Stora Enso Oyj – Annual report – 31 December 2023
Industry: forestry, manufacturing
Human rights
Every individual has a right to be treated with dignity, without discrimination. Geopolitical tensions, climate change, and increasing inequality further emphasise the importance of human rights. New regulatory developments, such as the EU’s Corporate Sustainability Due Diligence Directive, oblige companies to conduct due diligence to identify and prevent environmental and human rights risks. When growing and harvesting trees, producing products or transporting materials, Stora Enso has an impact on people. The Group directly impacts approximately 19,000 forest owners, 21,000 employees, over 20,000 suppliers and thousands of customers globally. Stora Enso’s approach to human rights is informed by the UN Guiding Principles on Business and Human Rights. It involves the proactive identification of potential risks across the value chain, taking appropriate action to mitigate adverse impacts, and implementing remediation measures when needed.
Progress
While Stora Enso considers all human rights to be important and respects them, the human rights identified as being most salient remain its primary focus. Geographically, the biggest potential impact is in countries where the Group employs large groups of people, either directly or indirectly. In addition, Stora Enso has identified high-risk sourcing categories where salient human rights issues may be impacted through the supply chain. These include recycling services, land and sea transportation services, and wood supply functions.
Scaling up best practices
In 2023, Stora Enso shared best practices and adapted existing processes to embed the outcomes of the three deep-dive projects initiated in 2022. The projects were carried out together with a third-party consultancy, with the aim of improving risk identification and controls for two high-risk supply chains, as well as the due diligence processes in the Group’s own operations.
1. Internal assessment process focusing on migrant workers in the forest supply chain
In Stora Enso’s forest operations in Sweden, activities such as the clearing and planting of trees are carried out by silviculture contractors, who predominantly employ migrant workers. A deep dive in 2022 resulted in a new monitoring and auditing approach being introduced to avoid or mitigate risks to migrant workers. This includes, among other things, more time to interact with migrant workers in the field as well as outside of working hours, facilitated by a translator. Two of the specific key improvement areas identified were workers’ difficulty in understanding wage payments and a low awareness of the rights afforded to them under applicable agreements in Sweden. As a result, the new collective bargaining agreement includes a commitment from the union to provide physical meetings at the start of every season. During 2023, all audits of silviculture contractors in Sweden were carried out following this new approach, and findings were shared with industry peers. The next step is to scale this approach to other Stora Enso locations and work towards a common approach with industry peers.
2. Deep-dive assessment of the Paper for Recycling supply chain
The Paper for Recycling (PfR) supply chain has a heightened risk due to the complex nature of the supply chain’s structure and low of awareness of the relevant risks among the wide range of actors involved. The outcome of the assessment showed that the work in the PfR supply chain is often labour intensive and associated with a lower barrier to entry and skill level. Risks can include inadequate or unregulated working conditions, informal forms of employment, low wages, the use of migrant workers, and a lack of transparency regarding sub-suppliers, among others.
Jobs in the PfR supply chain can be a last resort of employment, which may further contribute to placing workers in a vulnerable position. Based on the risk landscape identified through the deep dive assessment carried out in the Packaging Materials division in Poland in 2022, Stora Enso has developed a more structured way of working with the PfR supply chain. This includes placing a greater focus on the specific supplier segments to assess risks and identify appropriate mitigation activities.
3. Improved risk assessment and monitoring in the due diligence process for own operations
The Biomaterials division’s production sites in the Nordics focused on defining a new approach to improve the due diligence process for Stora Enso’s own operations, in conjunction with SMETA audits. The approach has since been shared with other divisions, and in late 2023 extended to the Veracel joint operation in Brazil and its own human rights due diligence work.
The process compliments the SMETA audits by focusing on dialogue and improvement possibilities, and broadens the scope of included stakeholder groups beyond own employees.
Since on-site contractors often fall outside of a company’s monitoring scope, the assessment gave valuable practical pointers on how to include on-site contractors in the due diligence process.
Capacity building
Training and capacity building is an integral part of due diligence to enable the integration of human rights into key business processes. Human rights are a core element in several training modules for the Group’s employees, including in the Stora Enso Code training aimed at all employees. The annual mandatory Human Rights training for security guards at the Veracel 50% owned joint venture operation was carried out according to plan.
Stora Enso arranges other training and awareness building activities tailored to specific needs. To cite one example, in 2023 all managers working in silviculture in Sweden were invited to an awareness-raising session focused on migrant workers’ rights.
Ways of working
The commitment to respect human rights covers all operations, including the Group’s employees, contractors, suppliers, and communities. Stora Enso takes human rights into account across its business activities, starting from investment decisions, while paying special attention to vulnerable groups, and encouraging the Group’s partners to do the same.
The integration of human rights aspects into Stora Enso’s business activities is described in further detail in the Human Rights Guidelines.
The Group continuously identifies and assesses potential and actual adverse impacts related to human rights and defines preventive and mitigating actions accordingly. Risk identification is integrated into due diligence processes and informs the Group’s Enterprise Risk Management process. Stora Enso is committed to remedying situations where its activities have caused or contributed to adverse human rights impacts. Remediation measures are determined on a case-by-case basis and according to the local context. The Group’s remediation process includes implementing corrective actions and ensuring knowledge sharing to prevent similar cases from arising in the future. Stora Enso continues to develop its due diligence processes in line with the upcoming Corporate Sustainability Due Diligence Directive.
