CORPORATE SUSTAINABILITY REPORT 2019 YRITYSVASTUURAPORTTI 2019 CONTENT

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CONTENT

Corporate sustainability report 2019 People Nokian Tyres in a nutshell ...... 3 One company, one purpose, one global team. . . . 35 Greetings from our CEO ...... 4 Human rights and safety are the base of our people operations ...... 36 This is what we are proud of...... 5 Our people ...... 39 Our way of working ...... 41 Fundamentals Managing sustainability...... 7 Products Our sustainability road map ...... 11 Improving road safety is a priority...... 45 Nokian Tyres’ value chain...... 13 Lower rolling resistance – less CO emissions. . . . 47 Nokian Tyres as a part of society ...... 14 2 Renewable raw materials...... 48

Climate and the environment Supply chain Our goal is to manage the environmental impacts ...... 20 We track the sustainability of our suppliers. . . .. 50 Energy, emissions, water and waste...... 22 Sustainable sourcing of natural rubber...... 51 Risks and opportunities in line with the TCFD. . . . 29 Human rights in the supply chain ...... 52 Microplastics and tire road-wear particles . . . . . 30 Recycling ...... 32 Reporting principles ...... 53 Performance in figures...... 55 GRI + UNGC content index ...... 60 Independent assurance report ...... 64 Corporate sustainability report 2019 Nokian Tyres in a nutshell

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NOKIAN TYRES IN A NUTSHELL

Nokian Tyres develops and manufactures premium tires for people who value safety, sustainability, and innovative products. We offer peace of mind in all conditions and instill our Scandinavian heritage in every tire that we make.

Our company designs tires for passenger At the end of 2019, the Vianor network cars, trucks, and heavy machinery and our included a total of 1,170 service centers in Vianor chain provides tire and car services . 19 countries . The NAD network operated in In 2019, the company’s net sales were 27 countries with 2,182 stores . The N-Tyre approximately EUR 1 6. billion and it employed network covered 133 stores in Russia, some 4,700 people . Nokian Tyres is listed Kazakhstan, and Belarus . on Nasdaq Helsinki . You can read about the Nokian Tyres has three factories: one company’s ownership structure here . in Finland, one in Russia, and one in United States, which was opened in October 2019 A global company and where the commercial production In 2019, Nokian Tyres’ products were sold in commenced in January 2020 . 61 countries . Our primary brand is Nokian Nokian Tyres has its own sales companies Hakkapeliitta . Our growth is supported by the in Finland, Sweden, Norway, Russia, Ukraine, branded distribution network, which includes Kazakhstan, Germany, Switzerland, the Czech the Vianor and Vianor Partner chains, Nokian Republic, Poland, Belarus, Canada, the United Tyres Authorized Dealers (NAD) network, and States, and China . We have obtained quality the N-Tyre network . and environmental certifications for our production facilities in Finland and Russia as well as for the Swedish sales company . Greetings from our CEO

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WE ARE COMMITTED TO REDUCING CLIMATE CHANGE

Sustainability has never been more important than it is now, as climate change increasingly dominates discussions. Nokian Tyres is committed to helping save the world’s winters for tomorrow’s generations: in 2019, we set stricter targets for reducing greenhouse gas emissions.

In 2019, we further strengthened our We are also committed to ensuring the safety commitment to sustainability . ‘Leader in of our partner and supplier employees around sustainability’ was added as a differentiator the world . Auditing our rubber processor in our strategy . We are committed to the plants has been an important way of UN Global Compact, and joined the General improving the labor rights of the workers . Platform for Sustainable Natural Rubber and Being a leader in sustainability means set our own strict targets to combat global admitting when you fall short of goals . This warming as a part of the Science Based year, our VOC (volatile organic compounds) Targets initiative . emissions increased at our Finnish factory . We We were again included in the DJSI World are actively working to resolve this . and the more strictly defined DJSI Europe, In 2019, we assessed the risks and which means we are among the top 10% of opportunities of climate-related changes, the most sustainable listed companies in the aligned with the recommendations of Task world . Force on Climate-related Financial Disclosures . Our work continues, and we are currently Safety is a top priority defining new sustainability goals for beyond Improving safety in the workplace has been 2020 . They will be ambitious, as leadership in one of our key targets for several years . So I sustainability entails . In 2019, we assessed the risks am very proud to state that following a lot of We want to be seen as the sustainability dedication and hard work, we have managed benchmark in the industry – creating added and opportunities of climate- to significantly decrease accidents at the value for people, the economy, and the workplace . Our Lost Time Injury Frequency environment . related changes aligned with the dropped to 4 .3 . In Heavy Tyres, we had no recommendations of TCFD. lost-time injuries for over a year . Hille Korhonen President & CEO This is what we are proud of

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THIS IS WHAT WE ARE PROUD OF

LEADER IN LESS ACCIDENTS LESS CO2 EMISSIONS RECYCLING SUSTAINABILITY Our injury frequency We have reduced 100% of production

rate LTIF dropped CO2 emissions from waste was recycled in We were again 51% from last year. production by 44% Finland. included in the Dow in six years. Jones Sustainability Index, and rose to the Silver Class in the RobecoSAM SUSTAINABLE WE CARE MORE SOLAR ENERGY NATURAL RUBBER Sustainability Our team did We installed solar panels in We have audited 90% over 800 hours of the parking lot of our new Yearbook 2019. of our major rubber community work in US factory. processing partners. the US. Fundamentals

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FUNDAMENTALS Management of sustainability at Nokian Tyres is based on our values of team spirit, entrepreneurship, and inventiveness. Managing sustainability

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MANAGING SUSTAINABILITY

For Nokian Tyres, sustainability means Code of Conduct and the anti-corruption LEADERSHIP OF NOKIAN TYRES’ CORPORATE SUSTAINABLITY sustainable product development, safe guidelines has been required from all our and eco-friendly products, and high personnel, including top management . By standards of quality in everything that we the end of 2019, 93% of our personnel had do . Management of sustainability at Nokian completed it . BOARD OF DIRECTORS Tyres is based on our values of team spirit, entrepreneurship, and inventiveness . Read more about how we manage Sustainability is an essential part of sustainability at Nokian Tyres . GROUP’S MANAGEMENT TEAM our daily work and leadership . Through and follow-up Strategy, targets targets Strategy, sustainable business practices and financial The graph “Sustainability management at success, we can offer security, work and Nokian Tyres” describes the most important well-being for our personnel and contribute standards and policies that guide our work in VP, SUSTAINABILITY & QUALITY to the well-being of local communities, while sustainability (page 10) . also considering investors, customers, and The UN’s 17 Sustainable Development Safety Energy Sustainable other stakeholders . Goals (SDGs) are created to promote Sustainability Environmental management efficiency purchasing prosperity while protecting the environment . workgroup workgroup workgroup workgroup workgroup Read more about our stakeholders . In 2018, we determined seven SDG’s, which are important for Nokian Tyres . Nokian Tyres’ business is guided by These goals provide a tool to examine Department the ethical principles presented in the sustainable business in the long term . We safety board-approved Code of Conduct, which have integrated these SDG’s into the chart workgroups was revised in 2018 . The document describes “Nokian Tyres’ sustainability goals for 2020 the operating culture at Nokian Tyres, and their progress” (page 8) . ALL UNITS AND SUPERVISORS leadership of sustainability of leadership generally accepted courses of action, and plans and day-to-day Action our commitment to working in accordance with the legislation and regulations . The PERSONNEL purpose of the Code of Conduct is to assist people in making the ethically right decisions in their daily work throughout the Nokian Tyres organization, and we expect all to adhere to it . Starting from 2018, taking an eLearning-course on all aspects of the 8

NOKIAN TYRES’ SUSTAINABILITY GOALS FOR 2020 AND THEIR PROGRESS

Area of sustainability Goal Progress in 2019

MANAGING • We will improve our Dow Jones Sustainability Index assessment . • We were again selected to Dow Jones’ DJSI World sustainability index and to SUSTAINABILITY the more strictly defined DJSI Europe index . • We rose to the Silver Class in the RobecoSAM Sustainability Yearbook 2019 .

PRODUCTS • Reducing the rolling resistance of the product range by 7% from 2013 to 2020, • We reached the goal already in 2017 . In 2019, the rolling resistance remained on

thereby creating a decrease of 500 million kg in CO2 emissions from traffic . the level of 2018: 8 3%. lower compared to 2013 (8 .2% in 2018) . • Each new product generation will have a lower rolling resistance compared to • We have launched new products with a lower rolling resistance than the the previous one . previous products .

PEOPLE • Occupational health and safety: A 70% improvement in the LTIF injury • The LTIF injury frequency improved and was 4 .3 in 2019 (13,9 in 2015) . This is a frequency rate tracking from 2015 to 2020 . 69% improvement compared to 2015 . • Everyone gets to go home healthy every day . • No severe accidents occurred in the Group during the year . • In 2019, Nokian Heavy Tyres achieved a milestone in industrial safety: a year with zero occupational accidents leading to absences .

