Sustainability for investors

Our goal is to be a thought leader in sustainability within our industry

Our services- and product-focused business model with project and systems capabilities supports our target for higher profitability and lower volatility. We work closely with our customers to solve their challenges, and we bring sustainable solutions to help them improve their performance. Our capability to provide our customers with leading technologies is the bedrock for sustainable growth. Finding ways to address sustainability challenges gives rise to new business opportunities and as we aim to help in solving global social and environmental challenges we will create value and well-being for all stakeholders.

Global environmental awareness creates opportunities for us to offer new intelligent solutions that improve our customers’ energy efficiency, reduce emissions and promote recycling. The biggest threats and opportunities related to the environment and climate change are transferred to Metso from our customers and are thus emphasized in our product, technology, and research & development (R&D). Improved reliability, safety and minimizing emissions are the key focus areas in Flow Control. In Minerals we work to improve efficiency through reduced energy consumption, improved utilization of raw materials and enhanced water conservation. We aim to develop our offering for existing operations and for new plants.

A sustainable way of operating throughout the value chain is a top priority for Metso. Through risk management, we can identify our potential sustainability threats and opportunities and plan our actions more carefully. Metso expects all of its suppliers and partners to operate in a sustainable way and also offers support in developing different areas in this field. By offering sustainable solutions for our customers and demanding them from ourselves and our partners we want to take part in creating a more sustainable future.

Value creation in Metso is assessed in both financial and non-financial terms. Increased stakeholder dialogue, identifying sales opportunities, and more effective and customer-centric operational processes support innovation, safety and a minimized environmental footprint, as well as build reputation and brand. In addition, value is created by improved internal processes, procurement efficiencies and decreased risk of misconduct.

The most important non-financial areas for the value creation for Metso’s shareholders and other stakeholders were concluded as follows. These take into consideration value chain impacts, risk management measures, applicable performance indicators and future opportunities

  1. Customer relationships
  2. Product responsibility
  3. Compliance
  4. Supply chain
  5. People

Commitment to follow certain global initiatives forms the basis for Metso’s operations in these areas. Each of the areas is also managed through the policies, processes, guidelines and instructions.

Implementation of the policies is ensured through regular training. The Board oversees that enterprise risk management is appropriately governed. Internal control practices are aligned with Metso’s risk management process approved by the Board. An audit frame is in place to support risk management by ensuring compliance and continuous business development. Following audits were conducted in 2017:

  • Metso Risk assessment evaluations, six in total
  • Internal audits in 20 countries, with the addition of three Group function and global process audits, 11 specific case investigations
  • Risk engineering audits, 10 in total
  • Logistics audits, six in total
  • Health, safety and environment audits, 20 in total
  • Sustainability supplier audits, 58 in total

The Board also oversees the effectiveness and impact of Metso’s sustainability governance. The Metso Executive Team (MET) follows and ensures the implementation of the sustainability agenda regularly and makes decisions on the corporate-level targets.

Customer relationships

The value in customer relationships is in increasing awareness of Metso and our offering and in the likelihood of a customer to repurchase and to recommend Metso to others.

Based on customer dialogue, Metso’s customers value safety, resource efficiency, productivity and supply chain responsibility. A comprehensive understanding of these customers enables solving their challenges through tailored solutions and providing them with the best performance and improved processes.

Metso is engaged in various projects that:

  1. Extend the life cycle of equipment and prolong maintenance cycles
  2. Maintain and improve product safety and a safe working environment
  3. Mitigate the environmental load through reduced emissions, waste and energy intensity

In recent years, a single Customer Relationship Management system has been implemented across the businesses to more effectively collate and manage customer data. By having access to more information, customer relationship management is more effective and better service delivered.

Metso has been developing a customer engagement survey that measures loyalty and satisfaction in key operational areas. This enables identification of the operational areas where a better customer experience can be delivered. By the end of 2017 the engagement survey covered all businesses except Recycling, which will be added in 2018.

