Corporate Responsibility Report 2017 in Motion Direction Phenomena Sustainability Work 2017 Gri 2

CORPORATE RESPONSIBILITY REPORT 2017 IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 2

Table of contents

DIRECTION PHENOMENA SUSTAINABILITY GRI WORK 2017

Finland’s leading general Business integrity 28 Business integrity 49 Reporting principles 73 discount retail chain 4 Digitalisation enables more Privacy protection 50 Information used in calculations 74 Our responsibility work 5 responsible business 29 Responsible marketing 50 Data 76 2017 highlights 8 Fair treatment 34 Generating and distributing direct GRI-index 81 Megatrends 9 Diversity as a business driver 35 added financial value 52 Profitable growth as a strategic Responsible sourcing and Tax footprint 52 objective 12 products 38 Fair treatment 53 Stakeholder engagement 14 Living wage and responsible Committed personnel 54 Materiality analysis 16 business 39 Equal treatment at work 55 Management approach 18 Efficient use of resources 43 Employee training and Managing material topics 20 Circular economy challenges and development 57 Values as the basis for encourages us to cooperate 44 Occupational health and safety 58 responsibility work 21 Responsible sourcing and Ethical guidelines 22 products 60 Human rights as a starting point Responsible sourcing 61 for responsibility 24 Product responsibility 64 UN’s Sustainable Development Efficient use of resources 66 Goals and Tokmanni 26 Energy-efficient business 67 Environmentally sound logistics 69 Resource efficiency 69

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 3

DIRECTION

Tokmanni is in motion. In this section We work hard for smart shopping and more sustainable discount retailing. Finland’s leading general Responsibility is a prerequisite for discount retail chain 4 Tokmanni’s success and a strategic Our responsibility work 5 focus area from the Executive Group 2017 highlights 8 level all the way to the stores and Megatrends 9 supply chain. Our vision and strategy Profitable growth as a strategic define the direction we are heading objective 12 towards. Stakeholder engagement 14 Materiality analysis 16 Management approach 18 Managing material topics 20 Values as the basis for responsibility work 21 Ethical guidelines 22 Human rights as a starting point for responsibility 24 UN’s Sustainable Development Goals and Tokmanni 26

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 4

Finland’s leading general discount retail chain

Tokmanni is the only general discount retailer in Finland with a nationwide network. At the end of 2017 Tokmanni had 175 stores across Finland. Tokmanni offers its customers a wide and attractive assortment, affordable prices and a pleasant shopping experience.

Tokmanni’s product assortment consists Asia and 12 per cent from other parts of Key Performance Indicators 2015 2016 2017 of leading international brands, the compa- Europe. Tokmanni’s sourcing organisa- Revenue, MEUR 755.3 775.8 796.5 ny’s own private label products, licensed tion is responsible for product purchases. Operating profit, MEUR 39.1 49.2 38.8 brands and non-branded products. Our Tokmanni is committed to responsible private labels are among others: Autoplus, sourcing, and it seeks to buy products only % of revenue 5.2 6.3 4.9 BBQ King, Energy+, Future TT Sport, from responsible suppliers. In 2017 prod- Employment Ideale, Iisi, Kotikulta, Kraft, Priima, Real, ucts were supplied to Tokmanni directly Employees 3,293 3,224 3,255 Tok Garden and Vaeltaja. from the following risk countries defined by The corporate head office is in Mäntsälä. the Business Compliance Initiative (amfori Permanent employees 2,424 2,440 2,540 Besides its operations in Finland, Tokmanni BSCI): Bangladesh, Bulgaria, China, India, Full time employees 1,203 1,137 1,187 also has a sourcing joint venture in Shang- Indonesia, Turkey and Vietnam. Sourcing hai with the Norwegian company Europris Tokmanni’s shares are listed on the main Share of Tokmanni's direct risk country purchases coming ASA. Tokmanni owns 50 per cent of the list of the Nasdaq Helsinki stock exchange. 81 95 99 from suppliers committed to amfori BSCI Code of Conduct, % joint venture. At the end of 2017 the company had ap- Tokmanni does not have its own produc- proximately 14,000 shareholders. The big- Environment tion facilities but acquires its products di- gest shareholders were Rockers Tukku Oy Total energy consumption, MWh* 107,038 118,411 115,697 rectly from Finnish and international manu- owning 17 per cent, Elo Pension Company Waste recovery, % 94.0 99.8 100 facturers, importers and agents. Tokmanni with 8 per cent and Varma Mutual Pension buys about 70 per cent of its products Insurance Company with 7 per cent of the from Finnish suppliers, 18 per cent from company shares. * The figures include both estimated and measured consumption.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 5

The most significant issues in our responsibility work are respecting human rights and reducing climate change impacts

The aim of our responsibility work is to minimise the business risks, make use of opportunities, and produce added value for stakeholders. We observe the relevant legislative requirements and collective agreements and the principles of good governance in everything we do.

Our operations accord with the provisions of and aim to make responsibility part of our the UN’s International Bill of Human Rights, value creation in all of our operations. the International Labour Organization's Declaration on Fundamental Principles and Tokmanni’s goal is a motivated, Rights at Work, and the UN Global Compact. committed and diverse Our operations are also governed by our eth- personnel ical guidelines, which consist of Tokmanni’s Fair treatment of people is an important Code of Conduct and the related principles, theme in our responsibility work. We are policies and instructions. These provide the building an operating culture that is fair and framework for our corporate responsibility based on trust and supports the wellbeing work and guide our operations. of all employees. We assess responsibility risks as part Our aim is to ensure that our personnel of the process of managing business risks is motivated and committed to their work.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 6

Our target is to portant to ensure our employees’ wellbeing As a result of the assessment, it was found our selling space, which will increase energy have a diverse work at work and career development. that the most salient potential human rights consumption and waste volumes. The com- impacts in Tokmanni’s operations and pany will be required to do significant efforts community in which We develop the responsibility of value chain relate to health and safety, on improving resource efficiency. equal treatment is our sourcing safety of buildings, excessive overtime, We aim to gradually increase our use Responsible sourcing and products are an lack of living wage, and the use of child of solar power, among other things, in our ensured for everyone essential part of our strategy. We will contin- labour and forced labour. The monitoring stores’ electricity production. The compa- from the recruitment ue to improve our sourcing operations by, for and indicators of these potential human ny already produces part of the electricity example, increasing direct imports without rights impacts were agreed in connection for some of its stores with store-specific phase onwards. compromising product safety, quality or with the investigation. Third party audits, solar power. We are also seeking similar responsibility. Tokmanni is a member of the in which factory workers have been inter- opportunities at other stores and our logis- amfori Business Social Compliance Initiative viewed also outside the factories, have tics centre in Mäntsälä. Tokmanni does (BSCI), which is a development programme been carried out in 2017 in four countries to not own its store premises, so adding solar On account of our growth and new stores, directed at companies with the aim of im- confirm the results of the assessment. The panels will require long-term planning and we are constantly in need of new, skilled proving working conditions at the factories results of the audits will be published later. negotiations for the individual premises. employees. In 2017, we opened a record and farms in a company’s supply chain. Product safety is also key in responsible The majority of transport service providers 13 new and 2 relocated stores across Fin- Factories producing Tokmanni’s private operations. We want to be certain that all are setting emissions reduction targets land, and our target is to open about 5 new label products and products in the standard the products we sell are safe to use. and moving over to more environmentally and relocated stores per year. Tokmanni selection imported by Tokmanni must be friendly technology. Regarding waste, has a significant role as an employer in amfori BSCI members or become so within Continued efforts into energy Tokmanni is working towards a reduction Finland and is known particularly as an em- a reasonable time frame. We also require and resource efficiency in food waste and in 2016, the compa- ployer of young people. In 2017 Tokmanni the factories supplying our brand products Tokmanni’s biggest environmental impacts ny committed to reducing the number employed hundreds of young people. to provide an undertaking that their produc- are caused by energy use, logistics and of plastic bags as part of the Ministry of Our target is to have a diverse work tion is in accordance with the amfori BSCI waste. Efficient resource use is an important the Environment’s and the Federation of community in which equal treatment is requirements. In addition to amfori BSCI part of the company’s responsibility work. Finnish Commerce’s Green Deal initiative. ensured for everyone from the recruitment audits, we also carry out our own audits at Our goal is to reduce energy consumption, phase onwards. Tokmanni is a member of our suppliers’ factories. to prioritise renewable energy and to mini- 2017 was a transitional year, the FIBS Diversity Charter. Our customer At the beginning of 2017 we published mise the amount of waste transferred to in- progress was made in the base is becoming more diverse, so we our human rights assessment based on the cinerator plants by improving our recycling. responsibility work need to make sure that our employees can UN Guiding Principles on Business and Hu- The work is becoming increasingly chal- Full-year 2017 revenue grew 2.7 per understand their needs. It is also very im- man Rights that we carried out during 2016. lenging as we are continuously increasing cent from the previous year. The trend

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 7

During the year in Tokmanni’s Like-for-Like revenue was In May we organised our annual cor- we established weaker than expected during the first and porate responsibility day at our premises second quarter of 2017 due to poor de- in Mäntsälä. The aim of the event is to a Responsibility mand for seasonal products and the shelf improve staff members’ understanding of Advisory Board availability issues related to the implemen- responsibility matters, to engage and train tation of a new assortment management members of staff and offer more in-depth to support our tool. In June we lowered our full-year guid- knowledge of responsibility offered by the responsibility ance regarding Like-for-Like revenue and company’s important stakeholders. profitability, and in the end Like-for-Like During the year, we continued to imple- work. revenue decreased 1.3 per cent from the ment our Deep Green project at our prem- previous year. Comparable EBITDA totaled ises in Mäntsälä. The target of the project EUR 55.0 million (62.8), a comparable is to reduce the environmental impacts of EBITDA margin of 6.9 per cent (8.1). Tokmanni’s office in Mäntsälä and our aim Heikki Väänänen, who was Tokmanni’s is to extend applicable areas of the project CEO from 2009, left the company in June to our stores. 2017. At the same time, Chairman of the Board Harri Sivula was appointed interim Mäntsälä, 16.2.2018 CEO. Mika Rautiainen from Kesko Group Markku Pirskanen was appointed Väänänen’s successor in Deputy CEO and CFO July. Rautiainen will start in his new position in June 2018. During the year we also continued our focused responsibility work, among other things by setting up the Responsibility Advisory Board. The Advisory Board is made up of external experts whose task is to provide the company with an external opinion of the company’s responsibility work and to function as a sounding board for the company regarding responsibility trends, risks and best practices.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 8

2017 highlights

January August Tokmanni 99% Occupational health services were put out to tender publishes the results and a national agreement was drawn up with Mehiläinen. of its human rights of Tokmanni's direct This will ensure conformity in working capacity management assessment. risk country purchases models, and thus ensure proactive support of working come from amfori BSCI capacity with a comprehensive service agreement which will audited factories. help to prevent premature applications for employment March disability pensions. A High minds group is established. May June Tokmanni organises a Nordic Swan label Responsibility day. evening organised on Tokmanni participates in the Finland100 project social media. by donating voluntary work. April A Sustainability Advisory Board is May established. The Deep Green programme is launched in Mäntsälä.

November Third place in Finnwatch’s compari- May August son of Easter chocolate Tokmanni's 2016 Notification of safety observations, improving the accident Solar panels and second place in reports achieve B+ investigation process and learning from these to prevent installed on the roof of Finnwatch’s com- rating in ReportWatch accidents from happening and to improve the creation of Tokmanni’s store parison of Christmas Industry Rating. a healthy and safe work environment. in Savonlinna chocolate.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 9

Megatrends, risks and opportunities for Tokmanni

Tokmanni has identified the megatrends that affect the company’s business and corporate responsibility perspectives. The material megatrends for Tokmanni are related to demographic development and society, climate change and resource scarcity, and digitalisation and technological development. Megatrends and the opportunities and challenges presented by them are assessed every year as part of the company’s strategic planning. Tokmanni assesses the responsibility risks as part of the general risk management process.

Demographic changes affect consumer habits and shopping experience requirements

• Urbanisation • Decline in family size • Reduction in importance of • An ageing population and the • Increase in number of nationalities ownership, especially in younger emergence of elderly people as a and religions in Finland age groups significant consumer group

Opportunity Challenge Response • Extensive store network and online • Continuing urbanisation and the • Development of products and services to store, which serve customers in all of declining number of inhabitants in correspond to changing customer groups Finland’s major towns small towns and needs • The emergence of a price conscious • Product selections and product • Diverse labour force and product elderly population as a substantial pack sizes affected by smaller selection consumer group family sizes and the ageing of the • Consideration of the impacts of the • Diversification of customer base population surrounding customer base and • Smart shopping trend • Decline in consumption by young migration in the planning of networks people • Business models related to circular economy

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 10

Limited availability of resources, climate change and responsibility

• Limited resources lead to problems with • Extreme weather phenomena (e.g. torrential increasingly important selection criteria for availability of products and rising prices. rain and storms) will increase, which will consumers. The transparency requirements • Climate change brings requirements for affect own operations, and supply chains of selections, prices and product origins are reducing energy consumption and making and logistics. growing alongside product safety. it more energy efficient, and for the use of • The origin of products and social responsi- renewable energy. bility in the whole company’s value chain are

Opportunity Challenge Response • Tokmanni’s responsible and • Increased energy consumption caused • Focusing attention on products’ raw materials, use of environmentally friendly opera- by new stores, also in logistics; growing renewable raw materials, recycling of products and sale tions strengthen the company’s waste volumes and related costs of recycled products, modularity and serviceability of competitiveness. • Limited availability of raw materials for products; products that reduce environmental impacts • Reduction of environmental impacts products affects the availability and (e.g. solar panels) throughout the value chain price of Tokmanni’s products in the • Focusing attention on packaging materials and • Developing an environmentally long run. methods, and recycling of packaging friendly product assortment • The operations of factories especially • More ecological alternatives for logistics and • Introducing energy and cost-efficient in coastal regions and in the emerg- optimisation of routes, for instance, alternative fuels, solutions to stores, such as solar ing markets may be interrupted due optimisation of loads panels and LED lighting to floods, storms or other natural • Reduction of energy consumption in all operations • Opportunities offered by circular phenomena. • More efficient use of resources, reduction of waste, economy (e.g. services in addition to/ • Shortcomings in the responsibility of the reuse and recycling instead of products) supply chain and partners • Selection of suppliers and supplier requirements • Careful management of product • Deterioration of employer image and • Increased requirements for knowledge and safety, quality control and a strong difficulty of obtaining competent transparency of the supply chain; information to be price-quality image enhance the workforce due to loss of reputation produced for consumers on production responsibility company’s competitive advantage • Shortcomings in product safety and • Human rights assessments and increased intervention • Responsibility communications quality control in human rights violations support openness and transparency • Increase in stakeholder cooperation throughout the value chain.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 11

Digitalisation’s impacts on Digitalisation's impacts on business processes and consumer habits and customer the value chain experience

• Increasing information security • Growth of transparency requirement • Consumers are online and buy things 24/7. • No online or bricks-and-mortar stores – requirements throughout value chain Importance of mobile shopping will grow. only one experience regardless of channel • Rise of automation and • Reduction in labour force need in the • Competition will increase – the next option is (omnichannel) robotics in production, retail sector and change in the only one “click” away. • Consumer’s own time has a price. Consumers use of artificial intelligence professional requirements of • Changes in purchase path are willing to pay for services (ease) and the • Internet of Things and sensors the work • Significantly shorter purchase process level of services (e.g. speed of delivery). (e.g. in properties) • Change in nature of work so that it is • Acceleration in service expectations and • Consumer models are changing the growth independent of place and time speed of purchasing of responsible purchasing (e.g. transparency • Importance of social media and online reviews requirement increasing).

Opportunity Challenge Response • Use of automation, robotics • Speed of change • Boosting business Opportunity Challenge Response and artificial intelligence in too fast processes and utilisa- • Utilising digitalisation at the • Digitalisation • Development of a digital service own operations (e.g. supply • Failure in information tion of artificial intelli- consumer interface (marketing, significantly changes offering and an omnichannel chain management, boost- security requirements gence throughout the new products & services, etc.) Tokmanni’s Tokmanni ing efficiency of warehouse • Inability to meet con- operations • Harnessing digitalisation in operations at the • Development of new ways of and logistics operations, sumers’ transparency • Continuous increase development of responsibility consumer interface, communicating with consumers processing big data, etc.) requirements compre- in transparency in the (e.g. reduction of material, energy and throughout the • Development of digital marketing • RFID and blockchain and hensively enough value chain and waste and ensuring value chain. • Varied order and delivery methods other enablers • Tools and labour force • Efforts into training transparency in the supply chain) • The competitive field and channels, transparency of • Telework and other models resources unable to employees • New business models, e.g. becomes increas- supply chain of working that are inde- keep up with the speed • Recruitment and sharing economy, circular ingly global and • Development of digital service pendent of time and place of change development of new economy non-transparent. offering and new business models competencies

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 12

Profitable growth as a strategic objective

Our vision is to be the smartest choice for customers when it comes to shopping. The target is to be a profitably growing, nationwide discount retailer that offers a wide assortment of high-quality products. We want our customers to be able to trust the safety and responsibility of our products.

Tokmanni’s strategic objective is Growth is to be a profitably growing, modern sought by devel- retailer with an affordable price image, an attractive assortment, and oping a topical a good in-store customer experi- and interesting ence. Responsibility is one of the company’s strategic focus areas, product assort- with an aim to minimise business ment that meets risks, make use of opportunities related to this, and produce added customer needs. value for stakeholders over short-, mid- and long-term. The long-term objective is low and continuous development single digit growth in Like-for-Like of customer experience in the revenue. Growth is sought brick-and-mortar and online by developing an interesting stores. Tokmanni markets its product assortment that meets products truthfully, in an under- customer needs, by marketing standable manner and in compli-

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 13

ance with its ethical guidelines. In Tokmanni is a significant Tokmanni aims to improve its accordance with the company’s employer in Finland, and the profitability and working capital data protection principles, per- expansion of store network will efficiency by increasing the pro- sonal data is used as provided by also have a positive impact on cesses' efficiency and tools used in data protection legislation. employment. Tokmanni’s target sourcing, supply chain and catego- Tokmanni’s assortments con- is to have a motivated and com- ry management. At the same time, sist of over 25,000 stock-keeping mitted personnel who contribute the company aims to ensure that units (SKUs). Product safety is vital responsibly to the company’s responsibility and ethical guidelines for success and Tokmanni wants performance. are considered in the processes. to ensure that the products are safe to use, responsibly sourced and produced in good conditions. The company takes product safety into account in its operations Tokmanni's strategy and ensures this by, for example, conducting self-supervision and Long term profitable growth is sought: product testing itself and commis- • leveraging its unified brand image and, demand-driven sioning it from third parties. category management, continuous store concept and The company has defined assortment development and through further investments expansion of its store network as in digital and omni-channel services to drive Like-for-Like another strategic growth objective. revenue growth; Product safety is vital for At the end of 2017 Tokmanni had • continuing to increase the amount of net new selling the company’s success and 175 stores around Finland. The space by approximately by approximately 12,000 square aim is to increase selling space by meters annually, translating into approximately five new or Tokmanni wants to ensure about 12,000 square metres per relocated stores, and that the products it sells year. This will lead to increases in • improving profitability and working capital management the company’s energy consump- through improved processes and tools in sourcing, are safe to use, responsibly tion and waste generation, and supply chain management and category management sourced and produced means that the company will have as well as improving its store efficiency to work continuously on improving in good conditions. its energy and material efficiency.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 14

Stakeholder engagement

Tokmanni wants to promote responsibility work together with its stakeholders. The company’s most important stakeholders are customers, personnel, owners, investors and suppliers.

