Stora Enso Oyj – Annual report – 31 December 2017
[Note: this is a summary of a longer report in the Sustainability report which forms part of the Annual report]
Industry: forestry, manufacturing
Sustainability Report (extract)
Human rights (extract)
Our commitment to respect human rights covers all our operations, including our employees, contractors, suppliers, and surrounding communities.
Opportunities and challenges
Operating in high-risk markets
When it comes to human rights, Stora Enso’s operations cover challenging markets such as 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.
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 the UN Guiding Principles on Business and Human Rights requires companies to conduct human rights due diligence procedures to identify, assess, and address the human rights risks and impacts of their operations, products, and services.
Our policies Implementing international human rights standards
In addition to our commitment to the UN Guiding Principles on Business and Human Rights, our Sustainability Agenda is aligned with the ten principles of the UN Global Compact, including its principles on human rights. Stora Enso also respects and follows the legal reporting requirements of the UK Modern Slavery Act.
Relevant Stora Enso policies and statements on human rights include our:
- Code of Conduct, expressing our respect for international human and labour rights.
- Supplier Code of Conduct, imposing strict contractual requirements regarding human rights on our suppliers.
- Human Rights Statement, expressing 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
How we work
On-going human rights due diligence
Human rights risks 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 our Code of Conduct and Business Practice Policy are also assessed. 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 – Labour Conditions, and Supplier Code of Conduct. Our human rights strategy and due diligence programme, which are currently under development, will define additional elements in accordance with the UN Guiding Principles.
In 2017, Stora Enso conducted human rights training and divisional sustainability expert capacity building. This was part of the process of identifying Stora Enso’s priority human rights issues and the development of a human rights strategy. The strategy will be further refined during 2018.
Environmental and social impact assessments
Significant new investments can entail local environmental and social impacts affecting human rights. To map and mitigate these impacts, 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.
One 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. The results of ESIAs 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.
Human Rights Assessment and Action Plan
Stora Enso conducted a comprehensive group-wide Human Rights Assessment in 2014, consisting of separate assessments for 93 operational entities in 22 countries. The assessment included all of our production, wood supply, and forestry operations, joint operations in Brazil and Uruguay, and our equity-accounted minority investment in Pakistan that was divested in 2017.
As part of this process, Stora Enso and the Danish Institute for Human Rights (DIHR) developed a customised Human Rights Compliance Assessment tool that covers 43 human rights issues. The resulting Human Rights Assessment report, consolidated by DIHR was published in February 2015.
A Human Rights Action Plan was developed during 2015, based on the findings and recommendations of the assessment report. The implementation of the action plan commenced in Q3/2015 and all actions were progressed to an appropriate conclusion by the end of 2017.
The Action Plan included specific measures to:
- monitor compliance with labour rights and the working conditions of third-party on-site employees.
- promote diversity and inclusion among Stora Enso’s workforce.
- improve overtime practices and entry-level wages at certain units.
- develop guidance and procedures for the protection of employee privacy.
- ensure opportunities for supporting and facilitating collective bargaining.
- improve occupational health and safety practices at certain units.
- strengthen grievance mechanisms.
- improve environmental and social impact assessment procedures.
- enhance policies and procedures for security management.
- continue to implement our Supplier Code of Conduct.
- ensure that human rights impacts are duly considered and addressed through responsible supply chain management.
Grievance and remediation mechanisms
In accordance with the UN Guiding Principles on Business and Human Rights and our own Human Rights Statement, Stora Enso is committed to remedy any situation where our activities have caused or contributed to adverse human rights impacts. In circumstances where human rights 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 relevant stakeholders to ensure that those impacts are remedied.
A third-party-administered grievance channel is available to all our employees. The channel enables them to report instances where their rights may have been infringed, or where they have observed violations of Stora Enso’s Code of Conduct.
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 an 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.
In 2017, we initiated a process to map all of our existing community grievance mechanisms to ensure alignment with the UN Guiding Principles effectiveness criteria. Similarly, in 2017 we undertook a process to map the existing security arrangements in all our operating units, as the first step to identify, assess and address any human rights risks or impacts.
