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Opportunities and challenges
Stora Enso sources a wide range of raw materials, products, and services for the group’s business globally. In 2016, purchases of materials, goods, and services represented 48% of Stora Enso’s total variable costs and fibre procurement accounted for 52%. The concept of responsible sourcing is relatively new in some markets, and local suppliers may not be familiar with sustainability requirements and audits. However, Stora Enso believes that demonstrating sustainability ultimately benefits the group’s suppliers, while helping to promote more sustainable sourcing around the world.
Although Stora Enso works in various regulatory environments around the world, it also consistently responds to stakeholder demands concerning transparency and sustainability performance of the group’s suppliers. Imposing sustainability requirements on direct suppliers also encourages them to build up their capacity to meet such stricter demands, and creates a larger pool of more sustainable suppliers.
Stora Enso strives to identify and address the impacts of its operations in its supply chain. The Stora Enso Supplier Code of Conduct (SCoC) is a legally binding document that imposes minimum supplier sustainability requirements on suppliers. Other policies that support responsible sourcing include the group’s Sourcing Guideline, Sourcing Strategy, Practical Instructions for Stora Enso Suppliers, Instructions for Purchasers, and Policy on Wood and Fibre Sourcing, and Land Management.
How we work
For Stora Enso, responsible sourcing means drawing on a deep commitment to sustainability, addressing the concerns of key stakeholders, complying with regulatory frameworks, adhering to best practices, and managing supply risks. Stora Enso’s approach to responsible sourcing has become more deeply embedded in purchasing and supplier management since the group’s more centrally-led sourcing organisation was established in 2014.
Materials and products sourced by Stora Enso include wood and fibre-based materials such as pulp and paper for recycling (PfR), as well as chemicals, fillers, energy, fuels, spare parts, and maintenance, logistics, and IT services. Any supplier who wishes to do business with Stora Enso must first pre-qualify, before being awarded with a contract.
In addition to enforcing its Supplier Code of Conduct, Stora Enso actively engages with suppliers to help them improve their sustainability performance. Stora Enso also conducts supplier assessments and audits based on risk evaluations to ensure adherence to the SCoC. Non-conformances found during audits are followed up with supplier discussions and corrective action plans. In cases where suppliers are not willing to improve their performance, relationships are terminated.
Stora Enso’s related key performance indicator (KPI) measures the proportion of total supplier spend covered by the group’s SCoC, including all categories and regions. By the end of 2016, 92% of Stora Enso’s total spending on materials, goods, and services was duly covered (90% at the end of 2015), exceeding the group’s target of 90% by the end of 2016. In 2016, the indicator was broadened to also cover the group’s Wood Supply units. The target for 2017 will be communicated in the Interim Report for Q1/2017.
During 2016, Stora Enso provided extensive training for its purchasers on a variety of topics, including supplier pre-qualification, and business principles.
Stora Enso continued to conduct third-party supplier audits in 2016 with a focus on high-risk suppliers in China. In 2016 a total of 36 suppliers were third-party audited in China (39 in 2015). These audits conducted revealed non-conformances primarily related to occupational safety, wages, working hours, and basic workers’ rights, as defined in Stora Enso’s SCoC. During 2016 third-party audits were also conducted on 11 suppliers in countries other than China.
In 2016 Stora Enso worked on identifying the most sustainable sourcing solution of coal for the group’s new Beihai Mill. This involved evaluating seven local coal suppliers against Stora Enso’s supplier selection procedures. Two Stora Enso sustainability audits and three third-party audits of the preferred supplier were conducted in 2016. Stora Enso was able to audit the whole coal supply chain, excluding shipping, and a social impact assessment was also conducted in villages neighbouring the mine as well as along the logistics chain.