The company keeps in touch with the most At PTY, Tokmanni’s representatives partic- Tokmanni aims to halve the use of plastic Board’s goal is to support Tokmanni’s important stakeholders daily through various ipate in the Board of Directors, retail trade self-service bags per customer by the responsibility work by providing the channels, and with others when necessary. group, communications group, product year 2026 and reduce the use of plastic company an external opinion of the com- Tokmanni has communicated with investors safety group and self-supervision group. bags by offering bags made of alternative pany’s responsibility work, by acting as for instance through the websites, reports We also participate in the operations of the materials. Tokmanni is also a member of a sounding board for the company in and one-on-one meetings. The list of en- Helsinki Region Chamber of Commerce in corporate responsibility network FIBS and responsibility trends, risks and best prac- gagement channels with other stakeholders the training and labour force committee and its Diversity Network. In 2017, Tokmanni tices, for example. The Advisory Board can be found on page 24 of Tokmanni’s the medal for merit committee. joined A Shared Vision for Respecting UN convenes twice per year and it started its Corporate responsibility report 2015. The company is also closely involved in Guiding Principles on Business and Human work in August 2017. many local communities at its store locations Rights in Grocery Trade Supply Chains. Active involvement in and in Mäntsälä where its head office is locat- Retail businesses, NGOs, the Ministry of Tokmanni supports associations and initiatives ed. In Mäntsälä, Tokmanni has a representa- Economic Affairs and Employment and the Tokmanni also implements its corporate Tokmanni participates actively in the op- tive at Mäntsälän Yrityskehitys Oy, where local Ministry for Foreign Affairs of Finland are social responsibility by supporting various erations of various national organisations business operations are promoted. Tokmanni part of the shared vision. Tokmanni also charitable organisations. In 2017, Tokmanni including the Federation of Finnish Com- cooperates with local and national authorities participates the UN Global Compact. supported Veikko and Lahja Hursti’s merce, the Finnish Grocery Trade Associa- from an early stage, during the development Laupeudentyö ry together with Unilever. tion (PTY), the Finnish Cosmetic, Toiletry and and planning stages of various projects. Advisory Board Tokmanni also supported those in need via Detergent Association and the Finnish Coun- Tokmanni has joined the Ministry of In 2017, Tokmanni set up the Advisory Brother Christmas. cil of Shopping Centers. In the Federation of Environment’s and Federation of Finnish Board for Responsibility to step up its To celebrate Finland’s centenary, Finnish Commerce, Tokmanni is represented Commerce’s Society’s Commitment to responsibility work. The Advisory Board Tokmanni offered its employees the oppor- on the Board of Directors (until June 2017), Sustainable Development’s Green Deal comprises external experts and, among tunity to perform 365 days of voluntary work the corporate responsibility group, commu- initiative, which has the purpose of re- others, the company’s CEO and several in various places. There is more information nication group and the training committee. ducing the consumption of plastic bags. members of the Executive Group. The on this on Tokmanni’s website in Finnish.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 15

Tokmanni's answer Main concerns Stakeholder Stakeholder Main concerns Tokmanni's answer

Diversity of affordable Product selection, availability Customers Decision Obtaining information, Websites, discussions, products, ensuring quality and price of products, makers opportunities to influence communications and safety independently product safety and quality, matters and using external help, responsibility of sourcing membership of amfori BSCI and requirements for Industry Active participation in Tokmanni employees in supplier factories, internal associations operations, distribution of different working groups, audits, communications information communications

Compliance with laws and Labour rights, training Personnel Academia Cooperation, obtaining Joint projects, reporting, regulations, ethical programmes information lectures, communications guidelines, labour policies, principles and instructions, training and Non- Responsibility in the entire Ethical quidelines, amfori communications governmental value chain, transparency, BSCI membership and organisations distribution of information requirements for supplier factories, audits, meetings, Vision and strategy and Financial performance, Owners and replies to questionnaires, acting in accordance with responsible operations investors communications these, ethical guidelines, investor communications Media Active offering of information, Websites, social media, answering queries quickly other communications Agreements, amfori Matters related to purchases, Suppliers and honestly BSCI requirements, fair treatment, requirements communications for suppliers

Compliance with laws and Compliance with regulations Authorities regulations, ethical guidelines, communications

Channels for stakeholder engagement are available at Tokmanni’s Corporate responsibility report 2015.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 16

Materiality analysis

Tokmanni’s material corporate responsibility themes are business integrity, fair treatment, responsible sourcing and products, and efficient use of resources.

The themes have arisen from Tokmanni impacts directly the follow- Tokmanni’s materiality analysis ing material responsibility themes: and their selection is based on the principles defining the content Business integrity, Fair treatment and of reporting presented in the GRI Efficient use of resources. 101 Foundation standard. The materiality analysis was carried out in spring 2015 using telephone were financial impacts including change the list of material respon- interviews and an online survey, to risks and opportunities, environ- sibility themes. which there were 565 responses. mental impacts and effects on Tokmanni directly impacts the The respondents to the survey people. The final results concern- following material responsibility represented suppliers, person- ing the material issues are pre- themes with its own operations: nel, consumers, authorities and sented on the following page. Business integrity, Fair treatment decision makers, industry organi- In 2017, the correctness of the and Efficient use of resources. sations, investors and non-govern- material issues was verified with In Responsible sourcing and mental organisations. The majority conversations in small groups products, the impacts are mainly of respondents represented the made up of suppliers (both in indirect (contribution, linkage) personnel, consumers or suppliers. Finland and China), personnel, and they affect supply chains, Tokmanni’s top management an- some non-governmental organisa- Tokmanni’s partners and cus- swered the questionnaire from the tions and industry organisations. tomers who use products sold by point of view of effects on business. A Facebook survey was used to Tokmanni. There is a more detailed The results were discussed find out consumers’ opinions. On description of the themes and and confirmed in the company’s the basis of the conversations, it Tokmanni’s activities related to Executive Group. The criteria used was not considered necessary to these themes under each theme.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 17

Material responsibility themes

Business integrity Fair treatment Economic performance Occupational health and safety Employment Employee training and Anti-corruption development Privacy protection Equality in work and remuneration Ethical marketing Non-discrimination

Responsible sourcing Efficient use of resources and products Efficient use of materials Responsible sourcing Energy efficiency Responsible products and packaging Efficient logistics Product safety Efficient waste recycling Appropriate markings on products

Four initiatives were launched around the material themes in 2017, and further divided into projects. The initiatives are:

• Carbon neutral Tokmanni These will be implemented over the years • Tokmanni supporting circular economy 2017–2020 and there will be more information • A diverse Tokmanni on them in the next report. • Tokmanni respecting human rights

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 18

Management approach

Corporate responsibility is an integral part of Tokmanni’s day-to-day business. The company’s aim is to minimise business risks, make use of the opportunities associated with these, and produce added value for stakeholders.

This description of management company Europris ASA each have approach covers all Tokmanni’s a fifty per cent holding. With the material responsibility topics. exception of responsible sourcing Tokmanni’s Corporate Respon- and product safety, the impact of sibility Report only concentrates the Shanghai sourcing office on on matters that are completely Tokmanni’s corporate responsi- within Tokmanni’s control, apart bility matters is marginal, because from logistics and sourcing. In the personnel of the joint venture the area of sourcing and product amount to less than one per cent responsibility, the Shanghai office of Tokmanni’s total workforce, is included in the reporting. In and its environmental impact is the area of logistics, the emis- generated only by the office and sions figures cover the transport staff travel. services suppliers and air travel Compliance with legislative emission data has been provided requirements and the principles by the travel agency. of good governance are minimum The Shanghai sourcing of- requirement for all of Tokmanni’s fice is a joint venture in which responsibility work. The opera- Tokmanni and the Norwegian tions accord with the provisions of

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 19

the UN’s International Bill of Hu- by the Board of Directors in ac- The material man Rights, the International La- cordance with Section 3a of the themes have bour Organization's Declaration Accounting Act. Responsibility on Fundamental Principles and for the operational management been defined Rights at Work, and the UN Global of the work lies with the Compa- according to Compact. The basis of corporate ny’s CFO and Deputy CEO, who responsibility work at Tokmanni is a member of the Executive the materiality are the company values and Code Group. The Head of Corporate analysis of Conduct, including the comple- Responsibility reports to the CFO mentary principles, policies and and Deputy CEO. The Head of presented in instructions. Tokmanni’s Code of Corporate Responsibility leads the GRI 101 Conduct and related principles the working group that consists of have been approved by the Board representatives of business units Foundation of Directors. The policies have and the personnel, whose duty is standard. been approved by the Executive to be responsible for reaching the Group and the instructions by the company’s corporate responsi- heads of business units. bility targets in the business units. The CEO is ultimately respon- It is the responsibility of everyone sible for Tokmanni’s corporate at Tokmanni to comply with the resources. The material themes are reported once a year and the the precautionary principle in all its responsibility matters. He reports company’s Code of Conduct and, have been defined according to operational indicators are mon- operations. Management is con- these to the Board of Directors in their own work, to minimise neg- the materiality analysis presented itored quarterly in the meetings stantly assessed at Tokmanni, and regularly. The Board of Directors ative impacts on the environment in the GRI 101 Foundation stand- of the steering groups. Targets targets, resourcing and business deals with corporate responsibil- and society. ard (see p. 16). The operational are reported separately for each practices are modified if necessary. ity matters if necessary, and the In Tokmanni’s responsibility work is carried out in the compa- material area in this report. Tokmanni has two channels for presentations and information work, material matters are themes ny’s various departments, where Tokmanni’s management reporting operations that are not produced by Tokmanni’s corpo- that are important for stakehold- responsibility targets are set for systems are further described in responsible. One of the channels rate responsibility experts serve as ers’ decision making and for the material responsibility topics, Tokmanni’s Corporate Governance can also be used to report products support for the decision making. business performance. These measures to reach these targets Statement. Corporate responsi- that are not responsible. Notifica- The Board of Directors also ap- themes are business integrity, fair are defined and the results con- bility risk management is part of tions submitted to the whistleblow- proves data other than financial treatment, responsible sourcing cerning these targets are reported. the company’s risk management ing channel are described in this data that is presented in the report and products, and efficient use of Corporate responsibility indicators process. Tokmanni aims to follow report (see p. 23).

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 20

Managing material topics

Material topic Main steering principles and policies Targets and measures 2018 Business integrity Economic performance: 201-1 Accounting principles, International Financial Reporting Standards (IFRS), Governance Financial targets Anti-corruption: 205-2, 205-3, 206-1, 415-1 Code of Conduct, Anti-bribery principles, Governance Targets of Business integrity Anti-competitive behavior: 206-1 Code of Conduct, Competition law principles Targets of Business integrity Marketing and labelling: 417-3 Code of Conduct Targets of Responsible products Customer privacy: 418-1 Code of Conduct, Data protection principles, Human rights principles Targets of Business integrity Fair treatment Employment: 401-1, 401-2 Personnel policy Targets of Fair treatment Code of Conduct, Personnel policy, Operating plan for occupational health care Occupational health and safety: 403-1, 403-2 Targets of Fair treatment cooperation, Human rights principles Training and education: 404-3 Training plan Targets of Fair treatment Code of Conduct, Personnel plan, Personnel policy, Equality plan, Human rights Labor-management relations: 402-1 Targets of Fair treatment principles Diversity and equal opportunity: 405-1, 405-2 Code of Conduct, Equality plan, Human rights principles Targets of Fair treatment Non-discrimination: 406-1 Code of Conduct, Equality plan, Human rights principles Targets of Fair treatment Responsible sourcing and products Code of Conduct, amfori BSCI’s Code of Conduct, Principles of responsible sourcing, Responsible sourcing: 308-1, 308-2, 407-1, 408-1, 409-1, 414-1, 414-2 Targets of Responsible sourcing Guidelines for responsible sourcing, Human rights principles Customer health and safety: 416-1, 416-2 Instructions of quality and packaging, Human rights principles Targets of Responsible products Socio-economic compliance: 417-1, 419-1 Instructions of quality and packaging Targets of Responsible products Efficient use of resources Efficient use of materials: 301-1 Code of Conduct, Environmental policy Targets of Efficient use of resources Energy efficiency and emissions: 302-1, 302-3, 305-1 – 305-4 Code of Conduct, Environmental policy Targets of Efficient use of resources Efficient waste recycling: 306-2 Code of Conduct, Environmental policy, Plastic bag commitment Targets of Efficient use of resources Efficient logistics: 305-3 Code of Conduct, Environmental policy Targets of Efficient use of resources

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 21

Values as the basis for responsibility work

Tokmanni's core values define the value framework within which the company operates and on which it bases its decision-making.

Customer focus Respect Customer focus is Respect is evident in the ensured by having a openness of the operating professional staff and culture, in a willingness by emphasising to help, support and reliability, safety, taking encourage, in good team responsibility and spirit and in long-term mutual respect. cooperation with various stakeholders.

Renewal Profitability Renewal means Profitability is sought boldness, encouraging through clear objectives, creativity processes, efficient and economical reciprocity of feedback operating models and and fast reaction to processes, and open needs for change. and correctly timed communications.

Corporate social responsibility Corporate social responsibility at Tokmanni is based on fairness, respect for equality and concern for environmental values.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 22

Ethical guidelines

Tokmanni’s ethical guidelines are built on three levels. The Code of Conduct guides everyone at Our Code of Conduct Tokmanni in their daily work and includes the following decision-making. Under the key rules: elements of the Code of Conduct • We treat everyone equally are more detailed principles, and without discrimination which deal with topics such as • We minimise accidents human rights and prevention of at work corruption. In addition, Tokmanni • We obey laws and has instructions for conducting regulations everyday matters. These guide- • We do not bribe lines must be complied with in all • We protect sensitive operations. The guidelines are business information and available in full in Finnish and company assets English on Tokmanni’s intranet. • We respect privacy The Code of Conduct is also • We support fair available on the external website, competition and as a printed version in Finnish • We minimise for Tokmanni’s employees. environmental impact Tokmanni employees and the • We require responsible members of the Board of Direc- production of our products tors have received training on • We communicate Tokmanni’s Code of Conduct and transparently and reliably have undertaken to comply with it. The training will be organised

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 23

again for all Tokmanni employees ymously. Notifications received wrongdoings received via the in 2018. The Executive Group in the channel are processed whistleblowing channel or oth- and key employees have also confidentially as required in data erwise, and actions that violate received additional training on protection legislation. Tokmanni’s Tokmanni’s Code of Conduct, prevention of corruption, trade stakeholders can also provide and imposes potential sanctions. sanctions and competition law. notifications of operations or The Compliance unit convenes This training will also be organ- products that are not responsible monthly but handles pressing ised again in 2018. New employ- through another channel, which matters immediately. ees and those returning from can be found on Tokmanni’s The whistleblowing channel longer periods of leave partic- website. was opened in September 2015. ipate in the training as part of In 2017, the Compliance unit their own induction programme. Compliance unit received 15 notifications, all of Everyone at Tokmanni is obliged The Compliance unit is respon- which have been processed. to observe the guidelines, ask sible for Tokmanni’s compliance 14 of the notifications were related questions and report violations of with the guidelines. The Compli- to employees, and one to external the guidelines. Tokmanni carries ance unit is headed by the Chief partners. Tokmanni didn't have out inspections on its partners in Compliance Officer, who reports any corruption or human rights connection with the prevention directly to the Chief Executive violation incidents in 2017. of corruption and observation of Officer and also regularly informs Users’ satisfaction with Everyone at trade sanctions. the Board of Directors. In addition the channel was studied in Tokmanni is Everyone is also obliged to to the Chief Compliance Officer, 2017. About 55 per cent of the inform their supervisors or the the Compliance unit includes respondents who used the obliged to Compliance unit of good practic- three Compliance Officers, each channel were satisfied or very observe the es. The Compliance unit can be of whom has a specific area of satisfied with the functioning informed via the whistleblowing responsibility. The Compliance of the channel. There were no guidelines, channel, which is presented as Officers answer queries concern- respondents who were dissatis- ask questions part of the training on the Code ing their area of responsibility and fied or very dissatisfied with the of Conduct. The channel is also update the principles and instruc- channel. Participants of the Code and report always open for Tokmanni’s tions that are their responsibility. of Conduct training in 2018 will be violations of external stakeholders, and notifi- The Compliance unit handles given a recap about the channel cations can also be made anon- notifications concerning financial and its principles. the guidelines.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 24

Human rights as a starting point for responsibility

Tokmanni’s operations accord with the provisions of the UN’s International Bill of Human Rights, the International Labour Organization's Declaration on Fundamental Principles and Rights at Work, and the UN Global Compact, among others.