ENVIRONMENT • Energy efficient production: decreasing energy consumption annually by 1% • No reduction in 2019 . Energy consumption in production increased by 0 4%. from 2016 to 2020 . from the previous year . However, the total energy reduction was 10 4%. between 2016 and 2019 . • A 20% reduction in CO2 emissions from production (kg CO2 kg product) from

2013 to 2020 (scope 1 and scope 2) . • The actual reduction of CO2 emissions from production was 44% in 2013-2019 . • Reducing the use of municipal water by 25% compared to the 2013 baseline • In 2019, the consumption of municipal water was approximately 38% lower than (m3/product ton) . in 2013, which means that the target was met and exceeded . • Utilizing 100% of production waste and taking no production waste to landfills; • In Nokia, Finland, 100% of production waste was recycled (100% in 2018) and the Finland 2016, Russia 2020 . recycling rate was 90% in Vsevolozhsk, Russia . (88% in 2018) . • Zero environmental accidents . • No environmental accidents occurred in 2019 . • In 2019, we set our strict Science Based Targets to lower greenhouse gas emissions in line with climate science . The proposal is in the validation process .

ECONOMY • Our financial target is to earn good returns for our shareholders: dividend • In 2019, we paid a divident of EUR 1 .58 per share (EUR 1 .56 in 2018), which was above 50% of net earnings . 73 9%. of our net earnings (2018: 96 7%). .

SUPPLY CHAIN • All of our raw material suppliers will have conducted a sustainability self- • 89 6%. of our raw material suppliers have responded to the sustainability assessment in 2017 . self-assessment survey (86 .8% in 2018) . • We will have audited all of our major rubber processor partners (at least 80% of • We achieved our goal of auditing at least 80% of our major rubber processor our natural rubber purchasing volume) by 2020 . partners . By the end of 2019, we had audited 90% . • At least two thirds of our raw material suppliers will have ISO 14001 certification • In 2019, 73 .3% of our raw material suppliers had ISO 14001 certification (72% in in 2020 . 2018) . 9

Handling issues In 2019, altogether 7 suspected Sustainable natural rubber and varying road conditions increase the As part of our Code of Conduct, we have misconducts were reported on the official Natural rubber is one of the key raw importance of safe tires and drive the demand a reporting procedure that instructs all of channel or raised to the Group’s awareness via materials of tires . In 2017, the EU declared for all-season and all-weather tires . our employees to report any identified or other channels . Three of the cases resulted in natural rubber as one of the critical raw As a leading manufacturer of studded and suspected internal or external misuse or internal disciplinary actions and/or demanded materials in terms of both economic non-studded winter tires, Nokian Tyres has violation . In reporting a suspected misuse or clarifying the local practices . One issue is importance and supply risk . called for a mandatory ice grip marking for violation, the person is advised to contact still under investigation . In three cases, no The increasing global demand for natural winter tires . In northern conditions, ice grip is either his/her supervisor, Internal Audit, Legal misconduct has been identified . rubber causes increased pressure on the the most important property for winter tires . & Compliance, or the HR unit . We strongly relatively limited geographical area in which Until 2019, the markings only included a wet encourage our personnel to report any Materiality assessment rubber trees grow: mainly in Southeast grip rating . As the result of years of work, potential violations of ethical guidelines and In 2018, we conducted a sustainability Asia and some parts of Africa . Nokian Tyres the ice grip marking is now being included laws, so that we can investigate and handle assessment together with our most takes part in initiatives on natural rubber into the EU Tyre Label . The ice grip test is each case . It is also possible to make a report important internal and external stakeholders . sustainability and, in 2019, we joined the currently undergoing standardization at the through the Whistleblow channel . The same They defined their individual material General Platform for Sustainable Natural International Organization for Standardization channel is available to external stakeholders topics, risks, and opportunities pertaining Rubber (GPSNR) . (ISO) . The new label will enter into force in May by email at whistleblow@nokiantyres com. . to Nokian Tyres’ sustainability efforts . After Nokian Tyres is also committed to finding 2021 . Our Whistleblowing process was analyzing the results of the assessment with indicators for better managing human rights updated in December 2018 and additional our sustainability experts, nine topics were in the supply chain . In 2019, our procurement Read more: Improving road safety is a priority . administrative improvements were selected as material . Our aim is to conduct a unit created a classification model for implemented during 2019 . Nokian Tyres’ materiality assessment every three years . Nokian Tyres’ suppliers to help us assess the Climate change: reducing Whistleblowing committee was formed in sustainability in our supply chain . greenhouse gas emissions 2019 . The committee consists of persons Read more about our nine material topics . The most significant environmental impacts responsible for internal audit, legal affairs, Read more: Human rights in the supply chain . during the use of a tire are caused by the and HR matters within the Nokian Tyres The defined material topics relate to three vehicle’s fuel consumption . Lower fuel group . The Chief Audit Executive coordinates themes that are covered in this report: Road safety consumption reduces the greenhouse gases the Whistleblowing process as well as • Sustainable natural rubber Product safety is the most important (GHG) released into the air . Tires with low rolling handling of any compliance breaches found special area of sustainability with regard to resistance can save fuel, thereby reducing • Road safety during the investigations or in other related our company as well as our customers and CO2 emissions . Through determined product processes at the Group level . All material • Climate change: reducing end users . We put constant effort in the development efforts, we have managed to findings and general statistics are reported greenhouse gas emissions development and functional testing of tires’ reduce the rolling resistance of our tires by 8% to The Audit Committee of the Board of safety characteristics . Extreme weather on average compared to the levels of 2013 . Directors . phenomena caused by climate change

Read more: Lower rolling resistance – less CO2 emissions . 10

We calculate the GHG emissions from SUSTAINABILITY MANAGEMENT AT NOKIAN TYRES our operations annually, including emissions from the transport of raw materials to us, Sustainability is a part of our company’s culture, strategy and goals. The management of sustainability is based on our values of team spirit, entrepreneurship and inventiveness. and reduce them systematically as planned . An EU directive requires corporations to Our Sustainability Management is guided by Nokian Tyres Code of Conduct, Whistleblowing and policies such as Environment, Safety carry out energy audits and other energy- and Quality Policy, Group Treasury Policy, Group Credit Policy, Procurement Policy, Disclosure Policy, Data Protection Policy, and efficiency measures . By increasing the equality- and diversity policies based on local regulations. proportion of renewable energy sources, we can reduce our GHG emissions from energy AREAS OF SUSTAINABILITY MANAGEMENT consumption . The biomass boiler plant has significantly reduced our GHG emissions in Nokia, Finland . In 2019, we started installing solar panels at our US factory . Most greenhouse gas emissions connected to tires, however, are outside of our direct influence . Production of tire Products / R&D People Economy Environment Procurement raw materials causes roughly four times We develop and We are committed to Through profitable We are committed to act We are committed to more CO2 emissions than the production manufacture ecofriendly, acting in the manner growth, we enable the in a way that does not sustainable procurement safe and high-quality required by the UN’s further development harm the environment or and further developing of tires . Approximately 90% of a tires’ CO2 emissions are created during its use . In 2019, tires that reach their Guiding Principles for of our operations and people. sustainability in our destination safely Business and Human ensure financial security, supply chain. we have included scope 3 emissions in our even under demanding Rights, and to following work and well-being for sustainability report and our aim is to start conditions. the International our stakeholders. encouraging our raw material suppliers to Labour Organization’s lower their CO2 emissions, too . This would (ILO) Declaration on Fundamental Principles lower CO2 emissions across the entire supply chain . and Rights at Work. We respect human rights and treat all individuals equally.

ESSENTIAL STANDARDS, GROUP POLICIES AND PROCEDURES RELATED TO SUSTAINABILITY

Tire/vehicle safety Policies and procedures Stock exchange ISO 14001, IATF 16949, Procurement policy, regulations, such as related to safety, rules, IFRS, Corporate Environmental Supplier Code of Conduct, United Nations tyre well-being, hiring, Governance, risk Management, Chemical ISO 9001, ISO 14001, UN regulations, various induction, people management, UN Global Safety Management, Global Compact. tire labelling (consumer reviews and competence Compact. Responsible Care information) regulations development, human program, Science Based and standards, such as EU rights and equality (global Targets, UN Global Tyre Labelling regulation, policy during 2020). ISO Compact. chemical regulation, 45001, Travel Policy, Data Nokian Tyres tire Protection Policy, UN testing policy, UN Global Global Compact. Compact.