The future focus in customer relationships is on continuing to invest in marketing automation, which can help keep customers better informed about what Metso is doing, and in developing even more effective customer satisfaction measurement tools.

Product responsibility

Metso’s products and services design is focused on helping customers operate safely with higher productivity and profitability while reducing their resource intensity. The safety of Metso’s products is one of the key drivers in research and development work. The product safety principles consider all aspects relevant to:

  1. Safe installation and operation
  2. Servicing and maintaining products in all conditions
  3. Training customers on the safe use of our equipment

Metso’s services portfolio, which ranges from wear and spare parts to life cycle services, is an important part of the offering. Service hubs and distribution centers close to the customer ensure efficient and timely service. Well maintained equipment typically has a smaller environmental footprint.

Sustainability targets set for each new R&D project reinforce Metso’s product sustainability. 84% of R&D projects have set environmental efficiency and product safety innovation targets that are monitored.

The future focus in product responsibility is on increasing the competitiveness of the offering and building more around digitalization. In addition, developing better methods for understanding and calculating the environmental impacts of Metso’s products is important.

Compliance

Metso’s Code of Conduct is a key corporate standard: Metso’s commitment to integrity including preventing corruption. This means respecting all applicable laws and regulations and aiming to share regulatory best practices as well as acting as a good corporate citizen throughout our global operations. At Metso, human rights are respected and supported: all people are entitled to be treated with respect, and discrimination, harassment, or illegal threats are not tolerated.  Any form of compulsory, forced or child labor is not accepted or used and applicable national laws and regulations regarding working hours and employee compensation are respected. Metso’s Anti-Corruption Policy supports zero-tolerance for bribery and corruption, including facilitation payments. Metso demands in its third-party agreements that suppliers, business partners and other stakeholders also follow similar standards.

All Metso people have a responsibility for compliance. A range of internal controls are in place, and Metso people are strongly encouraged to report any suspected wrongdoing or misconduct to their supervisors, to other management or, if necessary, directly to Internal Audit, e.g. using the Whistleblower channel. All reports are treated as confidential and anonymous, and Metso commits to no negative repercussions for the reporting person.

Metso’s Code of Conduct was renewed in 2017 and 99.8% of the employees passed the mandatory training in the required time frame. The Code of Conduct training is also a compulsory part of the new employee onboarding process. To support the new Code of Conduct and to enforce better awareness of and compliance with Metso policies and guidelines, a development project that created a policy framework for the internal guidance was completed in 2017. During the year Metso also initiated a Data Privacy project to ensure compliance with the EU’s General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679).

Focus on updating the policy framework and implementing it efficiently throughout the organization will continue in 2018. In this respect, implementation with taking e-learning into better use is a priority. Several training programs in anti-bribery, corruption and trade sanctions are planned for 2018.

Supply chain

Due to the cyclical nature of Metso’s customer industries, a business model of outsourcing the product manufacturing plays an important role. 80 percent of the cost of goods sold derive from our suppliers and close relationships with them are critical. Processes are in place to continuously develop a shared understanding with the suppliers in the areas of innovation, cost efficiencies and quality to manage the risks related to outsourcing. Defined ways of working and regularly conducted risk assessments related to e.g. environmental load in the supply chain support the overall supply chain management.

Metso’s Code of Conduct and supplier sustainability criteria set the standards for Metso’s suppliers. Human rights and other sustainability topics are covered by third-party supplier audits, supplier self-assessments and Metso’s internal sustainability supplier audits. Key supplier requirements are also incorporated into contract obligations, and a contract breach can lead to consequences that include the termination of a supplier relationship. Metso has also conducted annual scope three carbon-dioxide emissions calculations since 2013 to better understand the environmental impacts of the supply chain.

Metso has defined sustainability criteria and evaluation processes for its suppliers in identifying critical suppliers and assessing them regularly. Suppliers’ environmental and safety practices, human and labor rights, compliance with laws and regulations, and anti-bribery are evaluated in the supplier self-assessments. Sustainability supplier audits are conducted in higher risk countries, and suppliers are required to implement corrective actions within a given timeframe. Corrective actions are followed up.