We aim to respect The goal is to human rights continuously Regarding human rights, Tokmanni’s operations are reduce potential also guided by the UN Guid- negative human ing Principles on Business and Human Rights. In line with the rights impacts. due diligence principle, Tokmanni has evaluated and monitors the potential effects of its operations ples and a summary of its Human on human rights, and takes any rights report 2016 on its website. corrective measures, if neces- Based on the evaluation, the sary. Tokmanni communicates its most significant potential human potential human rights impacts as rights impacts in Tokmanni’s far as possible within its degree operations relate to health of participation, possibility and and safety, safety of buildings, power of influence. Tokmanni has excessive overtime, a living wage, published its Human rights princi- and the use of child labour and

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 25

forced labour. The potential nega- ers, ideas for matters related to Tokmanni tive impacts identified can impact grievance and remedy mecha- also expects upon a range of human rights, nisms have been suggested in The most important measures for including the right to work, the workshops with other companies its business eliminating or mitigating human right to health, the right to life and chaired by a consultant familiar partners to rights impact in Tokmanni’s own the right to a family life. In 2017 with human rights issues. This operations are: we commissioned audits carried work is still under way. There was respect human • improving occupational out by third-party at our suppliers’ also discussion on the develop- rights in line health and safety factories in Bangladesh, China, ment of suppliers’ management • improving the safety of business travel Myanmar and Turkey to try and system during the strategy pro- with supplier • increasing flexibility of work verify the validity of potential cess. Supply chains have been in- requirements. human rights impacts discovered vestigated, particularly regarding In purchasing, we work towards: in human rights evaluations. The critical raw materials (see p. 63), • further developing a strategy and audits have also included inter- by requiring suppliers to provide action plan for responsible purchasing views with employees carried out information on their suppliers. • further developing a supplier outside of the factories. We will This work is also still under way. management system report the findings later. For several potential significant • developing a grievance and remedy human rights impacts, a part process in accordance with the We act for human rights solution in risk countries would be effectiveness principles that are The occupational safety and functional freedom of association contained in the UN Guiding Principles health of personnel has been and collective bargaining. These • going deeper into the supply chain further improved (see p. 58), are ways of ensuring a living as has the safety of business wage and preventing excessive amfori BSCI audits and its own travel. The flexibility of work has overtime, for example. The imple- audits, as well as complaints filed been improved with teleworking mentation of freedom of associ- via various channels. The goal is and solutions tailored for people ation and collective bargaining at to continuously reduce potential with partial work capacity. suppliers’ factories is currently negative human rights impacts. A strategy and action plan for monitored with audits. Tokmanni also expects its responsible sourcing has been Tokmanni will update its hu- business partners to respect developed as part of Tokmanni’s man rights assessment once human rights in line with strategy process. Among oth- a year based on the results of supplier requirements.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 26

UN’s Sustainable Development Goals and Tokmanni

Tokmanni is committed to the The most relevant goals for Tokmanni UN Sustainable Development Goals (SDG), which will guide its member states’ operations until 2030. We have chosen the most important goals for our work and our stakeholders. You can read more about our actions in the section Sustainability Work 2017.

More information about UN Sustainable Development Goals here.

Other goals

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 27 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

PHENOMENA

No company works in a vacuum. In this section Tokmanni is affected by various global megatrends and important Business integrity 28 responsibility issues that will change Digitalisation enables more how we handle our business and our responsible business 29 responsibility. Next, we will present Fair treatment 34 four interesting phenomena indicating Diversity as a business driver 35 the future of the retail sector. Responsible sourcing and products 38 Living wage and responsible business 39 Efficient use of resources 43 Circular economy challenges and encourages us to cooperate 44

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 28 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Business integrity

Read more about our measures and actions in the

Sustainability work 2017

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 29 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Digitalisation enables more responsible business

In our global world, product supply chains are long and complex. Digital solutions and services allow us to keep track of products more closely. Electronic solutions improve the traceability of supply chains and help to develop processes. Waste is reduced, and environmental efficiency improves.

Digitalisation is already having a considerable effect on the world and is making significant changes in all sectors. However, few sectors are changing quite as quickly and dramatically as the retail sector. The opportunities created by technology are revolutionising buying, selling, logistics and recycling, and each new technological breakthrough furthers this development. Utilising digitalisation in business is traditionally associated with the improvement of productivity using IT solutions. However, this perspective is too narrow if you consider all the opportunities that digitalisation can bring for developing business and changing procedures

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 30 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

from the perspective of responsible The payment process is also changing and business. has largely already become digital.

Consumers’ purchasing Product transparency with behaviour undergoing technology radical change International retail sector giants, such as Digitalisation has significantly changed Wal-Mart and Tesco, are attempting to consumers’ purchasing behaviour over respond to customers’ increasing demands the past decade. The time and shopping for transparency by developing technologies location no longer matter as consumers which can help to offer more transparent can buy products and services 24 hours a information on the origin and materials of day, every day of the year from all over the their products. Today, this type of product world. There is deeper involvement in the labelling is still the sole right of individual retail purchasing processes and information is giants and globally they are less common, sought from the internet before and during but it is only a matter of time before custom- the transaction. Consumers seek informa- ers start to think that this is normal practice. tion on the availability of a product, com- This and the fact that technology is getting pare prices in different stores, seek techni- cheaper is also forcing other operators in the cal information from the internet and read retail sector to introduce similar technologies. peer reviews and recommendations about The key existing technologies, such as the product. Digitalisation also significantly the RFID code that is familiar from inven- increases pressure for transparency and tory management, are developing and increases the need for product traceability. create more opportunities regarding trans- Consumers demand increasingly accurate parency. Traditional paper product labels information on products and they need to will be replaced by microscopic electronic find this information easily and quickly. devices that can be read with smart-

Technology makes it possible for operators that are unknown to each other to produce and maintain databases in a distributed manner.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 31 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

New phones and product labelling that can be be verified from many sources and used to possibilities read with new generation bar codes. The compile a database. The technology means product labelling created with the tech- that members of the chain can trust each Digitalisation significantly for monitoring nologies developed can be used so that other even though they do not know each changes companies’ offer companies the information is directly saved in them other. From the responsibility perspective, operations throughout the and, in some cases, almost in real time the fundamental thing in blockchain tech- value chain the opportunity as the product moves through the supply nology is that information that has been to save each chain. Alternatively, the product could saved can’t be changed later on, so in this Consumer simply contain an identifier that guides way it creates opportunities for saving, • Changes in consumption, detail of the consumers to a huge amount of data on tracing and sharing information on the purchasing locations and product related the internet. Therefore, consumers would supply chain in a dispersed and safe way behaviour, and forms of easily be able to access information where throughout the ecosystem. payment to each stage the origin data collected is not just general of production. information on some product group, but Technology increases supplier Production information on the actual product that the requirements and improves • Rise of automation and consumer is holding. By developing tech- processes and quality control robotics nologies like this companies can create Transparency is not important only at • Use of artificial intelligence increasingly developed ways of tracing the the customer interface, as monitoring • Internet of Things origin of their products. technologies increase companies’ require- Supply chains and production con- ments targeted at suppliers at the start of Logistics & sourcing tain a growing number of companies that the production chain. Supply chains, from • Transparency requirement produce and supply products or services the beginning until the finished product, are • Optimisation of logistics together. This may create challenges for long and complex. Today, supply chains the traceability of products. However, a are rarely straight and are made up of mas- Workforce relatively new type of technology called sive networks that branch off and are hard • Reduction in need for work- blockchain creates better opportunities to trace. Until now companies have found force and changes in profes- for tracing products and product ecosys- it difficult to confirm suppliers lower down sional requirements of work tems that have been produced together. than Tier 1 and Tier 2 suppliers as this has • Education will become dig- Technology makes it possible for operators been financially and logistically challenging italised; work will be inde- that are unknown to each other to produce and the information is not necessarily relia- pendent of place and time and maintain databases in a distributed ble. Though companies make huge efforts manner. In the blockchain, information is into auditing Tier 1 and Tier 2 suppliers, distributed among participants, so it can these audits may be insufficient, and the

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 32 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

biggest risks may be found much deeper in to boost the processes and to analyse the value chain. products, for example from the perspective In certain critical industry sectors, of quality, safety, reliability and responsi- such as the pharmaceutical and chemical bility. Digitalisation will allow companies to industry, traceability has been standard demand more and more traceability from practice for a long time, despite the costs throughout the value chain. Only those and complexity. These sectors have refined suppliers and products whose traceability systems, which are used to confirm the or- is in order can be approved. igin of pharmaceutical ingredients, among other things, primarily due to the require- Digitalisation also reduces ments of product safety and regulations. companies’ environmental However, developing technologies will impacts make monitoring easier in other industry By digitalising and automating their pro- sectors, so companies will be able to en- cesses companies can enhance their energy sure that suppliers do not replace approved efficiency, material efficiency and waste materials with poorer-quality alternatives, processing. For example, unnecessary use prevent counterfeit components and ma- of materials and waste can be reduced and terials from entering the supply chain and use of capacity can be made more effective. ensure that products are manufactured at Procedures can also be changed complete- the factories stated by the supplier and not ly, for instance by reducing unnecessary elsewhere. Traceability is also a very essen- transportation using tele-diagnostics. Peo- tial factor for companies aiming to measure ple can be assisted in their work and daily life the ecological footprint of their products. by making environmentally friendly choices New possibilities for monitoring offer more attractive. Over the longer term, digi- companies the opportunity to save each talisation will revolutionise everything, from detail of the product related to each stage transport and work to housing and food of production. The information can be used production. In this way digitalisation can significantly reduce the material and energy intensity of the economy. Energy consump- Over the longer term, digitalisation will tion can be optimised in many ways through revolutionise everything, from transport and digitalisation. The heating of buildings and industrial processes, for example, can be work to housing and food production. intensified with sensors and analytics.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 33 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

PERSPECTIVE falsifying information without others know- Blockchain technology Companies ing, so exponents of the technology believe in the retail sector may also pass there is no need for banks, law offices, Many consumers are demanding cheaper agencies or any other traditional intermedi- prices and higher-quality products and on the reliable Blockchain aries to guarantee trust. services. They are increasingly interested information in the background of their purchases and technology is Many different uses more aware of issues related to responsibil- collected with Up to now, the most well-known user of ity. At the same time, retail trade companies blockchain anticipated to blockchain has been the digital cryp- naturally aim to meet customer expecta- to-currency bitcoin, but in many sectors, tions and also speed up the flow of goods, technology revolutionise people are now thinking of ways of using prevent counterfeit products and reduce to others. blockchain technology to assist business sourcing costs. To succeed on the market, the world development. Experts believe that the tech- companies need to harness significant nology can enable many more digital solu- resources for many functions, such as Utilisation of blockchain technology is tions, in addition to digital currencies, such performing various audits, compiling arousing considerable interest all over as voting systems, and identity, property reports and acquiring certificates of the world. This technology, which has and other registers, and smart contracts, origin for products. been called a megatrend, makes more which are like self-executing computer pro- Blockchain technology can also be transparent sourcing possible, for grams based on programming code. considered to benefit retail trade busi- example – also in the retail sector. Users of blockchain technology can al- nesses. Using the technology, various ready be found in the finance sector, where operators can not only conclude agree- services based on blockchain are said to ments and speed up money transfers, they product inspections, which means the The media is even describing blockchain speed up monetary transactions and settle- can also verify the origin of their products reduction of costs. as a technology, comparable to the inter- ment of share trades. The Nasdaq stock ex- more accurately than before, and monitor Companies may also pass on the relia- net,that will significantly change people’s change has already engaged in share trad- the life cycle of products, from raw ma- ble information collected with blockchain lives and practices. Blockchain is a decen- ing using blockchain technology. Around the terials to end-use. As transactions can technology to others. For example, in the tralised online log book of transactions in world, people have been working on a land be verified reliably, operators can react retail sector, it would be possible to provide which different parties can store, exchange registry based on blockchain technology quickly to possible problems with au- consumers with encouragement regard- or transfer different types of information or and even global citizenship. However, the thenticity and quality at different stages ing their purchase decisions, for example, value. All information in the blockchain is technology has received plenty of criticism: of production, for example, in connection by offering meaningful information on the distributed among countless computers, its implementation is considered to be de- with production or logistics. The increase origin or production method of a product which means it can be verified from many manding and the electricity consumption of in transparency of sourcing may reduce or service. This could help operators gain a sources. There is no way of changing or its transactions huge. the need for intermediaries to carry out competitive edge in the market.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 34 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Fair treatment

Read more about our measures and actions in the

Sustainability work 2017

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 35 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Diversity as a business driver

The benefits of diversity are now recognised much better than earlier in Finnish companies. For many, the retail sector is a gateway into working life and companies can be champions for diversity. However, this requires the work community to be open and target oriented.

Diversity can refer to the individual characteristics of different people, such as age, sex, ethnic background or position in the company. In addition to these characteristics that can easily be observed, diversity is also made up by skills, values, operating style and attitude. Many variable factors are also associated with diversity, such as life situation and health. The diversity of the work community requires employers to develop their abilities to encounter differences and change their own procedures so that they are better at considering differences. A diverse work community is sometimes considered to be a liability. It may take longer for employees to complete their orientation and adjust to the work community if they are unacquainted with Finnish working culture. On the other hand,

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 36 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Openness other members of the team may benefits of diversity has grown. and target- wonder why the work tasks need Companies want to employ the to be delegated in a new way due best talents no matter what their orientation hold to the life situation of one em- nationality is, which means com- a key position in ployee, for example. Despite this, panies have to be open towards more and more Finnish companies differences and to be able to the construction consider diversity above all to be a recognise competence. of a successful, positive resource and that the ben- The companies that participat- efits that it provides to business ed in the competition considered multicultural are bigger than the challenges. the benefits of a multicultural company. organisation as the improvement Campaign of networking and innovation and highlighted good the growth of customer satisfac- practices and new ideas tion. Personnel value managers Within the framework of the Hel- who believe that multicultural sinki Region Chamber of Com- personnel are a strength and who merce’s Chamber of Multicultural value learning from other cultures. Enterprises (COME) project, the A multicultural company was also Successful Multicultural Company considered an attractive employer. Campaign was arranged at the beginning of 2017. Tokmanni par- Targets are more ticipated in this campaign with important than different the right way, we need to focus success is measured on the basis 45 other companies. The cam- ways of operating on doing the right things,” says of results. paign attempted to find workable Attracting investments and skills Lahtinen. “Supporting diversity needs to practices to promote multicultur- is important for Finland’s suc- Companies that place im- be part of the company’s values, alism in different-sized companies cess, so promoting diversity at portance on the observance of but a functional multicultural team, and to highlight new thinking companies has an important role established procedures will not for example, is not built with stra- concerning the recruitment of per- in affecting opinions. benefit from diversity. In a tar- tegic decisions. Everyday acts, sonnel. Project Director Markku “Openness and target-ori- get-oriented corporate culture, coaching of supervisors, support Lahtinen from the Helsinki Region entation hold a key position in there is more freedom and dif- and patience is needed for this as Chamber of Commerce has seen the construction of a successful, ferent ways of doing things are a multicultural work community over the past three years how multicultural company. Instead permitted more easily. Then there is created through learning and companies’ understanding of the of focusing on doing things in is more room for innovation and mistakes,” says Lahtinen.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 37 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

PERSPECTIVE Retail sector as a pioneer An open atmosphere that in multiculturalism? is respectful of others It is difficult for people who have moved to Finland from other will also rapidly come For the joy of the work countries to gain a foothold in the across to customers and Finnish labour market. Skills are Considering people with partial work capacity not always identified and the ser- have a positive impact on requires encouragement vices for work-based immigration the service experience. are dispersed. Lahtinen feels that A diverse work community and en- care of certain tasks. It is not easy it is important that services for the suring the equal treatment of per- for a committed employee to hand highly skilled and professionally and this has a significant impact sonnel from the recruitment phase over tasks and even team members skilled are in one place so that no on attitudes. onwards are important targets for may be unfamiliar with the various unnecessary hurdles are placed Multiculturalism offers the Finn- Tokmanni. The company aims to work tasks in their team. in the way of gaining employment. ish retail sector new ways of under- establish operating practices and “Supporting the cooperation According to Lahtinen, the recent- standing its customers, because conditions in which all employees of a diverse team involves talking ly-launched International House increasingly competence in multi- feel that they are in an equal and about matters early on and giving Helsinki, which brings public, culturalism will be required in order comparable position in relation to the discussion a chance. This private and third sector services to construct a good service and colleagues, irrespective of individ- helps to prevent corridor conver- together in one place, is a good product selection as the customer ual characteristics, such as age, sations and discrimination,” says example of a fresh way of thinking base becomes more multicultural. position, sex, ethnic background, Haantaus. and customer-oriented service. The opportunity to receive custom- life situation or health. Consideration of people with The retail sector is among the er service in your own language, or Tokmanni has actively created partial work capacity and flexible sectors that employ the highest for the product assortment to take models, among other things, that work requires encouragement, number of young people, and the celebrations of different cul- support employees’ occupational honesty and openness. The su- for many it is also a gateway into tures into consideration are busi- wellbeing and adjust work when pervisor role includes coaching the working life. Therefore, in Finland ness opportunities that are worth a person’s working capacity has team in changing situations and re- the retail sector could show the using. In the retail sector, members declined. inforcing the team’s common goal. way as a multicultural working of the work community work close- Store Manager Katri Haantaus Katri Haantaus wants to work in a community and promote diversity ly with the customer, so an open has successfully managed her way that ensures that enjoyment of also in other ways. Summer jobs, atmosphere that is respectful of team in situations where work has work is retained in all situations and part-time jobs and on-the-job others will also rapidly come across been redistributed among the team conditions. “Openness, honesty training often provide the first ex- to customers and have a positive when an employee has had to tem- and open communications are perience of a working community impact on the service experience. porarily or permanently stop taking everything in this matter.”

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 38 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Responsible sourcing and products

Read more about our measures and actions in the

Sustainability work 2017

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 39 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Living wage and responsible business

Globalisation has raised people’s living standards all over the world. Despite this, in many countries workers are still not ensured a living wage.