LOCAL GUIDELINES AND PROCEDURES Our sustainability road map

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SUSTAINABILITY ROAD MAP

We want Nokian Tyres to be seen as a sustainability benchmark in the industry, creating added value for people, the economy, and the environment. In 2015, we made the Nokian Tyres Sustainability Road Map to guide our work on sustainability. The road map defines seven areas of sustainability and their related projects. The projects are led by the Corporate Sustainability working group, which is headed by the Environmental and Responsibility Manager. 4 SUPPLY CHAIN • Risk management • Natural rubber sourcing 2 3 OTHER ENVIRONMENTAL PEOPLE ACTIONS • Occupational Health & Safety • Human rights • Compliance • Development of • Water efficiency sustainability culture • Materials efficiency 1 • US factory ramp-up CLIMATE ACTIONS • Climate risks and adaptation • Product development and R&D • Energy efficiency • Energy mix (renewable and non-renewable) 12

OUR VALUES GUIDE US

Inventiveness Entrepreneurship Team Spirit We always find solutions We take ownership to We succeed together . and opportunities . reach our ambitious goals .

5 PRODUCTS AND SERVICES • Materials • Microplastics • Services 6 7

FINANCE, COMMUNICATION CORPORATE & STAKEHOLDER GOVERNANCE ENGAGEMENT • Governance & Compliance • Reporting • Board agenda • Investor relations • Risk management • Climate-related topics • Value creation for the society • Vianor communication Nokian Tyres’ value chain

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NOKIAN TYRES VALUE CHAIN

A tire is a global product whose value chain extends throughout the world. We bring value to our stakeholders not only as an employer and tax-payers, but as a valued business partner, 1 RAW MATERIALS member of the community, and provider of safety. We have The main raw material groups in tire manufacturing are synthetic rubber, fillers, chemicals, reinforcing materials, and natural rubber . included the ten principles of the UN Global Compact initiative We use more than a hundred different raw material suppliers in the graph to show our impact along the value chain. and they are all committed to our Supplier Code of Conduct . We have conducted sustainability audits in natural rubber processing factories since 2016 . (UNGC 1, 2, 4, 5, 10)

RECYCLING 9 2 TRANSPORTATION OF End-of-life tires can be shredded or granulated to replace RAW MATERIALS rock materials in road construction and civil engineering Most of the raw materials for tires are transported by sea applications, for example . Bus and truck tires can be also to large ports in Europe from where they are shipped to retreaded 2–4 times . Another way is to combust used tires Finland, Russia and now also US . (UNGC 10) for energy . We are exploring possibilities of using recycled carbon black in our products . (UNGC 8, 9) 3 SUBCONTRACTORS We work globally with several subcontractors in various fields, such CONSUMERS 8 as construction, security, cleaning, and The users of our tires are the most important link in our logistics . In 2019, we developed a new value chain . Approximately 90% of a tire’s carbon footprint classification model to evaluate the is generated during its use, which means that our product sustainability risks of our suppliers . All new development efforts for reducing their environmental impacts suppliers are categorized according to the are measured during their use by consumers . (UNGC 10) model beginning 2020 . (UNGC 1, 2, 10)

WHOLESALERS 7 4 GROUP FUNCTIONS Nokian Tyres’ products are sold globally via our We produce tires in three countries: branded distribution network, Vianor and Vianor Finland, Russia and starting from 2020, Partner chains, as well as through car dealerships and US . In addition, we have sales companies tire stores . We offer our partners higher earnings in our key markets . (UNGC 1–10) potential selling our products . (UNGC 10) 5 SOCIETY TRANSPORTATION OF TIRES 6 Our impact is directly seen in our factory locations as We used to deliver tires to large wholesalers, a locally significant job creator and a permanent part nowadays distribution is divided more into of the surrounding community . Our purchases, salaries, smaller product lots and smaller warehouses . and taxes, as well as the dividends to shareholders (UNGC 10) contribute to wellbeing throughout the world . Nokian Tyres as a part of society

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NOKIAN TYRES AS A PART OF SOCIETY

Nokian Tyres’ objective is to create value INCOME TAX EXPENSE OUR AMBITIONS for its various stakeholders, such as shareholders, customers, consumers, Region M€ 2019 Nordic countries: Russia: and our personnel . We want to meet Nordic countries -93* We are the market leader We are the market the stakeholder expectations . Through Russia and Asia 27 .8 in selected segments in the leader in selected sustainable business practices and financial Other Europe -1 .8 Nordic countries segments in Russia success, we can offer security, work and North America -0 .8 well-being for our personnel and contribute Other countries 4 .7 to the well-being of local communities . Central Europe: North America: *Tax expense was 20,7 M€ excluding a tax refund of 113 .7 M€ We increase our sales by 50% We double our sales in North You can read more about our financial in Central Europe in five years America in five years targets and key figures in our Financial operational tax rate is expected to be at the Review 2019 . level of 18% for 2020 . In its decision-making and administration, All major winter Vianor: Nokian Tyres contributes to society and Nokian Tyres adheres to the Finnish tire markets: Targeting +3% EBITDA of communities as a responsible employer Limited Liability Companies Act, the Finnish Our tires are available Nokian Tyres-owned Vianor and through the fair payment of salaries Securities Markets Act and the rules issued on all major winter by the end of 2019 . This and taxes . We directly employ some 4,700 by Nasdaq Helsinki Ltd, Nokian Tyres’ Articles tire markets . target was reached in 2018 . people around the world . When we include of Association, and the Finnish Corporate all of our subcontractors, our role as a job Governance Code 2020 for listed companies . Heavy Tyres: creator becomes even more significant . Our Nokian Tyres complies with the code without We increase the sales of tire factories are significant employers . The exceptions . The code is published at Heavy Tyres by 50% in four years . salaries and taxes that we pay support the www cgfinland. .fi/en/ . structures of society and improve the quality We are included in the OMX GES of life for thousands of people . Sustainability Finland GI index, which The Group’s tax rate in 2019 was -18 7%. provides transparent, objective and FINANCIAL TARGETS 2019–2021 (18 4%. in 2018) . The adjusted tax rate reliable information for making responsible excluding a tax refund of EUR 113 7. million investments . The companies are selected Growing faster than Healthy profitability: Good returns for our concerning the tax disputes from 2007−2011 for the index based on their compliance the market: EBIT at the level of 22% shareholders: was 15% . The tax rate is positively affected with the requirements that focus on the Above 5% CAGR with Dividend above 50% of by tax incentives in Russia, which are valid management of environmental, social, and comparable currencies net earnings until approximately 2022 . The estimated corporate governance (ESG) . For the third consecutive year, we were also included in 15

the prestigious Dow Jones Sustainability Risk management Index . We are also included in the STOXX Nokian Tyres has adopted a risk management GENERATION OF ADDED VALUE Global ESG Leaders and FTSE4Good indices . policy, approved by the Board of Directors, In May 2019, Nokian Tyres signed a which supports the achievement of strategic CUSTOMERS Sales MEUR 1,595 .8 loan agreement linked to sustainability goals and ensures the business continuity . with the Finnish OP Corporate Bank . The The Group’s risk management policy focuses SUPPLIERS margin of the EUR 100 million loan will on managing both the risks pertaining Cost of goods, materials, and services purchased MEUR 691 .6 increase or decrease dependent on Nokian to business opportunities and the risks Tyres meeting three sustainability key affecting the achievement of the Group’s ADDED VALUE performance indicators: goals in the changing operating environment . MEUR 904 .3 At Nokian Tyres, Corporate Risk Management 1 . Commitment to the indicators defined (CRM) also includes the sustainability aspects . according to the Science Based Targets Nokian Tyres detailed the overall business initiative, which has been created to risks and risk management in the Corporate lower greenhouse gas emissions . Governance Statement . For the first time, climate change- 2 .Auditing the human and labor rights related factors were included in the risks . DISTRIBUTION OF ADDED VALUE in natural rubber processing plants . For example, the following risks could EMPLOYEES 3 .Reducing workplace accidents . potentially have an impact on Nokian Tyres’ Wages and salaries MEUR 232 .2 development: PUBLIC SECTOR Concrete targets linked to financing • Nokian Tyres is subject to risks related to Direct taxes MEUR –63 .1 help the financiers to have a meaningful consumer confidence and macroeconomic SHAREHOLDERS discussion on sustainability and support and geopolitical conditions . Political Dividends MEUR 218 .1 the progress of these targets together with uncertainties may cause serious disruption clients . GROSS INVESTMENTS and additional trade barriers and affect Nokian Tyres has a Disclosure Policy MEUR 299 .6 the company’s sales and credit risk . that describes the key processes related to Economic downturns may increase FINANCIAL INSTITUTIONS Nokian Tyres’ external communications as Net Financing Payments MEUR 4 .9 trade customers’ payment problems well as the main principles that Nokian Tyres and Nokian Tyres may need to recognize ECONOMIC VALUE RETAINED follows when communicating with the capital impairment of trade receivables . IN THE COMPANY markets and media . You can read about our MEUR 212 .6 communication principles here . 16