For more information on the group’s formal grievance mechanism, which is also open to external stakeholders in countries where the law allows, see page 27.
Communicating our performance
During 2017, details of our progress on implementing our Human Rights Action Plan were published in our quarterly Interim Reports, which also covered other human rights related topics, such as supply chain management.
Stora Enso is also following the legal requirements of the UK Modern Slavery Act to enhance our transparency and reporting regarding modern slavery. This act requires organisations conducting business activities in the UK and with a global turnover of greater than 36 million British pounds to publish annual Slavery and Human Trafficking Reports. The report must set out what the organisation does to ensure that slavery and human trafficking do not take place in any part of their own business or their supply chains. Stora Enso’s first report was published in 2017 at storaenso.com/sustainability.
Progress Human Rights Action Plan finalised
In 2017, our focus was on finalising the implementation of the Human Rights Action Plan that resulted from our group-wide Human Rights Assessment conducted in 2014 and a related report published in 2015.During the year, an internal assurance process was carried out to ensure that actions are adequately concluded and evidence documented.
By the end of 2017, a total of 88% (86% at the end of 2016) of the preventive and remediation actions were completed and 100% of the actions were brought to an appropriate conclusion.9% of the actions were closed and 3% were identified as actions requiring continuous review. Actions were based on the UN Guiding Principles on Business and Human Rights and criteria created in collaboration with the DIHR.As all actions were progressed to an appropriate conclusion during 2017, the reporting on the Human Rights Action Plan progress will stop.
Certain country-specific actions that have been of special interest to our stakeholders in 2017 are described below.
Stora Enso’s operations in Guangxi consist of tree plantations in various parts of the province 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 2017, our human rights work in Guangxi focused on training staff in human rights and progressing the remaining actions of our Human Rights Action Plan to a conclusion.
- Human rights training for key employees, including those working with sourcing, legal issues, human resources and sustainability, as well as for external security service providers.
- Continuing to develop a Transportation Impact Management Plan including safety guidelines reviewed together with contractors, with a special focus on road safety in local villages.
- Implementing and compliance monitoring of our Supplier Code of Conduct and Responsible Sourcing Programme. For more information about responsible sourcing, see pages 60–63.
As the Beihai Mill continued to ramp-up in 2017, we drew on our ongoing work and started to develop a comprehensive human rights due diligence programme, which covers both our forestry and manufacturing operations, in accordance with the requirements of the UN Guiding Principles. The pilot human rights work began with security service providers for Stora Enso in Guangxi, and will continue in 2018.
When required, adequate 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 tree 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 2017.
During the year, we also continued to focus on sustainable land management in Guangxi. For more details, see page 53.
Veracel, our 50/50 joint operation with the Brazilian company Fibria, 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 2017, Veracel focused on progressing the remaining actions of our Human Rights Action Plan to a conclusion.
- Continuing to implement the Sustainable Settlements Initiative for disputes related to land and landless movements, and indigenous people’s rights.Read more on page 23.
- Continuing to implement Veracel’s supplier code of conduct and associated training, audits and follow-up procedures.
Additional human rights training is provided annually to employees working as guards for Veracel’s security service provider.
Veracel has been criticised in the past for issues related to landless people’s social movements and the rights of indigenous peoples. In 2017, Veracel continued its dialogue with the landless movements and the Bahía State government to address issues of land distribution in Bahía. Veracel’s ongoing implementation of the Sustainable Settlements Initiative in response to this issue continued in 2017. For more information about landless people’s social movements in Bahía and Veracel’s community engagement, see pages 22–23.Veracel maintains good relations with local indigenous villages, and also supports programmes designed to strengthen the cultural identity of the 29 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 2017, this case was still being processed by the regional federal court. Veracel remains committed to fully comply with the court’s eventual decision.