Before globalisation, governments protected and supported domestic production with various taxes and customs duties. When customs duties were added to products manufactured abroad, they became more expensive than the domestic products. Customs duties meant that it made sense to manufacture many products domestically, even though this was more expensive, and the products manufactured may have been poorer quality than those manufactured abroad. On shop shelves foreign products were always more expensive than domestic ones. Globalisation has meant that such customs duties and taxes have been partially aban- doned. As a result, store product selections have grown, and the prices of many products manufactured abroad have declined. Products are manufactured by those who are able to do

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 40 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

this efficiently, and they are usually man- associated for example with the use of child ufactured in countries where wage and pro- labour and forced labour, excessive over- duction costs are clearly lower than those time and endangering occupational safety, at home. especially in piecework. The rights of freedom of association Benefits and challenges of and collective bargaining are also part globalisation of the ILO’s fundamental rights at work. Developed countries have benefited from The realisation of these rights would bring globalisation, which can be seen in cheap employees better conditions for receiving a prices and the growth of product selec- higher wage. However, the right of freedom tions. At the same time, in many developing of association in trade unions is not realised countries economic growth has created in all countries in the world. jobs and helped people to make a better living. Over the past thirty years global Defining a living wage poverty has reduced, and in China, for In 1919 the International Labour Organisa- example, hundreds of millions of people tion (ILO) specified a minimum wage as a have been able to improve their living fundamental right in accordance with the standards. However, there are still many ILO Convention. In 1948, the UN’s Univer- countries in the world where globalisation sal Declaration of Human Rights officially has not raised living standards as desired. recognised the right of workers to receive a Though every person should be able to living wage. However, the UN’s Declaration receive fair compensation for their work, did not specify the living wage. this, unfortunately, does not always Implementation of the living wage happen in global production. requirement has been complicated by The statutory minimum wages enacted the fact that different states, international by states in the production countries are and local trade unions, NGOs and various not always at a sufficient level for people research institutions have formed their own to live on and some countries don't even definitions and measurement methods for have a statutory minimum wage. If employ- Elements of a decent standard calculating a living wage. The Global ees are unable to cover their own and their of living include food, water, Living Wage Coalition has started to family’s basic needs, this can easily lead to apply a method developed by Richard human rights violations at the workplace. housing, education, health care, and Martha Anker for defining a living A wage that is insufficient for living on is transport, clothing, and other wage in various parts of the world. essential needs.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 41 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Companies have a and obligation to respect human rights responsibility and and, among other things, to ensure that the employees working in its supply chain are obligation to respect paid a living wage. However, the matter is human rights. not as clear-cut as this and companies do not always, despite their good intentions, necessarily have the opportunity to affect the matter as they would wish. clothing production chain includes many Individual companies have limited different stages that are completed by opportunities to impact, and the various parties and suppliers. Let’s take cooperation of different parties is needed an ordinary cotton T-shirt as an example. to solve the problem. It is important for The productions stages include harvesting companies to be able to work together to the cotton from the fields, transporting the ensure that human rights are realised in cotton to the spinning mill, spinning the supply chains. In addition to cooperation cotton into yarn, and transporting the yarn between companies, governments, NGOs to where it is woven into fabric, which is and the actual employees, for example is then washed and dyed. The fabric is sewed needed to find solutions. into a T-shirt either at the same place or Though a company’s opportunities to elsewhere. After this the T-shirt is either impact living wage may be limited, it is able transported to the country of sale or to the to influence the matter, for example, by next place where it is printed on, for exam- carefully choosing suppliers, by auditing ple. Therefore, the supply chain can easily suppliers and cooperating with its suppli- contain dozens of parties, and trying to find ers. Companies can also have an impact out who these are can be incredibly hard on the realisation of rights with contractual According to the definition, a living wage This definition also provides detailed for an individual company. terms and whistleblowing channels set up is “the remuneration that is sufficient to calculation methodology and indicators for factory employees. Ending business afford a decent standard of living for the for specifying a living wage. Who is responsible for relationships as a result of violations of worker and her or his family. Elements of a ensuring a living wage? rights at work is not often the best solution. decent standard of living include food, wa- Long and complex This is a difficult question from a company When business relationships end, it is often ter, housing, education, health care, trans- supply chains perspective. Though it is a government’s the factory workers who suffer by losing port, clothing, and other essential needs The supply chain from raw materials to the job to ensure the realisation of human their jobs. Therefore, the problem should including provision for unexpected events.” store is usually very long. For example, the rights, companies have a responsibility be solved in cooperation with the suppliers.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 42 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

PERSPECTIVE been raised substantially in recent years Third-party audits as a result of international attention, min- are a good tool at imum wages are still not enough to live Janne Ronkainen on. International operators, brands, store best, but lots of Executive Director of Wage chains and trade unions have continued to problems remain SASK, the Trade Union keep the matter in the spotlight and have Solidarity Centre of challenges in the helped to improve working conditions, for hidden even in Finland example using the international Accord good audits supply chain agreement. The Accord already currently About 20 years of expe- covers about 60 per cent of the over three rience in leadership and According to SASK, what are the million employees working in textile indus- expert tasks in development biggest challenges for workers in try in Bangladesh. Thus, huge progress has cooperation organisations. developing countries regarding been made regarding a living wage also in Familiar with ethicality receiving a living wage? Bangladesh, but there is still a lot to do. related to agriculture, logistics and even issues of company sup- The key problem is that many workers do real estate management. ply chains, for example not earn a living wage for their work. From your perspective what are through his role as Executive According to the International Labour companies’ biggest challenges? What should companies focus on Director of Fairtrade Finland. Organisation (ILO), the percentage of There are many types of companies, so the from this perspective and how? workers out of the global workforce (in total biggest challenges vary for each company. Knowing your own supply chains is 3.2 billion workers in 2016) living in extreme The key challenges for retail trade compa- the most important thing in this matter. SASK poverty had declined from 53 per cent in nies are the size of the supply chains and You should make a risk assessment of The Trade Union Solidarity 1991 to about 13 per cent by 2016. This is the related information management. There your value chain and first focus on the Centre of Finland, is the an excellent trend and direction. However, are easily dozens of various commercial areas where the risks are the greatest. solidarity and development there are still almost 500 million workers in operators associated with the value chain Third-party audits are a good tool at best, cooperation organization the world living in extreme poverty. of one product, and some of these opera- but our investigations into the value chain of Finnish trade unions. tors change frequently. Managing this type of the Finnish retail sector prove that lots SASK’s members are Can you give us any of chain is challenging for anyone, but it of problems remain hidden even in good 37 Finnish unions whose concrete examples? becomes especially challenging when the audits. For example, this is because the members total about The textile industry in Bangladesh is one value chain includes lots of operators in de- target is often informed in advance that 1.7 million employees in example of a global value chain in which veloping countries. Often, at least some of there will be an audit, which means there is Finland. the branded clothing that we wear is often the operators many operate in the informal time to prepare by even forging documents, manufactured in unbearable conditions. economy. Such operators can be found in such as documents on salaries Though the statutory minimum wage has developing countries, for example in tasks and working hours.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 43 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Efficient use of resources

Read more about our measures and actions in the

Sustainability work 2017

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 44 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Circular economy challenges and encourages us to cooperate

Just a few generations ago, clothes were used until they fell apart and leftovers were used to conjure up new meals and this was self-evident. Now in cities, municipalities and companies these skills are being adapted into practices following the concept of circular economy.

In the past, people didn’t have much, which meant they lacked things and money. Many had to live very frugally, and within their means. Around the world, many still experience such shortages, also in Finland. But this has also gained another meaning: humanity is starting to run out of natural resources. And because of this we need to rethink many things. We need to start learning to mend, share and rent things again, instead of always buying new things.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 45 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

The principle of circular economy is very businesses, researchers, NGOs and trade selected from Åland, Central Finland, Finn- countries in addition to Finland are aiming simple and reasonable: products are de- unions were involved. The road map has five ish Lakeland and Lapland. The goal is to to become a model country for circular signed to be durable and easy to reuse, also interlinked focus areas: a sustainable food create a food system for each area, where economy. The discussions emphasise the as components. Raw materials and energy system, forest-based loops, technical loops, production and consumption take place need for systemic change, without which it are renewable and side streams of industrial transport and logistics, and joint actions. through conservation of natural resources will be impossible for the circular economy processes and agriculture are collected and The actions are divided into three levels: and their optimal use and recycling. to make progress or strengthen. used as raw materials by other operators. • Policy actions leading to circular econ- All projects have the following in common, “Circular economy really is a model Hardly any or very little waste is generated. omy. For example, these are acts and they are extending the sustainability perspec- example of systemic change, as the need decrees that promote circular economy. tive to the entire food chain, from production for change affects almost all industries and Finland now has a road map to • Key projects of focus areas, in other to plate and further to nutrient recycling. For social sectors. These types of paradigm a circular economy words, flagship projects for the develop- example, side streams of various materials shifts are impossible to implement alone,” But something that is easy in principle is ment of a circular economy. are generated in food production, and the says Martin Hunt. not necessarily easy in practice. To turn the • Focus area pilots, in other words, first- aim is to make use of these in accordance Martin Hunt is a Principal Project concept into reality, a road map to a circu- phase development trials. with the concept of circular economy. Manager at Forum for the Future, a British lar economy for the years 2016–2025 was The road map was published in autumn company offering sustainable development compiled for Finland – the first country in 2016 and since then some key projects Cooperation across organisa- services, who has been involved in inves- the world to have one. and trials have already been launched. For tional boundaries is needed tigating the challenges posed by the cir- The work was led by Sitra, the Finnish example, in November 2017 the first pilot The circular economy is currently a hot cular economy for the energy industry and Innovation fund, and several ministries, projects for a sustainable food system were topic around the world, and many other construction sector, for example.

Circular economy Product-life extension Sharing platforms Resource efficiency and recycling These include recycling of office furniture These include a food service utilising These include recycling old sheets into business models and usable IT equipment, and fashion mobile technology and recycling service for raw material for new rag pieces, fish libraries and clothing repair services. surplus soil. farmed with local raw materials to reduce Sitra introduces the most inspiring the nutrient load in the Baltic Sea and Finnish companies in the circular Product as a service Renewability using old bread in beer preparation. economy on its website. These have Examples include combining various forms Examples include replacing petrol with fuel been compiled from all five circular of transport and acquisition of work uni- made from biological waste and biodegrada- Read more: www.sitra.fi/en/projects/interest- economy business models: forms as a service. ble lubricant from forest industry side streams. ing-companies-circular-economy-finland/

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 46 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

To achieve systemic change, cooper- of social change. Then come the adapters ation across organisational and sectoral and finally the stragglers, who only adopt boundaries is necessary. Courage and new procedures when forced to.” Fazer is reducing food openness is also needed. According to Martin Hunt the stragglers “I don’t believe that the biggest hurdles are those companies who have made waste together with its are related to technology, though I am sure large investments in projects following the they also exist. The circular economy is “old model” and whose financial freedom customer companies such a rational and fantastic concept that to move is therefore very limited. Those if technological hurdles were the only hur- whose gaze extends to the outer ring of dles then they would have been solved by their traditional value chain and who seek Fazer Food Services restau- of Economics to prevent food now. I believe that, above all, it is a question cooperation with an open mind are the ones rants serve 130,000 lunches waste. The project sought of a need for cultural change, the ability to who are most likely to find new, exciting a day. Fazer has produced a reasons for the generation of change your perspective,” says Martin Hunt. opportunities. guide for restaurants on how to waste and aimed to find new According to him, the circular economy However, no idea will be successful reduce food waste and is using procedures for reducing it. The will require companies to cooperate in a unless it can be developed into financial- forms of communications to students also had to think about way they have never done before, which ly profitable business. So far, according encourage its diners to make whether it would be possible to may feel scary at first. In Forum for the to Martin Hunt we have seen plenty of responsible choices. Campaign create a closed loop process at Future’s projects it has become clear that interesting pilots and trials, but we have not challenges will be used to the restaurant so that the bio- it is quite a challenge for large companies seen any sufficiently scalable business. encourage people to only take based waste generated could in particular to open up, share information “In the circular economy it is a question the amount of food that they are be recycled and utilised there. and to “let go” as it were, in other words, of a long-term change. It is probably not a able to eat. During the cam- The top suggestions includ- give up the idea of full control. good idea to think that only the type of model paigns Fazer will measure the ed boosting the efficiency of that conforms 100 per cent to the concept of amount of food that customers communications and using A perfect model does not exist is suitable. We should consider the circular throw away from their plates the compost formed from There is no single right way or model for economy as a force for change and driver and the customers will hear the biodegradable waste to allow developing procedures according to the of innovation. In any case, trials and pilots results. This will help diners un- Tokmanni’s employees to grow circular economy concept. If there were, will lead us towards a society that is more derstand how much food they herbs at Tokmanni’s premises. this would have certainly already been sustainable than it is now. I believe this is throw away. This joint activity was consid- introduced. Different types of models may more important than the name given to this In spring 2017, Fazer and ered to be a recreational activity prove to be successful in different sectors. change. The most fundamental thing is that Tokmanni carried out a project but also an opportunity to put The change happens gradually, and poten- the change takes place in the spirit of circular at Tokmanni’s staff restaurant corporate responsibility into tial winners are drivers of change. “Innova- economy so that we are able to value and in Mäntsälä in cooperation with concrete terms and get the tors and forerunners are needed in all types give value to sustainability and sharing.” students from Hanken School company’s personnel involved.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 47 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

PERSPECTIVE The applications for recycled plastic are virtually the same Recycling of as those for normal plastic film plastic, but it can’t will extend to be used to make products that are Tokmanni stores directly in contact Tokmanni has started recycling clear with food. plastic film in its stores in cooperation with Lassila & Tikanoja at the accumulates over a week in 400-litre sacks beginning of 2018. The goal is to and L&T comes and collects these sacks. further increase the percentage of The property maintenance agreement recycled waste. covers over 80 stores, which is almost half of all of Tokmanni’s stores. “We are starting the recycling of plastic At Tokmanni’s logistics centre in Mäntsälä, at a couple of dozen stores which have an plastic film has been collected ever since existing property maintenance agreement the centre was opened around 10 years ago. with us. The collection will be extended to Around 90 tonnes of plastic are collected at new stores as they join the scope of the Mäntsälä in a year. It is harder to do this at agreement,” explains Marko Rouhiainen, stores as the plastic needs to be collected Account manager at L&T. separately from several locations. Tokmanni L&T pre-treats the plastic, i.e. granulates started making progress in this matter when it, and then sells it. The majority of the plastic it signed a property maintenance agreement granulate, about 80 per cent, is exported. with L&T. The maintenance has already been The applications for recycled plastic are circulating the stores each week and will now virtually the same as those for normal plastic, start collecting the plastic film at the same but it can’t be used to make products that time. The store staff collect the plastic that are directly in contact with food.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 48 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

SUSTAINABILITY WORK 2017

On the following pages we will explain In this section Tokmanni’s goals, measures and results of our responsibility work from Business integrity 49 Responsible sourcing and the point of view of every Material Privacy protection 50 products 60 topic. Responsible marketing 50 Responsible sourcing 61 Generating and distributing direct Product responsibility 64 added financial value 52 Efficient use of resources 66 Tax footprint 52 Energy-efficient business 67 Fair treatment 53 Environmentally sound logistics 69 Committed personnel 54 Resource efficiency 69 Equal treatment at work 55 Employee training and development 57 Occupational health and safety 58

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 49 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Business integrity ACHIEVEMENTS AND TARGETS

Responsibility towards Achievements 2017 Targets 2018 customers, employees, investors and other stakeholders is a core The company’s Code of Conduct is trained to The company’s Code of Conduct is trained to Tokmanni principle in our business oper- Tokmanni employees. employees. All employees to renew the training in 2018. ations. We observe the relevant legislative requirements and the All messages sent to Tokmanni’s grievance channel are All messages sent to Tokmanni’s grievance channel are principles of good governance in managed properly. managed properly. everything we do. The company’s operations are also governed by Tokmanni will not have any cases of corruption. Tokmanni will not have any cases of corruption. its ethical guidelines incorporating Tokmanni’s Code of Conduct and Tokmanni will be not have privacy violations. Tokmanni will be not have privacy violations. the related principles, policies There will be no remarks from authorities related to There will be no remarks from authorities related to and instructions. marketing in Tokmanni. marketing in Tokmanni.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 50 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Privacy protection ard. PCI DSS applies to all people who process The company’s aim is that the systems and payment card data. As a result of the audit, UN Sustainable Development Goals and Tokmanni registers in its control have no actual or Tokmanni has received a Report on Compli- suspected cases of infringement of privacy ance and an Attestation of Compliance. • Development of business protection. The EU General Data Protection Reg- • Integration of responsibility Tokmanni complies with all laws and ulation (GDPR) has entered into force and into business regulations related to privacy protection. In it will be enforced as of May 2018. During • Foreign trade order to ensure its systems and registers 2017 Tokmanni inspected its processes, • Cooperation with have no actual or suspected cases of in- information security practices and cooper- various parties to improve fringement of privacy protection, compliance ation agreements to ensure that it meets the responsibility with data protection principles is monitored requirements of the GDPR. • Increasing consumers’ at Tokmanni, and technical systems are also Tokmanni did not receive any complaints

knowledge of responsibility monitored to ensure they are up to date also about breaches of privacy protection or of • Preventing crime from the perspective of information security. lost customer data in 2017. (e.g. shoplifting) The personnel are also trained in informa- • Development of indicators tion security matters, for example through Responsible online training. All of the Group’s personnel marketing have completed information security train- Tokmanni wants its marketing to be ethical, ing, which is currently part of the induction clear and easy-to-understand and it com- of employees in all roles. A topical follow-on plies with the relevant legislation and regula- section was prepared for the training in 2017. tions in its marketing. Completion of this section started at the end In 2017, efforts were made to pay more of 2017 and will continue during 2018. Infor- attention to responsible marketing at mation security training is related to daily Tokmanni. For example, product data was situations at work where information security improved at the company, to make it easier skills are needed. Diverse cases have been for customers to make purchase decisions used throughout 2017 to communicate infor- by providing them with a more compre- mation security matters. hensive understanding of products’ char- Tokmanni is a PCI DSS audited company acteristics of use. Tokmanni attempted to and meets the requirements of the Internation- make marketing texts even easier to read, by al Payment Card Industry Data Security Stand- increasing the size of price labelling, among

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 51 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

other things. For example, efforts were made depth knowledge of responsibility provided to improve the availability of campaign prod- by the company’s important stakeholders. ucts by developing systems. Like previous year, Tokmanni's advertising During the year Tokmanni provided in- was not dealt with by the Council of Ethics in formation on the responsibility work that it Advertising in 2017. The authorities gave six presented in the previous year’s Corporate notices to Tokmanni stores, one of which was responsibility report by arranging informa- related to price marking, two to the visibility of tion announcements on its store radio and licenses and three to taring of scales. social media channels for instance. In spring Tokmanni aims to cooperate with only 2017 Tokmanni arranged an environmental responsible partners. All marketing partners night on its Facebook pages. The aim of the have committed to observing Tokmanni’s event was to raise customers’ environmental Code of Conduct. Commitment will continue awareness and reinforce Tokmanni’s quality to be a requirement and the guidelines will be image. In its environmental night, Tokmanni’s attached to all cooperation agreements. guest was a chemicals expert from the Nor- Tokmanni’s goal is to avoid receiving any dic Swan label who answered questions re- complaints from authorities regarding its garding the Swan label posed by Tokmanni’s marketing in 2018. social media followers. The active education of store personnel in responsible marketing was continued. Attention was paid to price labelling and location of alcoholic beverages and tobacco products and the supervision of the sale of age-restricted products. In May 2017, Tokmanni organised a responsibility day for its office staff. The aim of the event that was organised for the second time was to improve staff members’ understanding of responsibility matters, to engage and train members of staff and offer more in-

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 52 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Generating and Generating and distributing direct added financial value, MEUR distributing direct added financial value Stakeholder group Added financial value 2015 2016 2017 Tokmanni is committed to profitable growth Customers Sales 759 779 797 and its competitiveness. The company Goods suppliers and service providers Purchasing -498 -507 -529 develops its business in a responsible man- Added value produced 261 272 268 ner, which supports its ability to care for its Personnel Wages and benefits -92 -96 -98 employees, assets and customers’ needs responsibly. Tokmanni reports transpar- Public sector Taxes -3 -7 -6 ently on its business operations, financial Creditors Financial items -21 -15 -7 development, and direct and indirect eco- Business development Expenses related to the development of operations -132 -127 -132 nomic influencers. Earnings retained 15 27 26

Tax footprint

Withholdings and employer contributions 39.8 MEUR Indirect taxes 47.9 MEUR Remitted witholdings from salaries 15.0 Value added tax 39.3 Employer pension insurance payments 24.0 Excise duty 2.3 Employer social security payments 0.8 Import customs duties 4.3 Electricity tax 1.9 Total Insurance premium tax 0.1 Income and capital taxes 8.1 MEUR 95.8 MEUR Corporate income tax 6.9 Property tax 1.2