• The tire wholesale and retail landscape monitor the working conditions, it cannot is evolving to meet changing consumer fully control the actions of its suppliers . Tire industry can be subject to needs . New technologies are fueling The violation of laws, regulations or risks caused by climate change, this with increasing digitalization . Failure standards by raw material producers, to adapt to the changes in the sales or their divergence from practices such as changes in consumer tire channel could have an adverse effect on generally accepted as ethical in the Nokian Tyres’ financial performance . European Union or the international preferences, regulatory changes or • Nokian Tyres’ success is dependent on community, could have a material adverse its ability to innovate and develop new effect on Nokian Tyres’ reputation . impact of extreme weather events on products and services that appeal to • Tire industry can be subject to risks caused natural rubber producers. its customers and consumers . Despite by climate change, such as changes in extensive testing of its products, consumer tire preferences, regulatory product quality issues and failure changes or the impact of extreme weather to meet demands of performance events on natural rubber producers . and safety could harm Nokian Tyres’ Nokian Tyres is committed to reducing reputation and have an adverse effect GHG emissions from its operations in • In May 2017, the Finnish Financial A global company on its financial performance . order to combat climate change . Nokian Supervisory Authority filed a request for with local impacts • Nokian Tyres’ production facilities are Tyres calculates the GHG emissions investigation with the National Bureau of Corporate philanthropy is our company’s located in Finland, Russia, and the United from its operations annually and reduces Investigation regarding possible securities way of giving back to our community locally, States . Any unexpected production them systematically . More detailed market offences . In March 2019, the regionally, nationally, and internationally . or delivery breaks at these facilities analysis on Nokian Tyres’ climate change police moved the suspicions of securities Donating our time, products, services, and would have a negative impact on the related risks and opportunities has been markets offences to consideration of money to charities and nonprofits helps company’s business . Interruptions provided in Nokian Tyres’ Non-Financial charges . The suspects have denied us to build trust with our communities, in logistics could have a significant Reporting Statement for 2019 . any involvement in criminal activity . consumers, and other companies as well as impact on peak season sales . • Foreign exchange risk consists of to improve our employee engagement . Nokian Tyres’ risk analysis also pays Our mission is to offer peace of mind in • Significant fluctuations in raw material transaction risk and translation risk . The special attention to corporate social all conditions . Our approach to philanthropy prices may impact margins . Nokian Tyres most significant currency risks arise responsibility risks, the most significant of mirrors our mission, entrepreneurial and sources natural rubber from producers from the Russian ruble, the Swedish which are related to the company’s brand inventive company culture, and sustainable in countries such as Indonesia and and Norwegian krona, and the US and image and product quality . Analyses and way of doing business . We do not support Malaysia . Although Nokian Tyres has Canadian dollar . Approximately 60% projects related to information security, data any governmental, political, or religious policies such as the Supplier Code of of the Group’s sales are generated protection, and customer information are entities . Conduct and established processes to outside of the euro-zone . continuously a special focus area . 17

We offer our resources to projects based Environmental Management, 500 metric on the following three categories: tons of used tires have been transferred to recycling facilities since the launch of the 1. ROAD SAFETY Eco Challenge . The aim of the project was to It is our responsibility to promote safe and increase public awareness of tire disposal, as smooth transportation . the recycling rate in Russia is still low . In 2018, Nokian Tyres set up a donations 2. LOCAL COMMUNITIES committee in Dayton, Tennessee, where We focus on supporting special community the company’s first US factory was being and environment projects in the areas where constructed . The company also has we operate . donations committees in Nashville and in Colchester . In 2019, the Nashville committee 3. INVENTIVENESS & ENTREPRENEURSHIP made a donation to, among other things, For improving the equal opportunities the Tennessee State University’s scholarship for youth, we support entrepreneurial fund, in order to support educational and inventive projects with educational efforts at the Nashville-based school . The institutions of various levels, in line with our committee also contributed funds and company culture, the Hakkapeliitta Spirit . food to United Way’s Give Thanks food drive, which fed families in need for the In 2019, we continued to support the Safety Thanksgiving holiday . on the road education for local school In 2019, the factory’s launch team children in Nokia, Finland, and donated books performed over 800 combined hours of for safety education . We also continued our community service during the first month In 2019, the Dayton factory’s local support for the global FIA Action for of its training program . The company Road Safety in Finland, where it is organized also announced the Nokian Tyres Road launch team performed over 800 by Finnish AKK under the name of “Turvassa to Sustainable Success, a three-pronged combined hours of community service in tiellä” (“Safe on the road”) . community outreach program that supports In the beginning of 2019, we organized local education in Southeast Tennessee, the first month of its training program. an Eco Challenge in Russia and emptied provides scholarships for high-achieving illegal tire dumps . As a result of joint efforts students, and advocates for sustainability in by Nokian Tyres and the Foundation of the region . 18

Partnerships and sponsoring In 2019, Nokian Tyres served for the first Nokian Tyres locally assists and supports time as a major sponsor of the Colorado organizations and events that suit the Classic, a premier women’s cycling race in company culture and brand . We continuously the U .S . The event was celebrating its first work with various organizations in places year as a standalone women’s race after where we employ people . previously hosting a men’s competition as Our long-term partnership with the well . In December, Nokian Tyres sponsored International Orienteering Federation the Birds of Prey FIS Ski World Cup event, continues also in 2020 . Our agreement which took place in Beaver Creek, Colorado . provides us with high visibility during the Nokian Tyres and POWDR Corp ski resorts annual World Orienteering Championships began their collaboration in 2017 and have and World Cup events . Nokian Tyres enjoyed two seasons in partnership together . also actively participated in the World While hosting product launch events at Orienteering Day promoting the sustainable POWDR resorts, the co-operation has also outdoor activity . enabled us to educate resort guests about Nokian Tyres became the title sponsor tire and road safety . for the first ever Finnish IRONMAN race . The In 2019, Nokian Tyres also sponsored Nokian Tyres IRONMAN 70 .3 Finland event the ski marathon TOKSOVO CUP in the took place in Lahti, Finland on June 30, 2018 . Leningrad region in Russia . During the event, This high-energy sport matches our values all visitors were offered a chance to get that promote mobility and an active lifestyle their tire tread depth measured and given while supporting the company’s brand recommendations about the need to change visibility in Finland as well as internationally . tires . Succeeding under exceptionally Nokian Tyres became the title demanding conditions through cleverness and relentlessness is also something found sponsor for the first ever Finnish in the Swamp Soccer World Championships, which takes place annually in Hyrynsalmi, IRONMAN race. The high-energy sport Finland . Nokian Tyres has been the title sponsor of the championships for more than triathlon matches our values that 10 years . promote mobility and an active lifestyle. Climate and the environment

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CLIMATE AND THE ENVIRONMENT We are committed to saving winters for the future generations. Our goal is to manage the environmental impacts

20

OUR GOAL IS TO MANAGE THE ENVIRONMENTAL IMPACTS

Nokian Tyres has uncompromising respect KEY MEASURES IN 2019 for the environmental and safety aspects, as well as for ensuring high quality and a Object Target in 2019 Status in 2019 Target in 2020 good customer experience throughout our STATUTORY Implementation according Implementation according Implemented . operations . We consider the product’s entire REQUIREMENTS to the Nokian Tyres’ to the Nokian Tyres’ life cycle and all of its functions in terms of environmental permits and environmental permits and environmental responsibility . legislation at the factories . legislation at the factories . In 2019, we included climate-change VOC EMISSIONS Compliance with the VOC emissions in relation to production increased approximately Compliance with VOC-directive related risks and possibilities into our VOC-directive at the Nokia by 51% compared to the previous year in Nokia, Finland, and are at the Nokia factory, factory, finding new solutions thus above the level required by the EU VOC Directive . The increase finding new solutions for sustainability report . The work was conducted for achieving target level . is partially due to moving the retreading unit away from Nokia achieving target level . according to the recommendations of the to Sastamala, which changed the balance in the calculations . However, in internal analysis the increase was found to be larger Task Force on Climate-related Financial than should be expected . VOC gathering system will be checked, Disclosures (TCFD) . Nokian Tyres is also corrective actions taken and after that, a new measurement will be organized in March 2020 to confirm the result . committed to setting Science Based Targets in order to further reduce greenhouse gas ENERGY Implementing energy saving Target not achieved . Energy consumption Implementing energy saving emissions . In February 2020, these SBT’s were actions . Decrease in energy increased 0 4%. from the previous year . actions . Decrease in energy usage by 1%/metric ton of usage by 1%/metric ton of sent for approval . production at the factories . production at the factories . Our environmental and quality targets are specified in the company’s Environmental, CLIMATE Setting Science Based Targets were set and sent for validation to the Science Approval of the Science Targets for approval . Based Targets initiative in February 2020 . Based Targets and drawing quality and sustainability strategies, which up an implementation plan . are drawn up for a period of five years . The CHEMICAL SAFETY Two factory audits by Implemented . Two factory audits by chemical Vice President for Quality & Sustainability is chemical specialists, specialists, concentrating on the involved in drawing up the strategy along with concentrating on the use use and storage of chemicals . the Environmental and Responsibility Manager . and storage of chemicals . Working together with environmental experts, MATERIALS Ensuring that no Substances Implemented . Ensuring that no Substances the Environmental and Responsibility Manager DEVELOPMENT of Very High Concern as of Very High Concern as referred to in REACH are referred to in REACH are prepares an annual environmental program contained in the products . contained in the products . for the factories . The program specifies the detailed targets, actions, schedules, and INCREASING ENVIRON- Regular trainings and Implemented . Regular trainings and MENTAL AWARENESS environmental communication . environmental communication . responsible persons for the goals presented AMONG THE PERSONNEL in the strategy . In addition, individual units BUILDING PROJECTS US factory and Spanish testing Implemented . US factory and Spanish testing have their own projects for developing the center: assuring chemical center: assuring chemical operations and processes . and environmental safety . and environmental safety in the production phase . 21