The systematic assessment and development work around the responsible supply chain will continue in the future with a special focus on the supplier cooperation to develop shared sustainability practices.

 People

The performance and engagement of people is a key contributor to Metso’s success and value creation. Engagement is supported by responsible employment and the safety and wellbeing of Metso people. In addition, respecting human rights in our operations allows operating and improving the operational risk management through improved working conditions. Metso’s policy framework and the global initiatives create the foundation in respecting the rights of the people that are employed in Metso value chain and in the communities around Metso’s businesses.

At Metso, continuous development and learning in everyone’s daily work is emphasized. This is ensured by regular performance and development discussions, which are carried out using a global process and tool. Additionally, Metso aims for fair remuneration systems, which take into consideration the individual, team, business area and the Group’s performance, as well as the varying market practices globally.

In engaging and retaining employees, excelling in leadership makes the difference. Metso’s approach is based on defined Leadership Principles and our values. This means both investing in the development of managers through global leadership development programs as well as a leadership development portfolio. During 2017, Metso invested in its sales teams by running several sales excellence workshops, and these will continue in 2018. Employee engagement is measured via a bi-annual survey, PeoplePulse. The results of the survey are shared and discussed in all teams. Team-specific action plans and their implementation is a shared responsibility across the whole organization. For example, the 2016 survey results have initiated several improvement projects and their progress was followed during 2017. The next survey will take place in 2018. 

Employee safety, risk observations, safety discussions and safety training hours are continuously measured. The lost-time incident frequency (LTIF) in 2017 was 2.6 (2.5 in 2016). Annually, sustainability reporting assurance audits are also conducted by an external partner. In 2017, sites in Sorocaba, Brazil, Shrewsbury, US, and Shanghai, China, were audited on their HR and HSE reporting processes. In 2017, a human rights assessment, originating in 2015, continued with various practices to understand all the salient human rights topics in the value chain.

People focus in 2018 is on implementation of the new organization model, effective as of January 1; this model aims to drive profitable growth and accountability through a leaner organization and ways of working.

 

Sustainability is managed at the group level by the Sustainability team, which works towards an integrated sustainability model with the top management, the functional support teams and the business units to support Metso’s long-term success. The main role of the Sustainability team is to provide support and knowledge to transform the strategic business targets into sustainable business actions. The Board oversees the effectiveness and impact of Metso's sustainability governance.

Code of conduct

The cornerstone of Metso’s approach to managing sustainability is the company’s code of conduct. Metso’s Code of Conduct creates a common basis for all our business operations and work assignments and is part of our general purchase conditions. It also serves as commonly accepted guidelines and perspectives for future decisions. Metso’s Code of Conduct is implemented through different training sessions for our employees and suppliers.

Read more about Metso's Code of Conduct.

International standards

In our sustainability management we comply with several international standards, such as quality management standard ISO 9001, environmental management standard ISO 14001 and health and safety management standard OHSAS 18001, and many of our business units have gained certification to these standards:

  • 28% of all our operations are covered by ISO 14001 certification,
  • 25% by OHSAS 18001 certification and
  • 66% by ISO 9001 certification.

Global list of Metso's externally certified units.

Metso is included in the following sustainability indices:

  • CDP Leadership level
  • RobecoSAM Sustainability yearbook 2017
  • FTSE4GOOD index
  • Ethibel Sustainability Index
  • oekom Research AG index with Prime status
  • OMX GES Sustainability Finland Index
  • Vigeo Rating
  • STOXX Global ESG Leaders Indices

Assurance

An independent third party, PricewaterhouseCoopers Oy, has provided assurance on the sustainability information disclosed in Metso’s Sustainability and Annual reports since 2010. In addition to the data revision, the assurance includes approximately three annual site visits and management interviews.