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 53 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Fair treatment ACHIEVEMENTS AND TARGETS

Tokmanni increases its enterprise Achievements 2017 Targets 2018 value with responsible operations, diverse personnel and expertise Tokmanni has an equality and diversity programme Safety observations will be made and reported more actively, development. An open and to monitor the development of a diverse work community. and occupational health and safety will improve. respective corporate culture is The programme ensures that personnel are treated key to success and sustainable equally and respectfully throughout their employment Involving personnel in development will continue. business. With inclusive and fair New values and management principles have been created personnel management, Tokmanni All employees receive the appropriate induction to their and implemented among the personnel. is able to reduce business risks work and they are all ensured the coaching or training required for their duties. and produce added value for Personnel related performance indicators are being updated and business intelligence will improve. stakeholders. The company Tokmanni looks after the occupational wellbeing of its continuously monitors the employees with coaching-based supervisory work and progress of management, super- working capacity management based on common visory work, working atmosphere procedures.The aim is for work to be carried out safely and equal treatment. at the workplace and to ensure that personnel are healthy when they reach retirement age.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 54 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Committed personnel average number of Tokmanni personnel in Motivated and committed personnel forms 2017 was 3,232. The figure reported in- UN Sustainable Development Goals and Tokmanni the basis of the company’s success. cludes employees who were on periods of At the end of 2017 Tokmanni had a total absence from the workplace (e.g. on ma- • Offering employees of 3,255 employees, which was 31 more ternity, paternity, parental, childcare, study exercise vouchers and than at the end of 2016. The establishment and job alternation leave). On average, the discounts for fitness of new stores was the main reason for the number of people on periods of absence at services increase in the number of employees. The one time was 183. • No discrimination • Increasing the number of women in management Permanent and temporary Full-time and part-time positions employments by gender, % employments by gender, % • Enabling the promotion of 100 100 • Employment women in the company • Employment of young • Continuous training 32 32 33 80 80 49 people and people with and development of 55 52 partial work capacity employees 69 70 75 77 79 75 • Occupational health and • Publishing human rights 60 60 safety requirements and principles monitoring their imple- • Development of indicators 40 40 68 68 67 mentation throughout the 51 48 value chain, with special 20 20 45 31 30 attention to women 25 23 21 25 0 0 F M F M F M F M F M F M 2015 2016 2017 2015 2016 2017

Permanent employments Full-time employments Fixed-term employments Part-time employments

All employments at the end of year included. All employments at the end of year included.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 55 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

New permanent employments and terminated permanent employments awarded for 10, 20 or 30 years of service and senior salaried employees accounted by age and gender at Tokmanni. At the end of the year, the for 1.7 per cent of the company’s personnel average service years of the permanent at the end of 2017. These two personnel persons employees were 9.2 years and the share of groups normally also follow the terms of the 160 employees with more than 10 service years retail sector collective agreement. was 38.3 per cent. 120 Equal treatment at work 111 Minor use of agency workers Tokmanni aims to ensure equal treatment in

80 93 Tokmanni’s use of agency workers is minor. all tasks and remuneration, and to guaran- 86 91 84 66 80 According to the statutory requirement tee non-discrimination in all of the compa- 57 77 60 39 48 40 7 9 4 Tokmanni always offers extra work first to ny’s workplaces. 45 4 6 23 2 24 27 the company’s own part-time employees. 32 24 25 13 26 31 28 24 19 14 15 21 11 0 11 Each year, Tokmanni also employs about Equitable benefits 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 1,000 fixed-term seasonal helpers for the Tokmanni’s personnel enjoy extensive –30 years 30–50 years 50 years– –30 years 30–50 years 50 years– needs of the store network during the sum- personnel benefits, and the same benefits, New permanent employments Terminated permanent employments mer and the Christmas seasons. In 2017 apart from a few exceptions, apply to both Tokmanni continued its cooperation with permanent and fixed-term employees, Female Total new permanent employments 256 and total terminated permanent Barona Logistics, and some of its employ- regardless of the nature of the employment Male employments 232. The pecentages have been calculated from new permanent ees working in the logistics organisation relationship and the hours contracted. The employments. The figures do not include retired people. are employed by Barona logistics. Executive Group determines the personnel benefits each year. High number of permanent The number of permanent employees Covered by collective agreements In addition to the statutory benefits, oth- employees that started at Tokmanni in 2017 was 256, Tokmanni observes all the provisions of er benefits include a diversity of purchasing At the end of 2017, 78 per cent of and the corresponding number that depart- the codetermination legislation (the Act benefits, funding for Christmas parties Tokmanni’s total workforce were in perma- ed during the year was 232. The turnover on Co-operation within Undertakings) and and recreational activities, and fitness nent employment and 22 per cent in fixed- of permanent employee arrivals during the those set out in collective agreements (the and culture vouchers partially paid by the term employment. Full-time employees reporting period was 7.8 per cent, and the Finnish retail sector collective agreement), employer. accounted for 36.5 per cent, and part-time corresponding departure turnover was including the legal provisions and notifica- Tokmanni also gives its staff gifts at employees for 63.5 per cent, of all person- 7.1 per cent. The turnover figures do not tion times concerning reorganisations. All Christmas and on significant birthdays nel. In the retail sector busy seasons have include employees leaving the company personnel groups except for the manage- (50th and 60th), rewards for long service an impact on the number of employees because of retirement. Tokmanni has a ment and senior salaried employees are (10, 20 and 30 years of service) and a thank- required and the majority of the part-time committed personnel. At the merit medal covered by the Finnish retail sector collec- you for those retiring. The occupational employees were cashiers. party in 2017 189 members of staff were tive agreement. Tokmanni’s management health service provided to staff is also more

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 56 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Age and gender distribution, Board of Directors and Executive Group Age and gender distribution, others persons persons

5 1,500 1,298 1 1 1,288 1,249 4 1,200 1 877 900 784 760 3 2 637 5 1 600 503 535 2 2 4 4 4 303 290 270 3 3 3 3 3 300 238 233 240 91 1 2 2 76 76 1 0 0 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 15 16 17 Female Male Female Male Female Male –30 years 30–50 years 50 years– –30 years 30–50 years 50 years– –30 years 30–50 years 50 years– Board of Directors Excecutive Group Female Senior salaried personnel Employees The calculations include all Female Male Male Office personnel employments at the end of year.

extensive than the statutory minimum, as it sonnel are covered by an incentive system Diversity and equal opportunity • Employees: store and warehouse includes a general practitioner service. that is based on the company’s success Tokmanni aims to establish operating employees and the system includes a monetary reward practices and conditions in which all The average age of the company’s Incentives for work and share-based reward. employees see that they are in an equal personnel at the end of 2017 was 38 years. Tokmanni operates an incentive pay The total amount paid in incentive cash and comparable position in relation to At the end of 2017 the Board of Directors scheme for all personnel, with the excep- rewards and productivity bonus for 2017 colleagues. had six members, out of whom two were tion of the warehouse staff, who have their was EUR 379,536.60. Tokmanni’s personnel groups are: female. During 2017 three new members own productivity bonus system. A few members of management and • Management: members of the joined Tokmanni’s Executive Group. At the The incentive bonus is given if there is an senior salaried personnel also have em- Executive Group end of the reporting period, the number of improvement in Tokmanni’s EBITDA. The ployer-paid voluntary insurance arrange- • Senior salaried personnel: separately members in the Executive Group was eight, bonus is determined on the basis of the net ments, most of which have been trans- designated experts two of whom were female. result and the organisational or personal ferred to Tokmanni in association with the • Office personnel: head office staff and Tokmanni is not reporting minority indicators that have been established. The corporate acquisitions made. store managers groups or other diversity factors (e.g. origin, review takes place each quarter. Key per- ethnic background, religion).

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 57 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

The majority, about 85 per cent, of Tok- procedures for handling cases of inappro- themselves have a big responsibility to motivation and commitment. Supervisors manni’s personnel are directly covered by priate treatment and for preventing such maintain and develop their own profession- also receive training in intervention. The the pay schedule of the Finnish retail sector occurrences. The guidelines state that al skill, but Tokmanni also supports their company’s Executive Group also received collective agreement, which has equali- intervention must be made immediately in development, thus ensuring it achieves its coaching during 2017. ty-based pay schedules. The basic pay and cases of inappropriate treatment. objectives. Supervisory work as a whole was eval- other remuneration of the management When employees are unsure of how to Tokmanni’s personnel are offered vari- uated at Tokmanni with a personnel ques- and office personnel are determined by the interpret Tokmanni’s Code of Conduct or ous training and development opportuni- tionnaire carried out at the beginning of post and the nature of the work, and also about personnel matters, they can contact ties. Professional expertise is developed in 2017. According to the questionnaire, the on the basis of experience, skills and per- the company’s Compliance unit. all tasks through conventional and online personnel awarded supervisory work with formance. In Tokmanni, salaries are defined Tokmanni is a signatory of the FIBS training programmes of different lengths the overall grade 4/5. A total of 38 supervi- with Hay Group job evaluation based on job Diversity Charter and diversity is consid- and in-service training. Tokmanni’s in- sors who received exceptionally good re- requirements. In stores the salaries of store ered as a competitive advantage at Tok- house experts participate in the training sults in the Pulssi personnel questionnaire managers are affected in particular by the manni. By encouraging employee partici- and improvement of personnel skills in col- were rewarded in 2017. size of the store and its net sales. pation and developing a coaching-based laboration with external training partners. management style, Tokmanni wants to In recent years, coaching-based super- Developing skills through Improving job satisfaction encourage personnel to raise their develop- visory work skills have been developed. apprenticeships Job satisfaction among Tokmanni’s per- ment suggestions and increase personnel’s All supervisors are trained in a long-term At Tokmanni, training leading to a vocation- sonnel is surveyed. The survey focuses on opportunities to have an impact. coaching programme that incorporates al qualification is a popular way of devel- factors such as equality, working atmos- tools and practices for the fair management oping expertise in the retail and logistics phere, supervision and development of fair Employee training and of employees. The management model em- fields. Development of vocational skills is management. Areas for improvement are development phasises the supervisor’s role in producing constantly supported at Tokmanni with selected each year in the different parts of Tokmanni’s aim is a motivated and com- results, building cooperation and managing the aid of various apprenticeship training the company, and these are monitored on mitted personnel who value the customer, change. During 2018, a continuation will programmes. Every year several dozen a regular basis. In 2017 achievement of the their own work and their employer and be piloted for this coaching programme, Tokmanni employees study for a vocational targets was also monitored with a poll con- contribute responsibly to the company’s which according to feedback is effective qualification in business and administra- taining a few questions. The next survey performance. and thought-provoking. The expertise tion, sales, logistics, immediate supervi- will be carried out at during 2018. The development of personnel expertise of supervisors in employment matters is sion, store management or some other ensures that Tokmanni achieves its strate- ensured by offering them regular training in vocational qualification. Discrimination prohibited gic objectives. Continuous advancement employment legislation and the collective Safety training and Tokmanni’s online Tokmanni’s aim is a diverse work commu- is important, as the surrounding world agreement. During 2017, supervisors were ethical guidelines training are compulsory nity in which equal treatment is ensured is changing quickly, and development of also provided coaching in matters related for all the company’s personnel and each for everyone from the recruitment phase professional skill enables individuals to to occupational wellbeing and working ca- member of staff completes these in con- onwards. The company has established keep up with the changes. The employees pacity, which play a huge role in personnel junction with their induction.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 58 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

During in 2017, Tokmanni provided office Influencing by participating age of Tokmanni’s personnel is 38 years and The return to work of personnel with par- staff with the opportunity to learn more In 2017 Tokmanni employees were given members of staff retire around the age of 63. tial work capacity was also developed within about topical subjects at their own work- the chance to discuss strategy and ask the Industrial safety at Tokmanni is organ- the Group. The development of the Flexible place every quarter. This will also continue company’s management further questions ised in compliance with the legislation. All Work model, which was launched in 2016, in 2018. During 2017 each member of staff at discussion events organised for person- of Tokmanni’s personnel groups are repre- was continued in 2017. The model makes it at the office had the chance to hear talks nel. The objective of these events was to sented on its occupational wellbeing group. easier for personnel with partial work capac- about respectful leadership and encoun- improve communications and openness In 2017 new operating models for managing ity to keep working and it specifies the tasks ters, and about personal wellbeing. At the and to reinforce strategy in daily work. working capacity at Tokmanni were created in various organisations that are suitable for beginning of October, the Nordic Business On 17 November, head office personnel based on an internal assessment of risks personnel with partial work capacity. In coop- Forum was brought to Tokmanni via video worked as Christmas helpers at stores, and needs, and steering group activities eration with the occupational health service, streaming, offering personnel the chance to which offered the opportunity to learn new were launched to develop working capac- these can be used to create temporary job listen to the world’s most influential speak- things through cooperation. During the day, ity management practices and business descriptions for personnel with partial work ers at their workplace. employees learnt about another employee’s intelligence together with personnel and capacity. Tokmanni also established a sub- job and carried out constructive discussions. Tokmanni’s occupational health care and sidiary called Taitomanni to help speed up Personal appraisals and In the discussions, many things that work insurance partners. Occupational health the recovery of working capacity of Tokmanni performance assessments well came up, but also areas for develop- services were put out to tender and one employees with partial work capacity. All employees receive a personal apprais- ment. The thoughts and ideas were passed occupational health care partner was al. The personal appraisal focuses on the on to the teams to assist development work. selected to serve the company throughout Supervisors’ working capacity employee’s work performance over the Finland from 1 August 2017. management skills improved preceding period and sets goals for the Occupational health with coaching coming period. It also includes a personal and safety Flexible work for personnel with Supervisors’ working capacity manage- skills development plan and an assessment partial work capacity ment skills were improved during 2017. of supervision, work atmosphere and team Towards better health and Tokmanni’s occupational health care in Tokmanni holds regional small group meet- working. job satisfaction cooperation with insurance companies, ings attended by occupational health ser- The personal appraisals are held once a Tokmanni is successful when its healthy defined clear procedures, targets and vice representatives and store managers. year. In fixed term contracts of less than 12 and satisfied personnel conduct their work more accurate indicators for controlling The aim of these meetings is to improve months, there is not always time to perform tasks safely. The health, working capacity expenditure on sickness absences and store managers’ working capacity manage- a personal appraisal, so a feedback discus- and safety of personnel is ensured with pensions. The aim of the cooperation is to ment skills, increase cooperation between sion at the induction phase can be used in working capacity management. refer Tokmanni employees with partial work the occupational health service and super- these cases. The goal of Tokmanni’s working capacity capacity to rehabilitation at an even earlier visors, and use peer support to enhance In 2017, about 80 per cent of personnel management is to anticipate the occupation- stage than currently and then back to work. supervisors’ ability to cope. had attended a personal appraisal with al health risks of personnel, improve job sat- This will prevent premature applications for In 2017 the procedures were standard- their supervisor. isfaction and lengthen careers. The average employment disability pensions. ised to relate to the aims and themes of

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 59 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Tokmanni’s working capacity management, internal working capacity management risk In 2017, an online working capacity man- and rehabilitation measures and the moni- which are supporting the work of personnel assessment showed that Tokmanni still has agement system, known as Kompassi, was toring of the return to work. with partial work capacity, occupational room for improvement in its control of oc- acquired for the Group. The system provides The resources of HR’s occupational ergonomics, recruitment and induction, cupational accidents and near accidents. a better overall picture of sickness absences wellbeing team were also strengthened wellbeing of supervisors and changing the Focusing on occupational safety is impor- and for the management and reporting of with an additional employee, which will occupational safety culture to into a pre- tant. In 2017 Tokmanni’s industrial safety working capacity risks. This improved the make it possible to carry out more person- ventative activity. organisation was transferred to HR. The identification of individual working capacity alised working capacity management and The selection of supervisor training of- aim is to raise the entire personnel’s aware- risks, the planning of well-timed treatment training of supervisors. fered was also complemented with training ness of safety observations, in particular, on bringing up subjects for discussion to and learn about dangerous situations encourage supervisors to discuss subjects together. All accidents are investigated and that can have an impact on occupational discussed in team meetings and the oc- Accident types wellbeing. The working capacity training cupational wellbeing group with the aim of 200 and training on bringing up subjects for dis- preventing accidents from happening. 158 cussion will be permanent features in the During 2017 the entire logistics person- 150 125 34 annual training calendar for supervisors. nel received training in a new occupational 28 100 186 177 safety culture way of thinking. At stores and 156 144 50 124 in administration the training was offered 32 98 Working towards better 6 occupational ergonomics and to supervisors. This training to promote a 0 30 26 26 safety safety culture will be continued in order to 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 At Tokmanni, most of the long-term sick- develop the safety of the work environment Accidents when Accidents on Occupational Total ness absences and applications for pre- and to minimise all health-related risks. commuting workplace diseases mature employment disability pensions are due to musculoskeletal disorders. Online doctor and other new Female Male Accidents when commuting includes only accidents recorded in Therefore in 2017, in cooperation with the operating models Total, previous years workplace safety insurance, meaning most commonly commuting between home and the workplace. occupational health service, Tokmanni In 2017 Tokmanni modernised its sick- improved supervisors’ skills regarding the ness absence practices by improving impact of good ergonomics on working self-reporting practices, and by introducing capacity and ability to cope. We also pub- an assistive appointment booking system 2015 2016 2017 lished new ergonomics guides on store and and the online doctor services provided by Injury rate (IR) 42 38 35 warehouse work. the occupational health services. The new Occupational diseases rate (ODR) 0 0 0 Tools that improve ergonomics were forms of service aim to provide health care Absentee rate (AR) 5.6% 6% 5.4% also assessed and developed. In 2016 the that is more user friendly and to cut costs. Work related fatalities 0 0 1

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 60 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Responsible sourcing and products ACHIEVEMENTS AND TARGETS

