State government to address issues of land distribution in Bahía. Veracel’s also continued its ongoing implementation of the Sustainable Settlements Initiative in response to this issue, and signed a new agreement with the landless peoples’ social movements in 2018. For more information about landless people’s social movements in Bahía and Veracel’s community engagement, see pages 24–26.
Veracel maintains good relations with local indigenous villages, and supports programmes designed to strengthen the cultural identity of 28 Pataxó and three Tupinambá communities. Local indigenous communities are calling for the expansion of the Barra Velha Indian Reserve. The extension would include 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 2018, this case was still being processed by the regional federal court. Veracel remains committed to fully comply with the court’s eventual decision.
Stora Enso’s operations in Guangxi province consist of eucalyptus tree plantations in several locations and a consumer board mill in the Tieshangang industrial zone, about 40 km from Beihai city. Stora Enso owns 83% of the operations, the International Finance Corporation owns 5%, and the remainder is owned by two state-owned organisations: Guangxi Forestry Group Co Ltd and the Beihai Forestry Investment and Development Company.
During 2018, our human rights work in Guangxi focused on internal and external capacity building and strengthening due diligence:
• Human rights training for key employees, including those working with sourcing, legal issues, human resources, and sustainability.
• Ongoing development efforts with key forestry contractors. This included reviewing safety guidelines together with contractors, as well as providing training in defensive driving to the managers of 30 wood transportation companies and over 200 Stora Enso employees.
• Continuous review of our Responsible Sourcing Programme, launched in China in 2018, which aims to improve supplier cooperation and transparency. For more information about responsible sourcing, see pages 60–63.
During the year, we continued the pilot human rights work related to our local due diligence programme, which covers both our forestry and manufacturing operations in Guangxi, in accordance with the requirements of the UN Guiding Principles. This work will continue in 2019.
When required, consultation with community stakeholders, including Free, Prior and Informed Consent (FPIC), continues to be a key element in our human rights due diligence and forestry operations in Guangxi. Our forestry employees work in dialogue with the communities neighbouring our plantations to maintain good community relations, and to understand and address the potential social impacts of our operations. Our work to further improve our local community consultation processes continued in 2018.
As part of our responsible exit from Pakistan following the 2017 divestment of the 35% minority holding in the equity accounted investment Bulleh Shah Packaging (Private) Ltd. (BSP), Stora Enso completed a three-year Public Private Partnership with the International Labour Organisation (ILO) at the end of 2018.
In 2018, Stora Enso continued to support six schools in cooperation with the Pakistani non-governmental organisation Idara-e-Taleem-o-Aagahi (ITA). These schools were set up in 2015 to provide education for the 640 children identified as child workers in BSP’s supply chain that was subsequently shut down in 2014. The contract for the school programme, together with Stora Enso’s funding for ITA, will remain in place until 2023 when the youngest children will complete compulsory primary school education as required by the state of Pakistan.
Stora Enso has continued to develop trial plantations in the Saravane and Savannakhet provinces of southern Laos on lands totalling 3 805 hectares (3 731 in 2017), of which 3 113 (2 988) are planted with eucalyptus. Stora Enso Laos has 123 employees (125).
During 2018, our human rights work in Laos focused on community engagement in land acquisition processes, community communication, and management systems:
• The Environmental and Social Management and Monitoring Plan launched in 2017 was fully implemented during 2018.
• In 2018, Stora Enso became the first forest products company in Laos to have their plantation and nursery operations certified under OHSAS 18001 for occupational safety.
• The community grievance mechanism created in cooperation with the International Finance Corporation (IFC) was fully implemented and actively communicated to local communities to ensure they know which channels to use in case of concerns.
• Measures were taken to enhance stakeholder engagement and communications to ensure that Free, Prior, and Informed Consent (FPIC) procedures are duly followed in Stora Enso’s land use and land leasing when applicable. Stora Enso also continued to enhance gender involvement in the land acquisition process and community consultation meetings.
• An additional tool for FPIC procedures was developed to ensure communities understand the information shared with them.
Stora Enso’s tree plantations in Laos are located near villages that are culturally and ethnically diverse. This makes it essential for us to engage in dialogues in a culturally appropriate way, based on informed consultation and participation, and obtain community consent for our projects. In 2018, we continued to train Stora Enso employees on stakeholder engagement and community consultation, particularly considering the interests of women and vulnerable groups.
A set of community consultation tools jointly launched by Stora Enso and Village Focus International in 2017 were fully implemented during 2018, as part of our efforts to improve our engagement with local communities. The tools help empower the communities to gain a deeper understanding of our agroforestry model, its benefits and impacts on their villages, and to enable the entire community to participate in decision-making related to Stora Enso’s activities.