The development of environmental replace harmful chemicals with safer ones . In production, we audit the environmental We document the annual environmental aspects and quality is reviewed monthly at The same procedure will be taken into use aspects and chemical safety through regular impacts of our tire factories and report them the management meetings . at the Vsevolozhsk and Dayton factories in safety walks at individual departments, and to the local authorities as required in each You can read more about managing 2020 . once every six months, through inspection country . We record feedback into a register sustainability in Nokian Tyres from our We require all of our chemicals suppliers rounds by chemicals experts . Audits include and take the necessary corrective actions . In website . to provide us with chemical safety data the audits carried out by our customers 2019, all the received complaints concerned sheets (SDS) in compliance with the valid and partners, such as automotive industry odor . Control of chemicals legislation prior to the purchasing of representatives . An external auditor You can read more about our complaint Control of chemicals aims at ensuring the chemicals . The SDSs of the chemicals that performs an audit once a year in order to mechanism here . safest possible use of chemicals for our we use are registered in a database that all assess our activities’ compliance with the employees, the environment and end users . employees can access . We also organize relevant standards . Legal and regulatory Environmental costs Our company meets all of the requirements regular trainings on chemicals for our compliance is supervised by the authorities In addition to personnel and technology, we of the European (the REACH and CLP employees . and insurance companies annually or as allocate financial resources to environmental regulations) and local legislation concerning required . responsibility . During the fiscal period, chemicals . Audits our environmental management costs We do not use carcinogenic chemicals Regular audits are an important part of Permits and complaint mechanics amounted to approximately EUR 415,000 . or SVHC chemicals (Substances of Very High our efforts related to environment, safety, Our production facilities have valid Other environmental costs amounted to Concern) as per the EU’s REACH regulation in and quality . Their purpose is to ensure environmental permits as well as chemical approximately EUR 1,400,000 . This figure our production . Our products do not contain eco-friendliness in production and a safe handling and storage permits . These permits includes the expenses and investments that any conflict minerals . working environment that meets high and other environmental and safety activities are related to air, soil, and water protection Moreover, all of our products meet the standards of quality . The audits aim to are supervised by several authorities and waste management . EU REACH requirements concerning PAHs verify that our operation complies with the according to the local laws . We immediately (Polycyclic aromatic hydrocarbons) . We also legislation, Environment, Safety, and Quality notify the authorities of any disruptions, intend to ensure that no products sold in the policy, and the instructions in the activity accidents, and major deviations from permit Vianor service centers now or in the future management system . We carry out internal requirements . contain any such chemicals . environmental and quality audits according We actively monitor the trends in No auxiliary chemicals are taken into use to an annual plan, so that each area of the environmental and safety regulations within at the Nokia factory before our chemical activity management system is audited at the EU and in all of the countries where we control team has issued a department- least once every three years . We draw up operate: Finland, Russia, and the US . We also specific usage permit for the substance in the annual plan on the basis of a five-year anticipate the effects of pending regulations question . The purpose of this practice is to plan, taking into account the findings of the on our operations . harmonize the use of chemicals throughout previous audits . the company and, whenever possible, to Energy, emissions, water and waste

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ENERGY, EMISSIONS, WATER AND WASTE

The environmental impacts from tire Our Energy efficiency workgroup Nokia Vsevolozhsk production include odor, dust emissions, continued its activities in 2019 . Unfortunately noise, waste, and solvent emissions (VOC we did not achieve our target of reducing EMISSIONS EMISSIONS emissions) . The most significant of these our yearly energy consumption by 1% per 60 t/a 80 t/a impacts are the VOC emissions and locally production ton . The energy consumption Solvent emissions Solvent emissions VOCs VOCs odor . We constantly strive to reduce these increased 0 4%. from the previous year . Particle emissions 1,4 t/a Particle emissions 13 t/a impacts in the best possible ways: we However, the target of reducing energy improve our operations and find efficiencies, consumption by 3% was already exceeded CO2 190 scope 1+2 kg CO2 530 scope 1+2 kg CO eq/production CO eq/production and correct identified deviations . In in 2018, and the total reduction was 10 4%. 2 2 (t) (t) accordance with our Environmental, Safety, between 2016 and 2018 . Noise <50 dB Noise < 50 dB and Quality Policy, we aim for zero defects in our activities within these areas . INPUT INPUT All the statistics can be found also on the Performance in figures section . Energy 620 TJ Energy 1,500 TJ 3 3 ENERGY INTENSITY Municipal water 67,000 m Municipal water 281,000 m River Nokianvirta 6,552,200 m3 Raw materials 160,800 t GJ/production t ENERGY Raw materials 55,300 t We purchase energy for our factory in 15 Finland from an external supplier . The PRODUCTS PRODUCTS 12 required energy can be divided into Tires and 51,800 t Tires 150,800 t electricity, heating and steam . In 2019, only 9 materials electricity produced with nuclear energy was WASTE WASTE bought for the factory in Nokia, Finland . As 6 the energy sources for heating and steam Landfill 0 t Landfill 1,100 t generation, we use biomass and natural gas . 3 Utilized 5,400 t Utilized 10,000 t The biomass power plant that supplies our 0 Hazardous 190 t Hazardous 1,000 t factory in Finland reduces the use of fossil 2017 2018 2019 Water into the 89,000 m3 Water into the 281,000 m3 fuels in favor of local energy sources in the Nokia Vsevolozhsk sewage sewage region . In Nokia, Finland, about 42% of all Water into the 6,531,000 m3 Storm water 76,300 m3 used energy is produced with renewable Nokianvirta river energy sources . 23

EMISSIONS Market-based scope 2 emissions were DIRECT GREENHOUSE GAS INDIRECT GREENHOUSE GAS EMISSIONS, SCOPE 1 EMISSIONS, SCOPE 3 approximately 24,700 tons CO2 eq . In Nokia, Emissions from energy production the emission calculation is based on the CO2 eq t Emissions t An independent company annually measures suppliers certificate of the actual energy Category CO ekv. the nitrogen and sulfur emissions from sources used . In Russia, emission calculation 80,00080000 2 energy production at our factory in Russia . is based on emission factors of purchased 70,00070000 Purchased good and servces 462,600 Our nitrogen and sulfur emissions are below electricity . 60,00060000 Capital goods n a. the set emission limits . Nokian Tyres wants to contribute to 50,00050000 Fuel and energy related activities 8,900 tackling climate change by setting ambitious 40,00040000 Upstream transportation Carbon dioxide (CO2) science-based climate targets . In May 2018, 30,00030000 and distribution 20,700 We calculate our tire production’s Nokian Tyres joined the Science Based 20,00020000 Waste generated in greenhouse gas (GHG) emissions from raw Targets initiative with the aim of setting 10,00010000 operations 1,700 material purchasing to the disposal of the more precise targets that are assessed 00 Business Travel 1,500 product in compliance with the ISO 14064 and validated by an external organization . 2017 2018 2019 Employee commuting 1,800 standard . Our Russian factory uses its own Nokian Tyres reached its previously set Nokia Vsevolozhsk Leased Assets 500 power station for generating most of the targets to reduce CO emissions well ahead 2 Downstream transportation energy it needs . Therefore, the factory’s of schedule . The new climate goals will be and distrubution 44,300 direct GHG emissions exceed those of the linked to the company’s value chain as well as INDIRECT GREENHOUSE GAS EMISSIONS, SCOPE 2 Processing of sold products n a. factory in Finland . the environmental impacts of products . The (MARKET BASED) Use of sold products 5,415,400 We are seeking a 20% reduction in CO2 company aims to achieve validation for its End-of-life treatment of emissions by 2020, and a 30% reduction Science Based Targets by May 2020 . CO2 eq t sold products 3,200 by 2030 . The point of reference comprises Previously, scope 3 emissions had 35,000 Franchises 60 our 2013 Scope 1 and Scope 2 emissions in been partly included in our CO emission 2 30,000 Investments n a. relation to production . The actual reduction calculations . In 2018, we started screening Total 5,960,660 from 2013 was 44% in 2019, which means downstream emissions and, in 2019, we 25,000 n .a = not applicable that we met and exceeded the target . calculated our scope 3 emissions as required 20,000 In 2019, our location-based scope 2 by the Science Based Targets initiative . Year 15,000 emissions were approximately 46,300 tons 2018 was chosen as the base year . 10,000 CO2 eq . The emission calculation is based on Finland’s and Russian’s average emissions 5,000 intensity of grids . 0 2017 2018 2019 Nokia Vsevolozhsk 24