Responsible sourcing ensures Achievements 2017 Targets 2018 that employees’ basic rights are respected in supply chains. Over 95 per cent of purchases come from factories that Tokmanni has piloted a feedback channel for reporting human These rights are based on, for have joined the amfori BSCI initiative. rights violations in the supply chain (grievance mechanism). example, the UN’s International Bill of Human Rights and No serious human rights violations have been found in Tokmanni has confirmed the results of the amfori BSCI audits Convention on the Rights of the Tokmanni’s supply chains. with their own visits to over 25 per cent of the factories that are Child, the International Labour active in risk countries in 2018. Organization's Declaration on No serious faults/accidents related to products sold by Fundamental Principles and Tokmanni have been found. No serious faults/accidents related to products sold by Tokmanni have been found. Rights at Work, and the UN Global Compact.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 61 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Responsible sourcing Responsibility is a key element of Tok- UN Sustainable Development Goals and Tokmanni manni’s sourcing process. The process is supported by Tokmanni’s principles and • Reliable and predictable • Improving packaging efficiency guidelines for responsible sourcing. As purchasing agreements • Preventing corruption throughout a member of the amfori Business Social • No forced labour or child labour the value chain Compliance Initiative (amfori BSCI), Tok- • Ban on modern slavery • Improving the traceability of manni is committed to complying with the • Occupational health and safety products and ensuring the amfori BSCI’s Code of Conduct. Tokmanni requirements and monitoring their responsibility of the supply chain also requires its supplier factories to be implementation throughout the • Special requirements of risk committed to operating in accordance value chain, with special attention products with the amfori BSCI Code of Conduct, to women • Use of standards and certifications and these suppliers must also demand • Ensuring trade union activities in • Offering affordable products to the same from their own suppliers and the private label supply chains customers producers. • Endeavouring to pay a living wage • Offering customers safe products throughout the supply chain • Offering customers healthy and Responsibility work focuses on • Preventing discrimination safe foods risk countries throughout the value chain • Training of own employees The supervision of responsibility of sourc- • Protecting risk groups in the • Training and development of ing focuses in particular on risk countries, private label supply chains suppliers which according to the World Bank’s clas- • Employment • Environmental requirements • Publishing human rights sification have the greatest risk of labour • Responsible sourcing and monitoring of these in the principles and human rights violations. The primary supply chain • Development of indicators focus is on suppliers within Tokmanni’s more immediate sphere of influence, i.e. private label and exclusive distribution product suppliers. Tokmanni requires factories manufacturing these products in risk countries to be audited in accordance with amfori BSCI or SA8000. Sourcing agreements with the factories of brand suppliers must also contain a commitment stating that production accords with the require-

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 62 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

ments of amfori BSCI. The assessment of is not likely to ever achieve 100 per cent in changed so that information regarding a BSCI audits and Tokmanni’s own audits. responsibility already begins at the supplier reporting. Tokmanni constantly distributes product’s country of origin is mandatory Tokmanni also accepts SA8000 auditing. tendering stage, as responsibility issues information on the amfori BSCI initiative’s at the product establishment stage. This An auditing company approved by are taken into account in the competitive principles, training and auditing, to its sup- means that supervision of responsible amfori BSCI compiles a report of factories bidding. plier factories to encourage them to renew sourcing can be better targeted on those located in risk countries, and a person in their audits and to understand the benefits products and suppliers with a greater risk charge of responsible sourcing at Tok- 99 per cent of risk country of responsibility from the perspective of the of human rights violations in their manu- manni’s sourcing organisation analyses purchases from audited factories company and its employees. facturing. This will make it possible to state this report. The results of the amfori BSCI Tokmanni’s target is to direct all direct the country of origin on product packaging, audits are evaluated on a five-step scale sourcing from risk countries to suppliers Increasing transparency in the and from the beginning of 2018, Tokmanni from A to E. If the score is C to E, Tokmanni using factories audited by amfori BSCI or supply chain will start stating the country of manufac- sends information to the supplier on the SA8000. In 2017, 99 per cent (95) of direct Another of Tokmanni’s targets is to in- ture/origin on the packaging of its private observed problems and a request to re- purchases from risk countries were made crease transparency in supply chains by label products. solve the problems. SA8000 audited facto- from audited factories. This can be consid- investigating the factories of suppliers that ries automatically receive the score Good ered to be an exceptionally good figure, be- do not source from risk countries and the Monitoring responsibility of in the amfori BSCI database. Some of the cause due to reporting technology reasons, responsibility of these factories. As part sourcing with audits suppliers in the amfori BSCI database are the share of purchases from amfori BSCI or of the development of responsible sourc- The responsibility of Tokmanni’s sourcing Tokmanni’s responsibility (Tokmanni is a SA8000 audited factories in risk countries ing, Tokmanni’s procedures have been is monitored and developed with amfori RSP, i.e. a responsible company for suppli-

Amfori BSCI full audits 15.5.2015–4.1.2018 Amfori BSCI follow-up audits 15.5.2015–4.1.2018

Decent working hours Decent working hours A Ethical business behaviour A Ethical business behaviour B Fair remuneration B Fair remuneration No bonded labour C C No bonded labour No child labour No child labour D D No discrimination No discrimination E No precarious employment E No precarious employment Occupational health and safety Occupational health and safety Protection of the environment Protection of the environment Social management system and cascade effect Social management system and cascade effect Special protection for young workers Special protection for young workers The rights of freedom of association and collective bargaining The rights of freedom of association and collective bargaining Workers involvement and protection Workers involvement and protection Amfori BSCI CoC 2.0 audits 0 200 400 600 800 1,000 Amfori BSCI CoC 2.0 audits 0 100 200 300 400 500

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 63 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Amfori BSCI and SA8000 audit hours, employee participation and aware- Key high-risk raw materials and freedom from discomfort, freedom from results 2017, % ness building. certification of prodcuts pain, injury or disease, freedom to express Tokmanni also carries out its own au- In 2017, palm oil, wood, fish and cotton, in normal behaviour and freedom from fear 0.2 5.6 dits at factories in risk countries and other particular, were defined by the executive and distress. countries of manufacture. The company’s group of the sourcing organisation as Tok- We require that our products of animal own audits are carried out particularly at manni’s key high-risk raw materials. Sup- origin come from animals that have been Total the factories of potential new suppliers, and bred for food production or are derived 609 (459) A-B pliers are required to declare the country audits C-D at any factories where amfori BSCI audits of origin of high-risk raw materials and any of fish or mollusc origin (incl. cosmetics E have discovered significant problems. sustainability certification, and to provide The audits focus on the problem areas more information on the origin of the raw 94.2 described in the amfori BSCI reports and materials, if necessary. To ensure the origin investigate whether corrective measures and responsible production of raw materi- have been taken. The audits also focus in als, Tokmanni aims to increase the number Principles for responsible ers). If problems are observed with these particular on occupational safety and qual- of certified products. Sustainability labels purchasing: suppliers, Tokmanni also asks them to ity assurance. In 2017 Tokmanni carried out should be used especially on Tokmanni’s • No Child Labour provide concrete problem-resolving plans 102 (113) own audits in Bangladesh, Bulgar- private label products. In sustainability • No Bonded Labour including schedules for the resolving of ob- ia, Cambodia, China, Finland, Estonia, Italy, labelling, the following systems are empha- • No Discrimination served problems. Problem-resolving plans Poland, the UK and Vietnam. sised: FSC, Nordic Swan Ecolabel, organic, • No Bribery are also requested from factories where Suppliers must require any of their own MSC, Fairtrade, UTZ and Oeko-Tex. • Fair Remuneration significant problems are found, even if the subcontractors to comply with Tokmanni’s • Decent Working Hours suppliers aren’t Tokmanni's responsibility. ethical principles. In its sourcing agree- Animal welfare in supply chains • Occupational Health and In 2017, 604 (459) amfori BSCI audits ments, Tokmanni retains the right to exam- Tokmanni considers animal welfare to be Safety were carried out at factories manufacturing ine a supplier’s entire subcontracting chain of utmost importance and is committed to • Special Protection for Young Tokmanni’s products. The majority of facto- if necessary. promoting it in its supply chains. We require Workers ries received the score C (acceptable). The all products sold by Tokmanni that contain • Compliance with Laws and validity period of the audit and the timeta- Developing responsible sourcing raw-materials of animal origin and manu- Collective Agreement ble for renewing the audit depend on the Tokmanni’s employees that are in charge of facturing of them to comply with laws and • The Rights of Freedom of factory’s score, so the figures only include responsible sourcing constantly participate regulations throughout the entire supply Association and Collective the factories where audits were renewed in training and events arranged by amfori chain. Tokmanni’s Animal Welfare Princi- Bargaining during 2017. SA8000 auditing was also car- BSCI and other partners, such as FIBS and ples are based on the universally accepted • Ethical Business Behaviour ried out at 5 (7) factories. In the amfori BSCI the TMA responsibility working group, to Five Freedoms of the UK Department • Protection of the Environment audits most of the problems were found in further develop Tokmanni’s responsible for Environment, Food and Rural Affairs the areas of management systems, working sourcing. (Defra): freedom from hunger and thirst,

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 64 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

raw-materials). Animals may not be slaugh- applies to cosmetics raw materials (Regu- Tokmanni is responsible for consignments prior to delivery, and through tered primarily for the sale of their skin, fur, lation (EC) No 1223/2009 of the European the safety and quality of the third-party testing and self-supervision horns, feathers or other parts. Parliament and of the Council on cosmetic products it sells inspections in Finland. Compliance with Tokmanni’s animal products). In our private labels, we use only From a product safety view point, Tokmanni welfare policy is monitored by documentary European manufacturers that have to com- not only sells products but is also a product Responsibility of the importer inspections and contracts in the purchas- ply with EU legislation in their own activities. distributor, importer and manufacturer. Besides its private label products, Tokmanni ing process. These include verification of Tokmanni acts in the capacity of manu- imports various goods and branded prod- documentation of wool origin or entering Product responsibility facturer for products placed on the market ucts from manufacturers outside the EU. a non-mulesing agreement. In addition, in Product safety is one of Tokmanni’s main under its private labels, even though the For these products Tokmanni bears the some products policy compliance can be responsibility themes. Tokmanni aims to products may be manufactured by other importer’s responsibilities, which include verified, for example though certifications ensure that all the products it sells are safe parties. The company is responsible for the various requirements that are comparable given. An example of this is down pro- to use. The company monitors product product safety including regulatory com- to the manufacturer’s obligations. Tokmanni duced in accordance with the Responsible safety, responsibility and due diligence by pliance, documentation and labelling of its demands a high standard of product safety, Down Standard which is used as material conducting self-supervision, visiting suppli- private label products. Product safety is security documents in accordance with in Tokmanni's own brand down jackets. In ers and by carrying out product testing itself ensured by checking documentation, man- the type of product and product labels in cosmetics, the ban on animal testing also or commissioning this from third parties. ufacturing quality controls, by inspecting accordance with Finnish laws for all the

Farm animals Wool Down and feathers Leather Exotic skin • Tokmanni will not accept products • Tokmanni does not accept the • Tokmanni will not accept down or • Tokmanni will only accept leather • Tokmanni will not accept real exot- from farms that do not observe the mulesing method; for wool from feathers plucked from live birds or from cows, sheep, buffalos, goats ic animal skins (including snakes, Five Freedoms in their supply chain Australia, Tokmanni requires from farms where this is practiced or pigs, or skin from fish that have lizards and alligators) (entire chain, including transporta- the wool to be declared as Non- • Tokmanni will not accept down or been used in food production tion and slaughter). Mulesed wool in accordance with feathers from farms where animals • Tokmanni will not accept cow, calf Animal testing the National Wool Declaration are force-fed or ox leather from India • Tokmanni will not accept animal Animal hair • Tokmanni requires full traceability • Tokmanni will only accept down • Tokmanni will not accept leather testing on any cosmetic products • Tokmanni will only accept hair from of the origin of wool right back to or feathers from slaughtered birds from Bangladesh because of the during any stage of production (pro- living farm animals. the farm and will only accept wool bred for meat production (exclud- poor conditions in its tanneries duction or on finished products) • Tokmanni will not accept rabbit hair from farms that comply with the ing foie gras production) • Tokmanni will not accept leather • Tokmanni will not allow the use (including Angora rabbit hair), or the Five Freedoms • Tokmanni will not accept the down from aborted animals (including of cosmetic ingredients that have hair of caged or endangered species or feathers of endangered species caracul or Persian lamb) been tested on animals in the prod- • Tokmanni requires full traceability Fur • All down and feathers intended for ucts it imports itself or in its own of the origin of hair right back to • Tokmanni will not accept real fur Tokmanni’s use must be sterilised cosmetics products the farm

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 65 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Purchases by risk level in these products Tokmanni must comply Products are put through technical product During 2017 Tokmanni reviewed or re- (received purchases in 2017), % with the relevant due diligence principle inspections, consignment inspections and newed the labelling of 1,675 (1,394) private prescribed by the product safety legislation risk based self-supervision inspections. label products. 282 (922) products were and be able to identify the different product Tokmanni aims to prevent all the non-con- inspected in Tokmanni’s self-supervision, group requirements in regard to product formities in product safety and quality and third-party product testing was carried 29 High risk labelling and compliance requirements, of experience before the new imported out on 758 (95) consignments in 2017. Medium risk for example. Correspondingly, Tokmanni or private label products are introduced. A total of 109 products or product families 48 Low risk imposes requirements on its suppliers Non-conformities are prevented with prod- were subject to a recall or prohibition on concerning the need for a high standard uct quality and documentation inspections, sale at Tokmanni in 2017. 23 of product safety, and through contrac- where compliance and appropriateness for No financial penalties were imposed on tual means and random self-supervision the Finnish market are ensured. Tokmanni in 2017 for violations of legisla- inspections, the company ensures that it tion and regulations concerning products The risk rating of Tokmanni’s self control is done fulfils its obligations. Prohibition on the sale of and services. by risk evaluation of every product or product products, self-supervision and type. Risk evaluation of a certain product or a product type is based on the amount of special Product safety as a goal product testing Legislative amendments demands, special legal requirements, safety The aim in 2017 was to improve the product In 2017 Tokmanni imposed a prohibition on improve product safety standards, packaging label requirements and safety and product and quality of expe- the sale of one licensed product introduced Tokmanni is constantly monitoring the product safety exceptions found to this product from registers of domestic or international rience of private label products, licensed to the market by Tokmanni on the basis of changing legislation to ensure product safety. market surveillance. products and products imported by the ensuring product safety. The prohibition In 2017 the main legislative changes that company. The indicator used in this as- concerned the sale of an angle grinder, as had an impact of Tokmanni's goods flow sessment is the number of instances of the structure of the product did not meet all were the ending of the transitional period products it imports. Tokmanni ensures with non-compliance for these product cate- the requirements imposed on the product for the old chemical labelling decree on 31 contractual means and product and docu- gories. The number of non-compliances in by its standard. Tokmanni also recalled one May 2017 and the ending of the transitional mentation inspections that importers have 2017 was 15 (27). Most of the cases were of its private label products in 2017. The re- period for the new national tobacco act on fulfilled their obligations. due to the quality of the product in use call concerned a LED floodlight, as a safety 20 May 2017. deviating from the product specification. deficiency and potential electric shock Both transitional periods created addi- Responsibility of the distributor hazard was discovered in Tokmanni’s own tional work at stores and the warehouse. In addition to the manufacturer and import- Inspected, controlled and safe quality control. In addition, in 2017, as a The change did not affect Tokmanni's er, Tokmanni acts as purely a distributor products Finnish retailer, Tokmanni also imposed a private label products, as the product for a large number of the products it sells. Tokmanni does risk-based self-supervision prohibition on the sale of one product. The labelling had already been changed at the These products include all consumer for its private labels and imported prod- product was a LED fidget spinner, and the beginning of the transitional periods. goods imported from the EU other than ucts. The supervision is done in the country reason was that the battery compartment Tokmanni’s private label products. Also of origin, the logistics centre and in stores. came off too easily in some of the products.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 66 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Efficient use of resources ACHIEVEMENTS AND TARGETS

Tokmanni implements a range of Achievements 2017 Targets 2018 measures that aim to achieve more resource-efficient business. The Reduction of properties’ location based carbon dioxide Reduction of properties’ location based carbon dioxide company is constantly examining emissions (Scope 1 and 2) by eight per cent. emissions (Scope 1 and 2) by five per cent. new opportunities to make use of alternative energy forms and Greenhouse gas emissions from transport Greenhouse gas emissions from transport at 2015 level in energy-saving equipment, and it at 2015 level in relation to net sales. relation to net sales. is working towards a more environmentally sound logistics. Increasing the waste recovery rate to 100 per cent. Keeping the recycling rate of waste at 34 per cent and raising The company also continuously reuse to 62 per cent. monitors the amount of waste generated at its warehouse and in its stores, and is actively improving its waste recycling.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 67 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Energy-efficient Total energy consumption, MWh business 140,000 UN Sustainable Development Goals and Tokmanni Climate impacts' reduction is one of 118,411 115,697 the most important areas of corporate 120,000 104,014 107,039 • Obtaining renewable responsibility at Tokmanni. The main focus 100,000 33,022 31,693 energy certificates of Tokmanni’s climate strategy is to reduce 31,605 31,956 80,000 • Energy and material the energy consumption and carbon diox- efficiency of products ide emissions of its properties. 60,000

• Improving packaging Reduction of energy consumption and 85,389 84,003 40,000 72,409 75,083 efficiency carbon dioxide emissions supports Tok- • Reduction, reuse and manni’s business strategy objectives and 20,000 recycling waste improves profitability, as reducing energy 0 • Ending the use of HFCs consumption also lowers costs. The use 2014 2015 2016 2017 • Decoupling business • Using final food waste of renewable energy can also have a pos- growth from material and in energy production itive impact on Tokmanni’s reputation and Heating The figures include both measured energy consumption, • Offering fewer plastic improve energy self-sufficiency. Climate Electricity and estimated consumption. and contamination of bags to customers matters are also associated with business environment • Offering energy efficient risks, such as interruption of operations • Reducing energy products for customers caused by weather conditions and risk to consumption • Reducing climate change reputation, which Tokmanni seeks • Improving energy risks in the supply chain to minimise. efficiency • Environmental require- The majority of the climate impacts • Using renewable energy in ments and monitoring of during the lifecycle of Tokmanni’s products own operations these in the supply chain arise during the manufacturing and use carbon neutrality regarding the emissions • Recommending the use of • Development of indicators of the products. The company has limited of its properties, air travel and leasing cars renewable energy to opportunities to affect these impacts and by 2030. The goal will be achieved by logistics service providers their measurement is challenging. This is • Reducing energy consumption and also partly the case for transport. The main improving energy efficiency focus of Tokmanni’s climate strategy in the • Using renewable energy coming year is to reduce the energy con- • Acquiring renewable energy certificates sumption and carbon dioxide emissions of • Offsetting the emissions caused by its properties. Tokmanni’s goal is to achieve air travel.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 68 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

Monitoring and remote 67 (69) per cent of the Group’s total energy management of automation systems in optimum use, and training will also reduce management reduce consumption are under Tokmanni’s control. properties, control of optimum use, and energy consumption, though the largest electricity consumption The other stores are located in commercial monitoring arrangements. The company savings have already been achieved with Electricity consumption and heating are or shopping centres, and Tokmanni has no has an action plan to extend the use of these measures. Tokmanni’s main climate impact factors. direct influence over the energy solutions at LED lighting in its store network and it also In 2016, Tokmanni launched the Deep Thus, Tokmanni’s measures taken to curb these stores. constantly monitors developments in the Green project with the aim of reducing the energy consumption focus particularly on The biggest consumers of electricity cost and energy efficiency of other new environmental impacts, including ener- its properties, as the company has con- in the properties are lighting, ventilation technologies. Over the long term, LED gy consumption, of Tokmanni's office in trol over the energy solutions for these. In and cooling. Measures taken to reduce lighting and new technologies will con- Mäntsälä. The measures include instruct- addition to Mäntsälä, about 47 (43) per cent energy consumption and the associated siderably reduce electricity consumption. ing personnel how to save energy at the of- of the number of store properties and about emissions focus particularly on remote Remote management updates, control of fice and encouraging the use of carpooling