Key tools for project-specific human rights include:
• Investment guidelines
• Environmental and social due diligence for mergers and acquisitions
• Environmental and Social Impact Assessments
• Community consultations, including Free, Prior and Informed Consent
• Sustainability Assessment checklist for innovation projects
Value chain transparency and reporting on human rights
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 unit-specific sustainability information with customers. Sedex Member Ethical Data Audits (SMETA) are conducted regularly, assessing suppliers’ performance against applicable labour standards, as well as health and safety, environmental, and business ethics criteria. Furthermore, Stora Enso is a member of EcoVadis, a platform where companies’ supplier performance is assessed and shared with customers. In 2023, Stora Enso was awarded the highest ‘Platinum’ level by EcoVadis for the seventh consecutive year.
The Group also takes part in membership organisations such as the Global Business Initiative for Human Rights (GBI), the World Business Council for Sustainable Development (WBCSD), and the Enact Human Rights & Business Practice Group (HRBPG) for access to expert knowledge and peer learning.
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. The Group publishes an annual Slavery and Human Trafficking Statement in accordance with the United Kingdom’s Modern Slavery Act 2015 and the Australian Modern Slavery Act 2018.
Community
Resilient and thriving communities promote economic stability and social well-being. Stora Enso is a significant employer, business partner, and taxpayer in its operating areas, while its investments improve local infrastructure. The Group has processes and procedures in place to prevent and avoid any influence from its tree plantations on land use that may adversely affect the rights of local communities. Protecting and respecting the rights of local communities and indigenous peoples is an essential part of sustainable forest management practices. Stora Enso strives to minimise negative socioenvironmental impacts, maximise positive influence, and maintain a constructive community dialogue that ensures a long-term social license to operate.
Progress
Value created in communities
Communities near to Stora Enso’s operations are supported through community development programmes and initiatives, with monetary and in-kind donations, and employee volunteering.
Stora Enso encourages its employees to engage in supporting local communities through volunteering, and employees are offered the possibility to use eight hours of paid working time each year for volunteer work. In 2023, the Group’s employees spent a total of 2,294 hours for volunteer work, equivalent to 57 weeks of working time.
In 2023, the majority of the voluntary community investment was allocated to Brazil to build resilience in local indigenous and farming communities through economic support and investments in education. Stora Enso continued to support emergency relief efforts through donations as well as donating towards the development of young leaders.
Stora Enso has a significant impact on the livelihoods of the local communities through direct and indirect employment. In 2023, Stora Enso employed approximately 21,000 individuals directly as well as employing a significant number of people indirectly. By purchasing from approximately 19,000 forest owners and sourcing from over 20,000 suppliers, Stora Enso helps to generate income for hundreds of local businesses and develop local infrastructure.
As a significant taxpayer in its operating countries, Stora Enso supports the sustainable development of societies and local businesses. For more information about the Group’s economic value creation, see Consolidated sustainability figures and country-by-country tax reporting.
As part of managing its environmental impact and contributing to local communities, Stora Enso has, for example, partnered with WWF and Tornator to enhance forest streams in Finland. In 2023, the organisations joined forces to build spawning grounds for endangered trout and restored hundreds of meters of freshwater habitats with the help of nearly 90 volunteers from Stora Enso.
Community consultations and land use
Local communities are consulted during the planning and decision-making stages of new investments. 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 Bahia, Brazil, Stora Enso’s 50% joint operation with Veracel maintains good relations with local Pataxó and Tupinambá indigenous 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 prior to the indigenous people’s first claim made to the land. At the end of 2023, this case was pending decision by the Ministry of Justice. Veracel remains committed to complying fully with the ministry’s eventual decision.
Ways of working
The community development programmes and initiatives defined in Stora Enso’s Community Investment Guidelines are categorised under three strategic focus areas: Education, Environment, and Resilient Local Communities. Projects are managed and funded locally to ensure that the communities close to the Group’s operations are the main beneficiaries, and local stakeholders are involved in the planning process to ensure the right benefits reach affected communities. The principles for donations and employee volunteering follow the same three strategic focus areas.
The Group’s tree plantations and land holdings are an integral part of local land use, and therefore sustainable land use practices are defined specifically for each location. Stora Enso is a major private forest owner in Sweden and a significant forestry operator in both Finland and Sweden. Stora Enso acknowledges its responsibilities concerning the rights of the indigenous Sámi people residing in areas situated on or adjacent to its land or where the Group sources wood. Firmly established practices are in place for engaging in dialogue, and local Sámi communities are always consulted before undertaking any forestry operations.
Mitigating adverse impacts on 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 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 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 as a prerequisite.
• 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. Read more in the ‘Our people’ section, Community engagement.
• Grievance mechanisms are available to communities close to the Group’s operations, read more in Human rights.
Long-term commitments with local communities in Brazil and Uruguay
The Pataxó and Tupinambá communities represent almost 25,000 indigenous people in Veracel, Brazil. In collaboration with indigenous communities, Veracel’s community liaison team plans activities that promote active dialogue and seek to preserve traditional culture. Activities range from awareness building on environmental topics to supporting educational programmes and cultural incentives.
In Montes del Plata, Uruguay, the extensive community engagement programme includes, for example providing additional income to local farmers by enabling them to integrate eucalyptus plantations into their farms, and promoting cattle grazing and honey production on company lands.
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