VOC EMISSIONS Volatile organic compounds, VOCs VOC emissions in relation to production Solvents or volatile organic compounds increased approximately 51% compared to t (VOCs) form our most significant emissions previous year in Nokia, Finland, and are thus 100 into air . As the legislation concerning VOC above the level required by the EU VOC emissions is country-specific, our calculation Directive . The increase is partially due to 80 and reporting of VOC emissions varies by moving the retreading unit away from Nokia 60 country . to Sastamala, which changed the balance in In Finland, we follow the EU VOC the calculations . In internal analysis the level 40 Directive, which stipulates that emissions was still found to be larger than expected, are calculated based on the used solvents . and a new measurement will be organized in 20 We use solvents in our factory only in the March 2020 to confirm the result . 0 production of heavy tires (also known as VOC emissions from the retreading 2017 2018 2019 industrial tires) and retreading materials production in Sastamala, Finland, were 4,45 Nokia Vsevolozhsk for the purpose of improving adhesion . tons, which is 18 .2% of the use of solvents . The VOCs from retreading material No solvents are used in tire manufacture production and the assembly of heavy tires at our Russian factory . According to the local are collected and conveyed to a catalytic legislation, emissions are calculated based incineration plant . In the summer of 2019, on usage of raw materials . VOC emissions are the retreading unit was moved from Nokia, generated due to the raw materials used in Finland to Sastamala and is now operated by the processes . a subcontractor . In Sastamala, we have an incinerator for solvent emissions . However, collecting solvent emissions from the production of heavy tires poses a challenge . In the production of heavy tires, it is not possible to seal the emission sources in such a way that all emissions could be collected and conveyed for incineration . In Finland, we aim to comply with the total emission limit of the EU VOC Directive, which is 25% of the solvents used . In 2019, the total solvent emissions were 49% of used solvents . 25

Our factories have Odor Finland . We have received two complaints According to the surveys that we have of both odor and noise from local residents introduced new odor commissioned the odor emissions are in Sastamala and are working on finding a momentary . The mastication process for solution to the problems . control equipment that softening natural rubber causes discharges of compounds during the precipitation and Particle emissions (dust) represent the best available dehydration phases of rubber milk that Particle emissions are caused by the results in an unpleasant odor in the near processing of powdery chemicals in our technology (BAT). surroundings . We use droplet separators for compound mixing department . The mixing reducing the odors from mastication . equipment is fitted with effective ventilation Our factories have introduced new odor and dust collection devices, and the best control equipment that represent the best separation rates achieved by water cleaners available technology (BAT) . In Vsevolozhsk, exceed 99% . We measure particle emissions the technology covers all the mixing lines, with particle concentration and differential whereas in Nokia the technology is being pressure gauges . In addition, outside implemented gradually . We have also experts carry out regular concentration managed to lower the number of separate measurements . mastication processes, thereby reducing the The measured particle concentrations related odors . have complied with the permit limits at Some odors are generated during the tire both of our factories . The dust that passes curing process . The quantity of the curing through the filter system mainly causes an fumes released in the process is directly aesthetic inconvenience and poses no harm proportional to the amount of cured rubber . to the environment or health . The concentrations of individual substances in the fumes are very small . Noise In 2019, we were contacted once Our production facilities have noise limits concerning odor emissions from our subject to their environmental permits . We Finnish retreading unit . In August 2019, regularly track and measure noise emissions . the operations of our retreading unit were According to the measurements, we are transferred from Nokia to Sastamala, below the noise limits . 26

Water and wastewater WASTE AMOUNT OF WASTES, NOKIA AND VSEVOLOZHSK Our tire manufacturing processes use large Waste is generated both in our actual t quantities of cooling water . In Nokia, we take production and in the support functions . 14,000 cooling water from the nearby Nokianvirta The generated waste can be roughly divided 12,000 river and discharge it back into the river after into three categories: landfill waste or 89 88 90 use . The Russian factory uses municipal tap non-recyclable waste, recyclable waste, and 10,000 water for cooling and then conveys it to a hazardous waste . 8,000 wastewater treatment plant . The cooling We weigh all production waste and 6,000 100 water has no contact with production record the department-specific volumes 100 100 4,000 chemicals at any stage and, therefore, does on a daily basis . For other types of waste, not become contaminated . we prepare reports monthly or annually . 2,000 In Nokia and Vsevolozhsk, we take annual Information on waste disposal methods 0 Nokia Vsevolozhsk Nokia Vsevolozhsk Nokia Vsevolozhsk 2017 2018 2019 samples from the cooling water and from and quantities are provided by the waste the wastewater conveyed to the municipal disposal contractors . We sort the generated Utilization, % treatment plant in order to verify the water waste at our factories in accordance with Landlling, t quality . Both the wastewater conveyed into separate waste management instructions . Utilized wastes, t the municipal sewage system and the cooling Most of the production waste is taken waters has been practically clean . Our goal directly to reutilization . We store hazardous is to reduce the consumption of municipal waste separately at the collection points in water by 25% by 2020 compared to the containers that carry warning labels . 2013 baseline . In 2019, our consumption of municipal water (m3/ton of products) was approximately 38% lower than in 2013 .

Materials Our production uses high-quality raw materials that contribute to the safety and high quality of our tires . We are continuously exploring the utilization of recycled materials but, in general, recycled materials contain impurities that would degrade our products’ safety characteristics . This is why we primarily use virgin raw materials in our production . 27

WASTES BY DISPOSAL METHOD, Recyclable waste Landfill waste NOKIA The reutilization rate of our production Mixed waste that cannot be utilized or waste has been growing for years . Scrap recycled is taken to a landfill . We aim to Reuse 8 .2% tires, or tires that do not meet our high further reduce the amount of landfill waste standards of quality, are taken to recycling by sending the waste that we generate to Recycling 73 .8% directly from production . Non-vulcanized recycling and reutilization . Our goal for 2020 Composting 1 9%. scrap rubber is generated in the production is that no waste generated in production is Recovery as energy 16 1%. stages preceding vulcanization or curing . taken to a landfill . In 2019, 100% of factory Landfill 0% These materials’ reuse applications include waste in Nokia and 90% in Vsevolozhsk was impact padding, conveyor belts, and other sent to reutilization, so we are heading in the rubber products that have less strict right direction . material requirements than tires . Other generated recyclable waste categories include combustible waste, plastics, scrap WASTES BY DISPOSAL METHOD, iron and steel, wood, paper, biodegradable VSEVOLOZHSK waste, cardboard, glass, and electrical and electronic equipment .

Reuse 5 1%. Recycling 76 4%. Composting 0 0%. Scrap tires, or tires that do not Recovery as energy 8 .5% Incineration (mass burn) 0 .2% meet our high standards of Landfill 9 .8% quality, are taken to recycling directly from production. 28

HAZARDOUS WASTES BY DISPOSAL METHOD, HAZARDOUS WASTES BY DISPOSAL METHOD, Hazardous waste NOKIA VSEVOLOZHSK We take all hazardous waste to an authorized processing plant . Roughly a third of this waste is seal oil from compound mixing machines, whose consumption is directly proportional Recycling 17 .5% Recycling 1 .3% to the manufactured rubber compound volumes . All Incineration (mass burn) 0% Incineration (mass burn) 2 4%. hazardous waste generated in our Nokia factory is utilized as Recovery as energy 82 .5% Recovery as energy 25 1%. energy or as raw materials . Landfill 0% Landfill 71 .2% Other locations Our sales companies and Vianor stores always comply with the local regulations . We sort the waste and deliver it for reuse whenever technologically and economically feasible . The most significant environmental impacts of our locations HAZARDOUS WASTES come from waste and energy consumption . In connection kg/t with our group’s energy-efficiency audits, we carried out energy efficiency assessments in one Vianor service center 8 and at Nokian Heavy Tyres during 2019 . Furthermore, our 7 sales companies and Vianor service centers pay attention to 6 the efficiency of product transports . 5 4 3 2 1 0 2017 2018 2019 Nokia Vsevolozhsk Risks and opportunities in line with the TCFD

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RISKS AND OPPORTUNITIES IN LINE WITH THE TCFD

In April 2019, the Quality and Sustainability CLIMATE-CHANGE RELATED RISKS CLIMATE-CHANGE RELATED OPPORTUNITIES Department organized a dedicated cross- functional workshop on climate change- Risk group Sub category Examples of Opportunity Sub category Examples of related business risks and opportunities . concrete risks group concrete opportunities The aim of the workshop was to identify top REGULATORY Emerging regulation Deforestation-related INNOVATION Raw materials Innovations with renewable three climate risks for Nokian Tyres in each regulation, mostly materials of the sub categories: physical, regulatory, concerning natural rubber Recycling Recycling system for tires still market, technology and reputational Further green labelling missing in many countries, risks . This was conducted along the Scandinavian system can be recommendations of Task Force on Climate- Stricter expectations to used as an example Related Financial Disclosures . oversight Climate-friendly tech Lower rolling resistance The workshop was facilitated by PHYSICAL Extreme weather events Disruptions in logistics environmental experts . Energy-efficient production Extreme temperatures Contamination of raw materials PRODUCT Competitive advantage RANGE EU trial labelling for Existing focus on sustainable TECHNOLOGICAL Climate-related demands sustainable tires natural rubber, for instance for new tire technology sustainability audits since 2016