Consumption of purchased energy, MWh Carbon footprint, ton CO2 80,000 77,133 74,418 30,000 8,880 70,000 10,161 25,000 24,208 60,000 20,000 18,474 50,728 50,000 42,280 15,000 11,044 40,000 21,204 35,932 10,475 8,818 8,955 9,528 30,965 68,253 30,941 10,000 8,349 30,016 64,257 30,000 2,104 8,432 27,107 20,246 5,000 22,677 19,724 20,000 445 346 315 382 29,524 8,302 30,941 27,500 27,107 9,455 0 10,000 20,476 8,848 11,944 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 8,288 10,291 8,848 9,455 0 Scope 1 Scope 2 Scope 3 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Non-renewable Renewable Nuclear power Scope 1: Direct greenhouse gas Scope 2 includes market based greenhouse (GHG) emissions gas emissions. Heating Electricity The figures include both measured and estimated consumption. Scope 2: Indirect greenhouse gas Scope 3 includes domestic and international Electricity includes selfproduced solar-electricity. (GHG) emissions transportation of goods, transportation by Posti and air travel. Scope 3: Other indirect greenhouse (GHG) gas emissions

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 69 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

when commuting to work. The extension of New alternatives for Concentration provides better opportu- footprint of rail transport is considerably the project to stores was planned in 2017 reducing emissions nities to combine consignments, improve smaller than that of air transport. and the aim is to implement this in 2018. Regarding greenhouse gas emissions, the load capacity utilisation rate of trans- several large development projects are port units and optimise transport routes. Concentration of delivery Renewable energy solutions being carried out internationally, such as This also reduces the adverse impacts on cycle lowers carbon dioxide Besides reducing energy consumption, increasing the use of the circular economy, the environment. The JOT (just-on-time) emissions

CO2 emissions are reduced through the the development of environmentally friend- approach has set challenges for achieving In 2016, Tokmanni created an annual plan use of renewable energy. In 2017 solar ly products, and new technologies in logis- the maximum load capacity utilisation rate based on delivery peaks which regulates panels were installed at Tokmanni’s store tics, administration, marketing and stores. for transport units. Tokmanni continuously the number of delivery days at different in Savonlinna. The solar power plant is These will have an impact on Tokmanni’s works together with its partners to avoid times on a store-specific basis. The annual expected to produce about 75–80 MWh actions in the coming years and will provide empty kilometres. plan increased the load size of deliveries of energy per year, which corresponds to the opportunity to extend the reduction of on average by six per cent on the previ- about 10–15 per cent of the store’s total emissions into new areas. Target is to increase rail and ous year, which reduced the number of annual electricity consumption. Tokmanni container transport kilometres driven each week by about has an action plan to extend the use of Environmentally sound Import consignments from Europe are now 10,000. During 2017 we were unable to solar energy to stores around Finland and logistics collected by lorry or by containers that can implement the annual plan to optimise the its logistics centre in Mäntsälä. In spite of its growth and the expansion of its travel by rail for some of the journey. The number of delivery days, which is unfortu- Carbon dioxide emissions were also store network, Tokmanni is aiming to keep target is to increase the share of rail and nately shown by the emissions figures of covered by renewable energy certificates. the greenhouse gas emissions from trans- container transport to reduce emissions. transport. In 2017, renewable energy certificates port at the 2015 level in relation to net sales. On a large container ship, the emissions By 2020 Tokmanni’s target is to further equalling 62,190 MWh (66,065) were used Tokmanni strives to concentrate its per container are considerably lower than concentrate the delivery cycle, which will at Tokmanni, which was 74 (77) per cent of transport needs with long-term contractors the emissions per trailer on a so-called also include deliveries outside of quieter Tokmanni’s total electricity consumption. and, with these partners, looks for ways to ro-ro vessel. Shipping companies renew periods. By doing this Tokmanni is aiming Electricity consumption at the Mäntsälä reduce carbon dioxide emissions and other their vessels all the time. The latest ships to compensate for the rise in carbon diox- logistics centre and at the stores that were environmental impacts from transport. are larger and more efficient, which reduc- ide emissions resulting from the increase in using electricity purchased by Tokmanni Tokmanni’s contractors have modern fleets es the emissions per transport unit. the number of stores. was covered in full by the certificates. which are constantly updated to increase Tokmanni has also started using rail Air travel emissions in 2017 were offset environmental efficiency. Over half of transportation from China. Containers or Resource efficiency by investing in renewable energy pro- Tokmanni’s partners also have a certified small consignments are transported by rail Tokmanni seeks to minimise the amount of jects through a selected partner. In 2017, environmental management system. Driv- via Kazakhstan, Russia and Belarus to Po- waste transferred to incinerator plants by emissions were offset with Gold Standard ers are also trained to drive in a way that is land where they are transported to Finland reducing waste, and by reusing and recy- projects implemented in Bangladesh and environmentally aware and economically by lorry or container. This is an alternative cling waste. Excellent results have been Vietnam. efficient. to air transport from China. The carbon achieved in waste recovery.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 70 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

In 2017, Tokmanni reused 47 per cent Recycling packaging materials with Recser Ltd and Akkukierrätys Pb Oy. Tokmanni’s goals is to decrease pa- and recycled 34 per cent of its waste. The As Tokmanni does not itself manufacture Recser has a nationwide collection network per-based direct marketing by increasing rest of the waste was recovered, as energy, any of its products, it is not possible to for portable and storage batteries, and Ak- digital advertising. among other things. The goal is to increase report on the materials used in products. kukierrätys is a producer organisation that In 2017, Tokmanni increased communi- reuse into 62 per cent and keep recycling in Most of Tokmanni’s waste consists of specialises in recycling lead-based batter- cations using digital channels, for example the same level in 2018. packaging materials. The company en- ies. Tokmanni has also signed a cooperation in social media and on its website. During Recycling of waste can be further im- deavours to reduce the amount of packag- agreement with Finnish Tyre Recycling Ltd the year, Tokmanni also advertised on proved by careful sorting in the stores, ing materials, actively monitors the volume for collecting and recovering tyres. television and radio. In 2017, the number of at the logistics centre and in the offices, of waste generated in its warehouse and Tokmanni’s direct marketing leaflets that and by monitoring the use of waste com- stores and is continuously improving its Increased efforts into were printed increased to about 304,000 ponents and providing guidance for em- waste recycling. digitalisation per week. The growth was a result of, ployees. The amount of food waste in the Tokmanni is responsible for the recycling Tokmanni aims to reach its customers among others, the increase in the store stores can be reduced especially by issuing and other waste management of the devic- increasingly by digital means. One of network and the fact that the distribution of instructions and monitoring results, and es and packaging it places on the market. through retail sector campaigns and by Tokmanni fulfils its producer responsibility donating unsold food to charity. through various producer communities Total weight of waste by disposal method, % In 2016, Tokmanni joined the Ministry of and by actively developing with them ways 50 47 Environment’s and the Federation of Finn- to ensure sustainable development. Tok- 44 43 ish Commerce’s Society’s Commitment to manni collaborates with Finnish Packaging 40 37 Sustainable Development’s Green deal and Recycling, Rinki Ltd and others in striving 33 34 30 30 30 aims to halve the use of plastic self-service to increase the recovery rate for packaging. 25 23 bags (fruit bags) per customer by 2026. The Tokmanni notifies Rinki Ltd of the overall 22 20 reduction in the use of plastic bags is pro- quantities of packaging materials imported. 13 ceeding according to plan. For example, The materials are paper fibre, plastic, glass, 10 7 7 checkout assistants no longer offer light- metal and wood. The non-renewables 6 0.2 weight plastic bags at checkouts and the among these are plastic, glass and metal, 0 plastic bags for the screws sold by weight which can be recycled efficiently. The plan 14 15 16 17 14 15 16 17 14 15 16 17 14 15 16 17 14 15 16 17 have been replaced with paper bags. The is to begin reporting packaging materials in Reuse Recycling Recovery Landfill waste Incineration sale of plastic carrier bags has also been the 2018 corporate responsibility report. reduced by offering customers bags made Tokmanni engages in electrical and elec- Total 2014: 13,708 tn Reuse consists of reused pallets at the logistic centre. from alternative materials. tronic equipment recycling via SELT Associ- Total 2015: 13,572 tn The data has been obtained form the service providers. Service providen has changed 2017 ation and Stena Oy. For portable and stor- Total 2016: 12,924 tn age batteries Tokmanni has an agreement Total 2017: 14,379 tn See page 79 for total weight and disposal method by waste type.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 71 Business integrity Fair treatment Responsible sourcing and products Efficient use of resources

fresh foods advertisements was separate similar to the one published in 2016, as this to achieve a 15 per cent reduction in expired still fit for use. In October 2015, Tokmanni from the Tarjoussanomat direct marketing year the products were advertised online food waste by 2020. Food waste has been began giving away for charitable purposes leaflet. In 2017, around 2,236,200 Tarjous- rather than in a printed catalogue. Advertis- one of the key indicators in the sales organi- food products whose ‘best before’ date sanomat direct marketing leaflets were ing in newspapers was also reduced con- sation since the start of 2015, and the com- had expired. This is always done through distributed each week, which is about siderable. The posters on display in stores pany has actively sought to reduce it. The agreement between the store and a local 27,600 copies, or about 1.3 per cent more, were also adapted so that they require tools for achieving this are the new manage- charity organisation. The agreement states per week than the previous year. However, considerably less ink. ment system and more diligent food waste the purpose for which the food will be used calculated per store, the number of copies The reduction of plastic bags was monitoring in every store. The most impor- and the handling arrangements, so as to of Tarjoussanomat printed was reduced by started at Tokmanni at the beginning of tant way of reducing the loss from expired make sure the products are for charitable 11 per cent. Tokmanni’s summer catalogue 2017 when the small bags that are availa- food waste is to ensure the basic operation purposes and safe for the eventual con- and Christmas toy catalogue were not ble on a self-service basis were removed of the stores is as it should be. sumers of the food. 92 stores have already distributed as direct marketing, as the cat- from checkouts. The availability of these The right selection of food products, ap- distributed food for charitable purposes. alogues were published as digital versions self-service bags was also reduced else- propriate order and delivery quantities and The idea is that in the future Tokmanni and only a small edition was printed for where in the stores during spring 2017. delivery dates, store-specific monitoring of will be able to give away all unsold food stores. There was no Christmas catalogue Paper bags and reusable bags are offered demand, and reduced prices for products products from stores to local operators for as an alternative at checkouts. Tokmanni’s near their expiry date are all effective ways their use. personnel has also received training in this of preventing food waste at the stores. matter. Measures have been taken at all stores to Waste by type, % In 2018, Tokmanni’s goal is to reduce prevent and reduce food waste. In addition, the amount of printed material in relation 30 stores with the greatest challenges in 2 to net sales, for example by optimising the terms of expired food waste have been distribution of direct marketing leaflets and included in a special monitoring process as Other waste developing digital communications. part of a wastage prevention project. Total 14,379 tn 98% (98) A store-specific action plan has been (12,924) Hazardous Effective prevention of drawn up for these stores in conjunction waste 2% (2) food waste with process advisers and others, and their The amount of food waste in the food prod- food waste is monitored weekly by the re- 98 ucts chain as a whole, including house- gional organisation. Active monitoring and holds, is approximately 400 million kilos prevention of food waste are again in the The data has been obtained from the service annually, which equates to 10–15 per cent sales organisation’s action plan for 2018. providers, and it covers stores and logistics centre. of all the food fit for consumption. For the Although expired food waste has been See page 79 for total weight and disposal method retail sector, expired food is always a loss. reduced, stores will inevitably always have by waste type. As a responsible operator, Tokmanni aims a certain amount of unsold food that is

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 72

GRI

We report on sustainability in In this section accordance with the Global Reporting Initiative (GRI) standards. In this Reporting principles 73 section, you will find more detailed Information used in calculations 74 information on the coverage and Data 76 principles of our reporting and a GRI-index 81 summary of the GRI indicators.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 73

Reporting principles

Tokmanni’s Corporate Responsibility Report Corporate responsibility report or as part concentrates on matters that are completely of the annual report. The previous Corpo- within Tokmanni’s sphere of influence and rate Responsibility Report was published control, apart from logistics and sourcing. in February 2017. The information in this In the area of sourcing and product respon- report has not been assured externally. sibility, the Shanghai office is included in the This report has been prepared in reporting, while for transport the emissions accordance with the GRI Standards: Core figures are from transport services providers option. At least one indicator is reported for and air travel emission data from the travel every material topic. The indicators have agency. been selected to form as complete and The Shanghai sourcing office is a joint balanced picture of Tokmanni’s corporate venture in which Tokmanni and the Norwe- responsibility matters as possible. gian company Europris ASA each have a fifty per cent holding. With the exception of responsible sourcing and product safety, the joint venture’s impact on corporate Further information responsibility matters is marginal, because ir.tokmanni.fi/en/responsibility its personnel amount to less than one per cent of Tokmanni’s total workforce, and its Contact information environmental impact is generated only by the office and staff travel. Outi Mikkonen The information in the report is for 2017, Head of Corporate Responsibility although some indicators also present his- [email protected] torical data where this is available. Tokman- [email protected] ni plans to publish corporate responsibility information annually, either in a separate

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 74

Information used in calculations

The company’s calculation of accounts for 43.51 per cent. The average • The location-based emissions coefficient space), and average consumption and av- the environmental profile of the specific emissions of carbon dioxide used is the average CO2 coefficient of erage emissions values per vehicle type as electricity it consumes is based from power production are 287.81 g/ 176 g CO2/kWh calculated using the ben- compiled by the transport operators. The on the following: kWh, and the amount of nuclear fuel used efit sharing method for Finnish district year used for comparison is 2015. • The electricity is purchased from the is 1.23 mg/kWh. heating CHP areas4. Tokmanni has collected information power market. The electricity purchased • The primary energy coefficients used in • The information concerning the division about the emissions of transport outside for the stores controlled by Tokmanni the calculations are: renewable fuels 1, of district heating into renewable and Finland from various operators. The basis and for the logistics centre in Mäntsälä non-renewable fuels 1.75 and nuclear non-renewable fuels is from Finnish for emissions calculations and the energy is covered by renewable energy certifi- power 3.03.2 Energy’s district heating statistics5. consumption of the transport operation cates. For these sites, the market-based • The location-based emissions coefficient • The primary energy coefficient used in are not known. The year used for compar- 6 specific emissions coefficient is 0 g used for electricity is the average CO2 the calculation is 0.9 ison is 2015. Through its own agreements,

CO2/kWh. emissions coefficient published by Mo- • The fuel emissions coefficients published Tokmanni manages 35 per cent (34) of the • The environmental profile of the residual tiva for Finland, calculated as a five-year by Statistics Finland have been used as transport consignments of purchases. Its 3 mix calculation published by the Energy rolling average, which is 181 g CO2/kWh. the emissions coefficients for gas and reporting covers 99.99 per cent (99.99) Authority for 2016 has been applied to oil.7 of the import consignments transported the consumption of electricity not The calculation of the The calculations for transport in Finland under its own agreements and 100 per cent controlled by Tokmanni.1 environmental profile for heating use an average consignment size (based per cent of the transport consignments • In the 2016 residual mix, non-renewable is based on the following: on the number and weight of consign- from the warehouse to the stores.

energy sources account for 47.36 per • The market-based CO2 emissions coeffi- ments), distance travelled by consignments All of Posti's services in Finland are car- cent, renewable energy sources account cient for district heating calculated for the (invoiced kilometres, as opposed to actual bon neutral Posti Green services that gener- 4 for 9.13 per cent and nuclear power Tokmanni sites is 156 CO2/kWh. kilometres that the cargo has been in load ate no emissions for customers. The emis-

1 Energy Authority. 2017. Residual mix in 2016. 3 and 4 Motiva. 2017. CO2 emissions coefficient. 2 and 6 Matias Keto. Energy factor. General principles and factors of realised electricity and 5 Finnish Energy. 2017. District heating statistics 2016. heat production, Report for the Ministry of the Environment. 7 Statistics Finland, Fuel Classification 2017.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 75

sions of the services provided by Posti were covered by the monitoring. The base year corded, the heating production emissions compiled by Lassila & Tikanoja plc, not in- 8 and 9 22.022 ton CO2 before offsetting in 2017. for the energy consumption and emissions coefficient (combined or separate produc- cluding the data on electrical and electron- An emissions report for air travel has is 2015. tion) used is that reported by Motiva for the ic waste, which was obtained from figures been obtained from the service provider. If the property’s heating method is not locality concerned. Using this information, gathered by Stena Oy. Energy consumption is not known. The year known, it is assumed to be district heating. the weighted average has been calculated used for comparison is 2015. Tokmanni has This is because most sites whose heating for the emissions coefficients, which indi- Examining energy consumption offset the emission of its air travel in 2017. consumption is not measured are located in cates the average CO2 coefficient for the information shopping centres, the majority of which are Tokmanni sites. At the end of 2017, Tokmanni had 175 Calculation basis and included in local district heating networks. For sites where the consumption and (162) active stores and one logistics cen- accuracy of data The 2015 update of the GHG Protocol supplier of district heating are not known, tre. Active stores are those which are in The recorded consumption data obtained advises that emissions from purchased the market-based emissions coefficient normal use. Active stores do not include in consumption monitoring is the prima- electricity and heating should be reported is 176 g CO2/kW. This describes the aver- new stores that are not yet in operation, or ry information used for ascertaining the in accordance with both market-based and age CO2 coefficient calculated for Finnish stores that have been discontinued by the consumption of power and heating by location-based coefficients. With regard district heating CHP areas using the benefit month in question. During the year, 13 new Tokmanni’s logistics centre and its stores. to the market-based coefficients, they are sharing method. and two relocated stores were opened. However, such data is not available for all energy company-specific and take renew- The calculations are based on the latest At the end of 2017, in terms of the total stores, and so the consumption by active able energy certificates into account. The information available. The information from surface area, 78 per cent (76) of the active stores outside the monitoring system is location-based coefficients are national the Energy Authority, Motiva and Energy stores were covered by electricity con- estimated on the basis of the consumption averages and do not take renewable energy Finland is updated annually, and the infor- sumption monitoring, and 50 per cent (41) by stores that are covered by the consump- certificates into account. In this report, only mation for 2017 was not yet available when were covered by heating consumption tion monitoring. In other words, specific CO2 emission are reported. Regarding the the calculations were being made. The monitoring (district heating, gas and oil). If 2 consumption (kWh/m gross floor area) properties other emission components' (CH4, environmental figures for previous years the logistics centre is also taken into ac- has been calculated for the stores covered N20) CO2-eq impact would be approximately have not been recalculated. count in the consumption monitoring, 81 by consumption monitoring. The specific four per cent of total emissions. The total greenhouse gas emissions for per cent (79) of the total surface area is cov- consumption figure obtained is assumed to Calculation of the market-based envi- the company’s own heating production are ered by electricity consumption monitoring equate to the average consumption level of ronmental effects of district heating takes estimated on the basis of the fuel emissions and 57 per cent (49) by heating consump- the stores and has been used to calculate the following factors into account: For sites coefficients published by Statistics Finland. tion monitoring. Consumption by the prop- the total consumption for those stores not where district heating consumption is re- The emissions coefficient for gas is 200.88 erties not included in the monitoring has

g CO2/kWh, and that for oil is 264.6 g been estimated on the basis of the specific 7 CO2/kWh . consumption of the monitored properties. The data on waste amounts, processing The energy intensity table for 2016 has 8 and 9 http://annualreport2016.posti.com/vastuullisuus/ymparisto/vihrea-logistiikka-ja-posti-green methods and definition of the hazardous been updated with the area and the corre- nature of the waste is from the statistics sponding consumption data.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 76

