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Case study: How Fortum respects and promotes human rights

Fortum is a Finnish state-owned energy company focusing on the Nordic and Baltic countries, Poland, Russia and India, operating power plants, including co-generation plants, and generating and selling electricity and heat. Fortum supports and respects internationally recognised human rights  Tweet This!, which are included in the key human rights treaties.

This case study is based on the 2019 Sustainability Report by Fortum published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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Fortum seeks to operate in accordance with the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, and to apply these principles in its own operations as well as in country and partner risk assessments and supplier audits. In order to respect and promote human rights Fortum took action to:

  • assess human rights impacts
  • identify human rights risks
  • address human rights-related grievances
  • provide training

What are the material issues the company has identified?

In its 2019 Sustainability Report Fortum identified a range of material issues, such as energy efficiency, business ethics and compliance, customer rights and satisfaction, climate change and GHG emissions, employee wellbeing, health and safety. Among these, respecting and promoting human rights stands out as a key material issue for Fortum.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Fortum engages with:

Stakeholder Group
Lenders and shareholders
Customers
Personnel
Future talent
Service and goods suppliers
Authorities and decision makers
Media
Energy sector organisations
NGOs
Local communities

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Fortum engaged with its stakeholders through surveys sent to more than 900 representatives of NGOs, customers, public administration, capital markets, research institutes, industry organisations and opinion leaders.

Fortum supports and respects internationally recognised human rights, which are included in the key human rights treaties.

What actions were taken by Fortum to respect and promote human rights?

In its 2019 Sustainability Report Fortum reports that it took the following actions for respecting and promoting human rights:

  • Assessing human rights impacts
  • A human rights assessment is part of Fortum’s investment project planning, especially in new operating countries. It is also part of a country and counterparty risk assessment. Depending on the project, Fortum assesses risks based on either public sources or a more in-depth assessment. An assessment based on public sources is always completed for all new countries to which one of Fortum’s business units is planning to sell products or services. In 2019, Fortum performed six such assessments. For investment projects targeting risk countries, Fortum performs an in-depth assessment in which it often uses also external local experts.
  • Identifying human rights risks
  • Fortum defines measures for projects to manage human rights risks to comply with its own requirements and, e.g., with lender requirements. Fortum also aims to support favourable impacts in collaboration with local communities and other stakeholders. All forms of child and forced labour are strictly prohibited and in violation of Fortum’s Code of Conduct and the Supplier Code of Conduct. Fortum has not identified risks related to the use of child or forced labour in its own operations. Fortum’s supplier audits cover the most important human rights aspects related to purchases.
  • Addressing human rights-related grievances
  • Fortum’s internal reporting channels used for reporting any suspected misconduct relating to labour conditions or human rights violations are defined in its Code of Conduct. In addition to internal reporting channels, Fortum has an external “SpeakUp” channel, which is available to all stakeholders. In 2019, there were no grievances related to human rights filed through Fortum’s grievance channels, nor were there any grievances carried over from the previous year. Fortum’s subsidiaries operating in Great Britain published a statement required by the Modern Slavery Act on its website. Fortum supports the principles defined in the Act and condemns practices that are in violation of the Act. Fortum also ensures compliance with its principles and Code of Conduct through internal monitoring and reporting practices and supplier assessments.
  • Providing training
  • The online training on Fortum’s Code of Conduct covers human rights-related issues. The online training is part of the induction programme for new employees, is continuously available to all employees, and the entire personnel undertakes the training in conjunction with the updates of the Code of Conduct. The Supplier Code of Conduct also includes human rights requirements for suppliers and they are addressed as part of the Supplier Code of Conduct training.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 408-1 Operations and suppliers at significant risk for incidents of child labor

2) Disclosure 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor

3) Disclosure 412-1 Operations that have been subject to human rights reviews or impact assessments

4) Disclosure 412-2 Employee training on human rights policies or procedures

5) Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening

 

Disclosure 408-1 Operations and suppliers at significant risk for incidents of child labor corresponds to:

Disclosure 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor corresponds to:

Disclosure 412-1 Operations that have been subject to human rights reviews or impact assessments does not correspond to any SDG.

Disclosure 412-2 Employee training on human rights policies or procedures does not correspond to any SDG.

Disclosure 412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening does not correspond to any SDG.

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



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By registering for the next 2-day FBRH GRI Standards Certified, IEMA & CIM recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by Fortum, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

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