Materials technology Requirements for Industrial (heavy) tires Expertise to provide climate- non-renewable material friendly solutions replacements ENGAGEMENT Consumers MARKET AND Market changes Shift from car ownership REPUTATION to mobility-as-a-service i e. . Policy makers Increased preparedness for changing customer base new regulations or incentives

Reputational risk Deforestation scandals Shareholders/stakeholders (natural rubber) Microplastics and tire road-wear particles

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MICROPLASTICS AND TIRE ROAD-WEAR PARTICLES

Plastic waste in the oceans and other bodies into ditches, sewage systems and, further, of water is an environmental problem that into bodies of water . A study in the vicinity of is currently being intensively researched . the river Seine concluded that some 18% of Some publications have brought up tires, particles ended up in bodies of water and a or particles from tire and road construction further 2% were carried into estuaries (Unice, materials, as one of the largest sources of Weeber, Abramson et al ., Characterizing microplastics ending up in oceans and other export of land-based microplastics to the bodies of water . estuary, 2018) . Tires use rubber rather than plastic . When discussing microplastics ending However, plastic and rubber are both up in the oceans, there are two types of polymers . When looking at micro-polymers sources: primary and secondary . Primary instead of only plastics, wear particles sources release microplastic particles directly from tire and road materials are one of the into the oceans, whereas secondary sources sources of micro-polymers ending up in the release them as a result of the disintegration ocean . of larger plastic pieces . According to a report Many publications include the dust compiled by the EU (European Parliament: created during tires’ contact with the Microplastics: sources, effects and solutions, road – i e. . wear particles from the tire and 2018), the largest group of primary sources road surface – under microplastics . Roughly consists of the small particles released from one half of the particles come from the tire the washing waters of synthetic textiles, such and the other half from the road surface . as fleece clothing . Wear particles from tire Typically, most of these particles are fairly and road materials are the second largest heavy and land on the roadside, compacting primary source . Together, these primary into the soil instead of being carried into a sources form 15–31% of the microplastics in body of water . Some particles, however, are the oceans . Wear particles from tire flushed off the road and its surroundings and road materials are one of the sources of micro-polymers ending up in the ocean. 31

Secondary sources include larger plastic In the project, sediment and water Reliable field and laboratory tests items, such as bottles and fishing nets that samples will be collected from the vicinity are ground into microplastics over time . of roads and water catchment areas during for understanding the nature, These are estimated to form the majority, or different times of the year . The sampling 69–81%, of the sources of microplastics in will be performed by an independent expert . routes of entry, and harmful impacts of the oceans . A method developed by Apila Group Oy Ab will be used for identifying and calculating the particles are required. Additional research is required microplastics originating from tires . Nokian Tyres is actively following the studies One important aspect of reducing the on this topic and participates in external harmful impacts of driving is how we can international studies ordered by ETRMA prevent particle emissions from traffic or and other organizations . Reliable field and control them by improving the infrastructure . laboratory tests for understanding the Such areas for improvement could include nature, routes of entry, and harmful impacts sewer systems, ditch embankments, or water of the particles are required because many purification . of the current estimates are based on mathematical models and calculations . As a founding member of Finnish Tyre Recycling Ltd, Nokian Tyres is also involved in a research project that aims to produce information regarding possible sources of microplastics in the operating environment and locations of tire recycling facilities . The project will be executed by Apila Group Oy, and it will take place between May 1, 2019 and March 31, 2021 . Recycling

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RECYCLING

Tire retreading allows the operator to save The recycling rate of tires in Finland is money, resources, and the environment . A high compared to many other countries . In good tire carcass can easily be retreaded two Finland, nearly 100% of tires are recycled . In times, which cuts tire costs by approximately all of Europe, for example, the figure is 95% . 30% . The retreading unit offers retreading The rest of the tires are taken to landfills . for trucks and buses as well as for heavy The recycling rate of our tires was 77% of our machinery . total sales in 2019 .

CO2 emissions are generated during In Russia, the tire recycling rate is low . tire production as well as while driving . According to the local legislation, in 2019, our Retreading has a significant impact on the tire recycling had to be equivalent to 25% carbon footprint of tires: manufacturing of our total sales in Russia, and we met that a new tire results in approximately 220 kg target . of CO2 emissions, whereas the figure for Another way to utilize recycled tires is retreading is only approximately 40 kg . to combust them for energy, as the heating Furthermore, each retreading operation value of tires is close to that of oil . The use of saves 40 kg of rubber and 70 liters of oil per recycled tires as an energy source has been tire when compared to new tires . growing for years and, today, approximately half of the tires recycled in Europe are used Where do tires end up after use? in waste-to-energy applications . Approximately 3 .3 million metric tons of In 1995, Nokian Tyres and other SOLAR PANELS PROVIDE RENEWABLE used tires are discarded each year in Europe . companies in the tire industry established ENERGY IN DAYTON Luckily for the environment, discarded tires the Finnish Tyre Recycling Ltd in order to are not worthless and can serve various promote the centralized collection and In October 2019, Nokian Tyres celebrated Sustainability was taken into account the opening of its US factory in Dayton, already in the construction phase of the purposes when reused or recycled . Among utilization of tires nationally . As one of the Tennessee . Commercial production of factory . The air conditioning, cooling and other things, the tires can be used in noise original founders, we are involved in their tires began in early 2020 . As part of the water systems all represent the latest barriers along motorways, or as an elastic work of looking for new ways to recycle and sustainability efforts, the factory will be technology and are designed to save base material in horseback riding arenas . In utilize tires . partially powered by solar energy . Solar energy and the environment . This also the last few years, experiments with rubber panels are installed in the parking lot, applies to the modern machinery in the pieces from old tires as water filtering thus providing shield from the sunshine factory . Safety was a top priority in the material have given good results . Used for the vehicles . The solar array will construction phase as well as in starting generate 3 megawatts of electricity to the production and running the daily rubber from tires seems to work well as an be utilized at the facility . process . absorber of heavy metals from water used in mines, for instance . 33

Used tires can be Shredded or granulated to replace rock FROM RAW materials in road construction . Nokian Tyres was the first tire company to eliminate Used in noise barriers along the use of harmful motorways . MATERIALS TO oils in its tire R RES AW Half of the tires recycled TI MA compounds . IFE TE in Europe are used in -L RI OF AL END-OF-LIFE waste-to-energy D- S EN applications . Nearly 100% 30% synthetic rubber TIRES recycled in Finland . 20% natural rubber 35% fillers 95% in the rest The outset of Nokian Tyres’ environmental 8% softeners of Europe 3% vulcanizers protection is the life cycle approach. We 25% in Russia 4% other chemicals take responsibility for the environmental P Lower rolling U E R R impacts of our activities and products resistance of a tire I Accounts for 90% C T H

means less CO F of a tire’s carbon A throughout their life cycle. Most of the 2 S O

I

N emissions . E footprint . Sustainability audits environmental impacts during a tire’s life S G U at natural rubber The effects of cycle are generated during its use. The life processing factories tire and road wear cycle ends, when the tire is crushed and OUR TIRE’S since 2016 particles (TRWP) are LIFE CYCLE used for instance as construction material. being researched .

Haulage % Mainly by boat S L

A truck 22% and partly by I R E T train 22% trucks and train T R A A ship 56% N Factories in M S W P Finland, Russia A O R R T and US . F A O T N IO Production IO N T O accounts for 2% A F T R Haulage % T of the carbon O IR P ES footprint of a tire S truck 5% AN TR train 2% ship 93%

PRODUCTION People

34

PEOPLE We want to empower our people to actively participate and collaborate, to take ownership of their work, and responsibility for everyone’s safety. One company, one purpose, one global team

35

ONE COMPANY, ONE PURPOSE, ONE GLOBAL TEAM

In 2019, we continued changing our 1 . Onboarding . To create a more positive KEY MEASURES IN 2019 way of working towards an energizing employee experience, our onboarding Improved occupational safety: reduced the number of working culture and shared values . process was further developed and One of our strategic differentiators is integrated as part of Workday . It workplace injuries by 51% compared to the 2018 level . high-performing engaged teams . This includes a survey for follow-up . Our LTIF was 4 .3 (8 .3 in 2018) . means empowering our people to actively 2 .Performance Review . Renewed participate and collaborate, to take both global process was implemented Renewed our short and Harmonized global people ownership of their work and responsibility in Workday and trainings were long-term incentive plans for processes for everyone’s safety . organized for conducting reviews . 2019 and onwards 3 . . Annual Salary Renewed people processes Annual salary review review, which follows the performance Our people management system, review, was done globally for the Organized training on A total of 92 .2% of our Workday, enables us to harmonize our first time in Workday . This ensures Code of Conduct: 93% of personnel took part in a people processes promoting the equal transparency and equal treatment . personnel completed the People Review (82 2%. in treatment of employees across our course 2018) organization . In 2019, we renewed several 4 .Competence evaluations . At Vianor, we people processes: utilized Workday in evaluating the technical competences of service center employees . 5 .People planning . People planning is part TARGETS FOR 2020 of the annual planning process . It is based on future competence and position needs Development of a Further development of and was implemented in Workday . global Human Rights value-based leadership 6 .Recruitment . In recruitment, we focused policy, management and culture with trainings and on developing a good candidate experience . processes pulse survey We have renewed the Careers section on our web site . Local process development Strengthening the A total of 95 0%. of our has been the main focus area . energizing and flexible personnel will take part in working culture with pilot the People Review . feedbacks and pulse survey Human rights and safety are the base of our people operations