In September, Stora Enso completed the divestment of its 35% minority holding in the equity accounted investment Bulleh Shah Packaging (Private) Ltd.(BSP) in Pakistan to the main owner Packages Ltd. Due to a changing business environment in Pakistan, the BSP asset with its product mix and related future outlook, was a non-strategic fit in our consumer board roadmap.
Until the divestment, Stora Enso’s focus in Pakistan was on implementing Stora Enso’s Human Rights Action Plan, including actions to systematically address child labour in supply chains; the implementation of BSP’s Supplier Sustainability Requirements; training employees on ethics; and ensuring adequate contractor wages and working conditions. The Human Rights Action Plan in Pakistan was progressed to an appropriate conclusion in 2017.
To ensure a responsible exit from Pakistan, an external expert organisation provided additional advice on human rights issues at Stora Enso’s request.
Stora Enso will continue its Public Private Partnership with the International Labour Organisation (ILO) until the end of 2018.
The partnership was signed in 2015 for a two-year duration. In 2017, it was extended until the end of 2018.During the partnership, Stora Enso and ILO have conducted research into the promotion of decent work and elimination of child labour in BSP’s supply chains; trained suppliers and personnel on decent work, child labour and other fundamental rights at work; organised community awareness-raising sessions on these rights together with the local government; arranged for a review of BSP policies by ILO with a focus on the prevention and elimination of child labour; co-hosted a Child Labour Platform meeting to start scaling up the good practices from the partnership through cross sectoral collaboration; and conducted a session at the Annual Child Labour Platform meeting with a focus on the lessons learned from the partnership.
After the divestment of BSP, Stora Enso continued to support its share of the two programmes it has been funding in Pakistan.
Stora Enso supports six schools in cooperation with the Pakistani non-governmental organisation Idara-e- Taleem-o-Aagahi. Since 2015, these schools have provided education for children previously identified as child workers in BSP’s supply chain. The schools have the capacity to educate up to 640 children. The contract for the school programme, together with Stora Enso’s funding, will remain in place until 2023.
Stora Enso has commissioned a mobile medical health care clinic, created together with the Yunus Center of the Asian Institute of Technology, in order to provide basic health services to local communities. Stora Enso’s support for the mobile medical clinic continued until the end of 2017.The clinic has been transferred to BSP to be operated by a local medical facility based in Lahore.
Stora Enso has continued to develop trial plantations in the Saravane and Savannakhet provinces of southern Laos in areas totalling 3 731 hectares (3 900 in 2016), of which 2 988 (2 995) are planted with eucalyptus. Stora Enso Laos has 125 employees (130). During 2017, our human rights work in Laos focused on progressing the remaining actions of our Human Rights Action Plan to an appropriate conclusion.
- An Environmental and Social Management and Monitoring Plan was launched and implemented.The Plan is based on the previous ESIA, which was largely carried out by the International Union for Conservation (IUCN), the Swedish University of Agriculture (SLU), and the United Nations Development Programme (UNDP).Environmental and social monitoring was adapted to meet the criteria of the Forest Stewardship Council1 (FSC®) and ISO 14001 certifications.
- Extensive training of employees to ensure correct implementation and social monitoring from a human rights perspective, including training on safety.
- Mapping supply chains and assessing supplier compliance with Stora Enso’s Supplier Code of Conduct.
- Implementing an improved community grievance mechanism, created in cooperation with the International Finance Corporation (IFC).The improved grievance mechanism was communicated to the communities neighbouring our operations.
- Measures 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. In 2017, Stora Enso focused on gender issues and land leasing procedures to further strengthen community consultation.
Stora Enso’s tree plantations in Laos are located in the vicinity of villages that are culturally and ethnically diverse. This makes it essential for us to engage in community dialogues in a culturally appropriate way, based on informed consultation and participation, and obtain their consent for our projects. In 2017, we completed a project with IFC and an NGO specialised in enhancing local leadership development, Village Focus International, to train Stora Enso employees on stakeholder engagement and community consultation, particularly considering the interests of women and vulnerable groups.
In 2017, Stora Enso and Village Focus International jointly launched a set of community consultation tools. The aim is to 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 in relation to Stora Enso’s activities.