Data

302-1 Energy consumption within the organization a. Total energy consumption, MWh c. Consumption of own energy production, MWh

2014 2015 2016 2017 Change, % 2014 2015 2016 2017 Change, % Electricity, total 72,409 75,083 85,389 84,003 -1.6 Non-renewable (oil) 461 96 360 324 -9.9 District heat, total 29,506 30,236 31,557 29,885 -5.3 Non-renewable (gas) 1,637 1,623 1,104 1,484 34.4 Gas 1,637 1,623 1,104 1,484 34.3 In Tokmanni’s GRI report, electricity and district heating consumption are given in terms of usable secondary energy Oil 461 96 360 324 -9.9 and consumption of own energy prodiction in primary energy. Primary energy refers to energy contained within energy Heating, total 31,605 31,956 33,022 31,693 -4.0 sources in their unprocessed form, prior to the transformation process into usable secondary energy. Primary energy Total energy consumption 104,013 107,038 118,411 115,697 -2.3 is used to describe the energy available from various sources, as well as the amount of natural resources used as such sources and the effect this has on the natural resource. Transforming energy from one form to another inevitably results in waste, and thus the amount of primary energy is always higher than the secondary. One new store has been added At the end of 2017, in terms of the total surface area, 72 per cent of the active stores (76) were covered by electricity con- to the gas consumption monitoring after year 2016. sumption monitoring, and 41 per cent (41) were covered by heating consumption monitoring (district heating, gas and oil). If the logistics centre is also taken into account in the consumption monitoring, 76 per cent (79) of the total surface area is covered by electricity consumption monitoring and 54 per cent (49) by heating consumption monitoring. Consumption by the properties not included in the monitoring has been estimated on the basis of the specific consumption of the monitored properties. Own electricity production with solar panels included to the total electricity consumption was 83.1 MWh. b. Consumption of purchased energy, MWh

2014 2015 2016 2017 Change, % Unit Electricity Heat Total Electricity Heat Total Electricity Heat Total Electricity Heat Total Electricity Heat Total Purchased MWh 72,409 29,506 101,915 75,083 30,236 105,319 85,389 31,557 116,946 84,003 29,885 113,889 -1.6 -5.3 -2.6 energy Non- MWh 29,524 21,204 50,728 20,476 21,804 42,280 8,288 22,677 30,965 10,292 19,724 30,016 24.2 -13.0 -3.1 renewable Renewable MWh 11,944 8,302 20,246 27,500 8,432 35,932 68,253 8,880 77,133 64,257 10,161 74,418 -5.9 14.4 -3.5 Nuclear MWh 30,941 0 30,941 27,107 0 27,107 8,848 0 8,848 9,455 9,455 6.9 0.0 6.9 power

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 77

302-3 Energy intensity

Energy intensity by energy type

2014 2015 2016 2017 Intensity Consumption Consumption Total area Consump- Total area Consumption Total area Consumption Total area Stores KWh/m2 KWh/m2 KWh/m2 KWh/m2 change, % change, % MWh m2 tion MWh m2 MWh m2 MWh m2

Electricity 58,538 432,967 135 59,525 444,287 134 66,065 457,928 144 77,693 520,409 149 3.5 17.6 District heating 11,191 214,354 52 10,613 214,283 50 10,688 201,656 53 12,322 220,342 56 5.5 15.3 Gas 1,637 18,927 87 1,623 18,927 86 1,104 17,880 62 1,484 22,565 66 6.4 34.3 Oil 461 5,807 79 96 1,551 62 360 4,034 89 324 4,034 80 -9.9 -9.9

The specific consumption is calculated from comparable items. Electricity: total area. District heating: the area of measured objects. One new store has been added to the gas consumption monitoring after year 2016. The increase in energy consumption is due to an increase in the number of stores.

305-1 Direct greenhouse gas emissions (Scope 1)

Consumption of own energy production and CO2 emissions

Unit 2014 2015 2016 2017 Change, % Non-renewable (oil) MWh 461 96 359,8 324 -9.9 Non-renewable (gas) MWh 1,637 1,623 1,104.4 1,484 34.4

Greenhouse gas emissions ton CO2 445 346 315 382 21.1

Direct greenhouse gas emissions include own heat production’s emissions (in Tokmanni heat is produced by gas and oil).

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 78

305-2 Indirect greenhouse gas (GHG) emissions (Scope 2)

Consumption of purchased energy and CO2 emissions

2014 2015 2016 2017 Change, % Unit Electricity Heat Total Electricity Heat Total Electricity Heat Total Electricity Heat Total Electricity Heat Total Purchased energy MWh 72,409 29,506 101,915 75,083 30,236 105,319 85,389 31,557 116,946 84,003 29,885 113,889 -1.6 -5.3 -2.6 (302-1, Purchases) Non-renewable MWh 29,524 21,204 50,728 20,476 21,804 42,280 8,288 22,677 30,965 10,292 19,724 30,016 24.2 -13.0 -3.1 Renewable MWh 11,944 8,302 20,246 27,500 8,432 35,932 68,253 8,880 77,133 64,257 10,161 74,418 -5.9 14.4 -3.5 Nuclear power MWh 30,941 0 30,941 27,107 0 27,107 8,848 0 8,848 9,455 0 9,455 6.9 0 6.9 Environmental impacts Greenhouse gas emissions ton CO 19,101 5,107 24,209 13,309 5,165 18,474 5,368 5,676 11,044 5,802 4,673 10,475 8.1 -17.7 -5.2 (market based) 2 Greenhouse gas emissions ton CO 20,719 5,488 26,207 17,553 5,553 23,105 17,846 5,775 23,621 15,205 5,260 20,464 -14.8 -8.9 -13.4 (location based) 2 Radioactive waste tonnes 0.1 0 0.1 0.1 0 0.1 0.1 0 0.1 0.02 0 0.02 -50.4 0 -50.4

Indirect greenhouse gas (GHG) emissions consist of the purchased electricity and of district heating.

305-3 Other indirect greenhouse gas (GHG) emissions (Scope 3) 305-4 Greenhouse gas (GHG) emissions intensity

CO2-emissions of transportations and air travel, ton CO2 Greenhouse gas emission intensity in proportion to net sales and number on employees

2014 2015 2016 2017 Change, % Unit 2014 2015 2016 2017 Change, %

Transportation 8,177 8,702 8,760 9,269 5.8 Greenhouse gas emissions (Scope 1 and 2) ton CO2 24,654 18,820 11,359 10,857 -4.4 Posti 22 100 Net sales MEUR 734 755 776 796,6 2.7

Air travel 172 116 195 237 21.6 Greenhouse gas emissions intensity ton CO2/MEUR 34 25 14,64 13,3 -9.0 Greenhouse gas emissions 8,349 8,818 8,955 9,528 6.4 Employees empl 3,119 3,293 3,224 3,255 1.0

Intensity ton CO2/empl 8 6 3,52 3,3 -7.4 305-3 includes inbound and outbound logistics (to and from the logistic center) transportation by Posti and air travel. The data is from service providers. In import consignments, 2017 data covers 99.9 per cent of transportation in proportion to the value of the freight paid. Posti has offset all its customers' transportation emissions. Greenhouse gas intensity has been calculated by proportioning Scope 1 and 2 emissions (market based) to Tokmanni's netsales and number of employees. In 2016–2017 Scope 1 and 2 location based emissions decreased 12.9 per cent.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 79

306-2 Total weight of waste by type a. Total weight of hazardous waste, with a breakdown by the b. Total weight of other waste, with a breakdown by the following disposal methods, tn following disposal methods, tn

Method 2017 2017, % Method 2017 2017, % Reuse 0 0 Reuse 6,722 47.8 Recycling 292 94.1 Recycling 4,578 32.5 Recovery 5 1.5 Recovery 1,804 12.8 Incineration 14 4.4 Incineration 965 6.9 Landfill waste 0 0 Landfill waste 0 0 Total 310 100 Total 14,069 100

b. All waste, by disposal methods, tn

Method 2014 2015 2016 2017 2017, % Change, % Reuse 6,072 5,766 4,236 6,722 46.8 58.7 Recycling 3,467 4,015 3,850 4,870 33.9 26.5 Recovery 3,146 2,958 4,818 1,808 12.6 -62.5 Incineration 979 6.8 6.8 Landfill waste 1,023 833 21 0 0 0 Total 13,708 13,572 12,924 14,379 100 11.3

Information on waste disposal methods has been provided by the waste disposal contractor. Waste disposal contractor has changed 2017. Reuse consists of reused pallets at the logistic centre. Re-used pallets consist of repaired, returned to supplier, reused, purchased by recycle service provider, as well as returned rental pallets.

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 80

401-1 New employee hires and employee turnover a. New permanent employments 2017

–30 years 30–50 years 50 years– Total number % number % number % number % Female 86 78.2 91 78.4 23 76.7 200 78.1 Male 24 21.8 25 21.6 7 23.3 56 21.9 Total 110 100 116 100 30 100 256 100 b. Terminated permanent employments 2017

–30 years 30–50 years 50 years– Total number % number % number % number % Female 66 68.0 80 76.9 27 87.1 173 74.6 Male 31 32.0 24 23.1 4 12.9 59 25.4 Total 97 100 104 100 31 100 232 100

405-1 Diversity of governance bodies and employees

Age and gender distribution by employee category

–30 years 30–50 years 50 years– Total number % number % number % number % Management, female 0 0 1 0.1 1 0.1 2 0 Management, male 0 0 4 0.3 2 0.3 6 0 Senior salaried personnel, female 0 0 9 0.6 10 1.4 19 1 Senior salaried personnel, male 0 0 16 1.1 11 1.5 27 1 Office personnel, female 15 1.5 188 12.6 82 11.2 285 9 Office personnel, male 7 0.7 61 4.1 19 2.6 87 3 Employees, female 745 72.3 1,052 70.4 545 74.6 2,342 72 Employees, male 262 25.5 163 10.9 61 8.3 487 15 Total 1,030 31.6 1,494 45.9 731 22.5 3,255 100

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 81

GRI-index

Location, comments and omissions UN Global Compact SDG GRI 100 Universal Standards GRI 102: General disclosures Organizational profile 102-1 Name of the organization 4 102-2 Activities, brands, products, and services 4, 13 102-3 Location of headquarters 4 102-4 Location of operations 4 102-5 Ownership and legal form 4 102-6 Markets served 4 102-7 Scale of the organization 4, Financial Statements 2017 102-8 Information on employees and other workers 4, 55 Principle 6 8 102-9 Supply chain 4, 61 4, Financial Statements 2017, No signifcant 102-10 Significant changes to the organization and its supply chain changes to the organization and its supply chain have occured during the period. 102-11 Precautionary Principle or approach 19 102-12 External initiatives 14 102-13 Membership of associations 14 Strategy 102-14 Statement from senior decision-maker 5 Commitment to UN GC 102-15 Key impacts, risks, and opportunities 9, Financial Statements 2017

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 82

Ethics and integrity 102-16 Values, principles, standards, and norms of behavior 5, 21, Ethical Guidelines Principles 1, 4, 5, 10 16 102-17 Mechanisms for advice and concerns about ethics 23, Ethical Guidelines Principles 1, 4, 5, 10 16 Governance structure 102-18 Governance structure 19, Corporate Governance 2017 Stakeholder engagement 102-40 List of stakeholder groups 15 102-41 Collective bargaining agreements 55 Principle 3 8 102-42 Identifying and selecting stakeholders 14 102-43 Approach to stakeholder engagement 14 102-44 Key topics and concerns raised 15 Reporting practice 102-45 Entities included in the consolidated financial statements 4, Financial Statements 2017 102-46 Defining report content and topic Boundaries 16 102-47 List of material topics 17 102-48 Restatements of information 73 102-49 Changes in reporting 73 102-50 Reporting period 73 102-51 Date of most recent report 73 102-52 Reporting cycle 73 102-53 Contact point for questions regarding the report 73 73, This report has been prepared in accordance 102-54 Claims of reporting in accordance with the GRI Standards with the GRI Standards: Core option. 102-55 GRI content index 81 102-56 External assurance 73, The report has not been assured externally. GRI 103: Management approach 103-1 Explanation of the material topic and its Boundary 16 103-2 The management approach and its components 18 5, 8, 12, 13, 14, 15, 16 103-3 Evaluation of the management approach 18

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 83

GRI 200 Economic standards GRI 201: Economic performance 201-1 Direct economic value generated and distributed 52 5, 7, 8, 9 GRI 205: Anti-corruption 205-2 Communication and training about anti-corruption policies and procedures 18, 22, Ethical Guidelines Principle 10 16 49, amfori BSCI, SA8000, other third party and 205-3 Confirmed incidents of corruption and actions taken Principle 10 16 Tokmanni's audits GRI 206: Anti-competitive behavior 23, There were no legal actions for 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices anti-competitive behavior, anti-trust, and 16 monopoly practices in Tokmanni in 2017 GRI 300 Environmental standards GRI 301: Materials 18, Information unavailable. The reporting is being 301-1 Materials used by weight or volume developed. Tokmanni aims to report the packaging Principles 7, 8 8, 12 materials in the 2018 report. GRI 302: Energy 302-1 Energy consumption within the organization 18, 67, 76 Principles 7, 8, 9 7, 8, 12, 13 302-3 Energy intensity 77 Principle 8 7, 8, 12, 13 GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions 18, 68, 77 Principles 7, 8, 9 3, 12, 13, 14, 15 305-2 Energy indirect (Scope 2) GHG emissions 68, 78 Principles 7, 8, 9 3, 12, 13, 14, 15 305-3 Other indirect (Scope 3) GHG emissions 68, 78 Principles 7, 8, 9 3, 12, 13, 14, 15 305-4 GHG emissions intensity 78 Principle 8 13, 14, 15 305-5 Reduction of GHG emissions 67, 68 Principles 8, 9 13, 14, 15 GRI 306: Effluents and waste 306-2 Waste by type and disposal method 18, 70, 79 Principle 8 3, 6, 12, 13, 14, 15 GRI 308: Supplier environmental assessment 18, 61, amfori BSCI, SA8000, other third party and 308-1 New suppliers that were screened using environmental criteria, % Principle 8 Tokmanni's audits 62, amfori BSCI, SA8000, other third party and 308-2 Negative environmental impacts in the supply chain and actions taken Principle 8 Tokmanni's audits

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 84

GRI 400 Social standards GRI 401: Employment 401-1 New employee hires and employee turnover 18, 55, 80 Principle 6 5, 8 Benefits provided to full-time employees that are not provided to temporary or 401-2 55 8 part-time employees GRI 402: Labor/management relations 402-1 Minimum notice periods regarding operational changes 18, 55 Principle 3 8 GRI 403: Occupational health and safety Workers representation in formal joint management–worker health and safety 403-1 18, 58 8 committees Types of injury and rates of injury, occupational diseases, lost days, and 403-2 59 3, 8 absenteeism, and number of work-related fatalities GRI 404: Training and education Percentage of employees receiving regular performance and career development 404-3 18, 58 Principle 6 5, 8 reviews GRI 405: Diversity and equal opportunity 405-1 Diversity of governance bodies and employees 18, 56, 80, Corporate Governance 2017 Principle 6 5, 8 405-2 Ratio of basic salary and remuneration of women to men 55 Principle 6 5, 8, 10 GRI 406: Non-discrimination 18, One case of discrimination. The case has been 406-1 Incidents of discrimination and corrective actions taken Principle 6 5, 8, 16 finalized. GRI 407: Freedom of association and collective bargaining Operations and suppliers in which the right to freedom of association and collec- 18, 61, 62, amfori BSCI, SA8000, other third party 407-1 Principles 2, 3 8 tive bargaining may be at risk and Tokmanni's audits GRI 408: Child labor 18, 61, 62, amfori BSCI, SA8000, other third party 408-1 Operations and suppliers at significant risk for incidents of child labor Principles 2, 5 8, 16 and Tokmanni's audits GRI 409: Forced or compulsory labor Operations and suppliers at significant risk for incidents of forced or compulsory 18, 61, 62, amfori BSCI, SA8000, other third party 409-1 Principles 2, 4 8 labor and Tokmanni's audits

IN MOTION DIRECTION PHENOMENA SUSTAINABILITY WORK 2017 GRI 85

GRI 412: Human rights assessment Operations that have been subject to human rights reviews or impact 18, 24, amfori BSCI, SA8000, other third party and 412-1 Principle 2 assessments Tokmanni's audits 412-2 Employee training on human rights policies or procedures 22, 49, Ethical Guidelines Principle 1 GRI 414: Supplier social assessment 18, 61, amfori BSCI, SA8000, other third party and 414-1 New suppliers that were screened using social criteria Principle 2 5, 8, 16 Tokmanni's audits 62, amfori BSCI, SA8000, other third party and 414-2 Negative social impacts in the supply chain and actions taken Principle 2 5, 8, 16 Tokmanni's audits GRI 415: Public policy 18, 22, Ethical Guidelines, Tokmanni does not financially support political parties, groups or 415-1 Political contributions Principle 10 16 individual politicians, nor does it make art or other purchases from them. GRI 416: Customer health and safety 416-1 Assessment of the health and safety impacts of product and service categories 18, 64 Incidents of non-compliance concerning the health and safety impacts of 416-2 65 16 products and services GRI 417: Marketing and labelling 417-1 Requirements for product and service information and labeling 18, 64 12, 16 Incidents of non-compliance concerning product and service information and 417-2 65 labeling 417-3 Incidents of non-compliance concerning marketing communications 51 16 GRI 418: Customer privacy Substantiated complaints concerning breaches of customer privacy and losses 418-1 18, 50 16 of customer data

IN MOTION