36

HUMAN RIGHTS AND SAFETY ARE THE BASE OF OUR PEOPLE OPERATIONS

Fairness and respecting human rights We treat our employees fairly and are the principles in all our operations, respectfully . We are committed to acting whether we are dealing with our personnel in the manner required by the UN’s or other stakeholders . We want to ensure Guiding Principles for Business and Human the psychological and physical safety of Rights, and to following the International our employees . We advance an inclusive Labour Organization’s (ILO) Declaration on and equal working culture and empower Fundamental Principles and Rights at Work . our people to be active members in our We have joined the UN’s Global Compact organization . initiative as a supporting member and follow the ethical principles of the initiative . In internal assessments we have recognized We value diversity and do not allow four human rights related risk areas: any form of discrimination, harassment, • Right to health or bullying at the workplace . Everyone is responsible for acting fairly and for creating • Right to privacy an inclusive, inspiring work atmosphere . • Right to life Everyone has the freedom of expression, but • Right to enjoy just and favorable everyone is also responsible for not insulting conditions of work others . Active participation at different levels Our Code of Conduct and the related of the organization and respecting every policies and instructions were updated, and employee’s right of participation are they entered into force in December 2018 . parts of our working culture . Contracts of Since every employee needs to adhere to employment are drawn up in writing and in the Code, we launched an online training for adherence with the local legislation . We also all the personnel . The management team annually conduct annual market analysis on Everyone is responsible for follows the number of people who have salaries . conducted the eLearning course . acting fairly and for creating an inclusive, inspiring work atmosphere. 37

We have identified diverse Safety is a choice we make every day countries . That is why we have invested in Our goal is to promote occupational health communicating our safety thinking globally . safety cultures, meaning and minimize the number of occupational We have trained our own managers to train accidents . Occupational health and safety their own teams in safe working . We have that the ownership of safety varies are an integral part of our daily management found this approach to be more efficient and operations . During 2019, we organized than having employees trained by separate according to operating countries. a safety campaign to globally communicate trainers . Developing a safe working culture is our slogan “Safety is a choice”, meaning that a continuous project . everyone is responsible for safety: adhering Our goal for 2019 was to reduce the to occupational safety guidelines, observing number of workplace injuries by 35% defects and shortcomings, and reporting and compared to the 2018 level . The result was removing hazards . a 51% reduction . During 2019, Nokian Tyres continued updating the risk assessments for We have identified three safety sectors: all workplaces and tasks . Opening of the US • Technology . Technical separation factory required major safety trainings . of people from energy sources, We encourage our employees to make such as electricity or steam safety observations and carry out safety actions with the goal of 2 safety actions • Process . Processes guiding per employee on average – this resulted in us to do the right thing over 14,000 safety observations in 2019 . This • Thinking . Safety in one’s own amounts to 2 9. actions per employee . thinking and actions The data privacy work (GDPR) continued by specifying and further developing the In order to avoid hazardous situations, required documentation and processes, we emphasize preventing occupational for example by updating the Nokian Tyres accidents . We have identified diverse safety privacy statements and further increasing cultures, meaning that the ownership the awareness within the company by of safety varies according to operating organizing workshops to assess where data is being stored and how it is dealt with . 38

A TYPICAL PROBLEM IS TAKING UNNECESSARY RISKS ACCIDENT FREQUENCY* Safety often fails in organizations because people have not been empowered to make the right choices. Our 2015 2016 2017 2018 2019 improvement in safety is the result of a couple of years of hard Lost time incident frequency (LTIF) work. The main priority has been involving all employees: safety belongs Nokian Tyres Finland 22 .3 20 .2 8 .6 5 .3 3.7 to all of us, from machine operators to top-level management. Nokian Tyres Russia 3 .0 3 .0 3 .2 5 .0 2.0 Vianor 23 .9 15 .2 12 .6 15 .0 7.8 A typical problem is taking unnecessary risks without stopping to think. The ratio of all listed companies 13 .9 11 .2 7 .5 8 .3 4.3 “I’ll just fix this quickly, I don’t need to do the safety locking” - and an accident happens. In April, we addressed this issue by launching the Recordable accident frequency (rec. F) campaign ”Safety is a Choice”. By the end of September, the Heavy Tyres Nokian Tyres Finland 24 .1 12 .6 8 .7 8.3 unit had spent one year with zero occupational accidents leading to Nokian Tyres Russia 3 .0 3 .9 5 .3 4.0 absence. All the hard work bore fruit: in 2019, our LTIF dropped to 4.3. Vianor 18 .7 19 .5 21 .6 13.9 The ratio of all listed companies 13 .2 11 .2 11 .6 8.2 I encourage all units to spontaneously reward safety actions. This encourages others to improve, too. Recordable accidents Nokian Tyres Finland 42 24 18 18 Jukka Rikkinen Nokian Tyres Russia 8 11 16 12 Head of Safety Vianor 59 62 72 48 The ratio of all listed companies 109 97 106 82 * Levypyörä (acquired in August 2019) will be included in the safety figures as of 2020 .

ABSENTEEISM BY COMPANY

Nokian Tyres Finland Nokian Tyres Russia Vianor Nordic Nokian NT Tyre OOO OOO Nordic Nokian Tyres (FI) Heavy Tyres Machinery Nokian Shina Nokian Tyres Wheels Vianor Holding Oy Vianor Oy Vianor AB Vianor AS

Sick absences % (total) 2 .6 4 .2 7 .7 3 .7 5 .5 1 .1 0 .8 6 .8 4 .2 5 .6 Our people

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OUR PEOPLE

NUMBER OF WORKFORCE* Our goal is to be a globally attractive Acquisition brought 100 Central and The rest employer that is known for its sustainability, new employees Russia Eastern North of the leadership, and international working In August 2019, Nokian Tyres acquired Nordic and CIS Europe America world Total community with teams around the world . Levypyörä Oy, a Finnish manufacturer of Own employees 2,675 1,554 187 287 27 4,730 We employ some 4,700 people with machine tool rims . The acquisition brought Permanent 2,419 1,483 174 286 16 different skills and backgrounds . us approximately 100 new employees serving 4,378 At the end of 2019, we employed a both installation and aftermarket customers total of 4,730 (-0 .8%) own employees . This in the forestry, agricultural, and earthmoving NEW EMPLOYEE HIRES AND EMPLOYEE TURNOVER* was the second year when the end-year sectors . The integration project started in Central and The rest headcount reporting was based on the August, and key processes in IT, Finance, and Russia Eastern North of the data in our global people management HR have been integrated with Nokian Tyres . Nordic and CIS Europe America world Total system, Workday . We report the number of The work continues in 2020 . As Total number of new 330 109 32 127 1 599 all employees including also those on a long an example, the yearly performance employees leave of absence . management processes and rewarding New employee hires rate 7 .0 2 .3 0 .7 2 .7 0 .0 12.7 The external workforce is mainly practices will be integrated as of (total), % used for ad hoc workforce needs . At January 1, 2020 . Harmonization and Total number of 247 111 27 52 0 437 the end of 2019, we had 43 external improving occupational safety will continue terminated employees (fixed terms not included) workers, most of them working in Finland . throughout 2020 . Turnover rate (total), % 5 .2 2 .4 0 .6 1 .1 0 .0 9.3 During 2019, we employed a total of 1,170 seasonal employees at Vianor . 51 4%. of our employees are covered by collective * Detailed statistics on page 58 . bargaining (52 9%. in 2018) . 40

Temporary EMPLOYEES PER EMPLOYEE CATEGORY* Employee cooperation Central and The rest negotiations in Finland Russia Eastern North of the lay-offs Nordic and CIS Europe America world Total Nokian Tyres conducted employee continued during cooperation negotiations in September Number of individuals within the top 16 1 1 1 0 19 – October 2019, with the aim of adjusting management the remainder of the number of personnel at the Nokia Number of white collar employees 1,087 454 183 123 23 1,870 production facility to meet the currently Number of blue collar employees 1,572 1,099 3 163 4 2,841 the year. known and anticipated demand . The * Detailed statistics on page 59 . negotiations concerned employees in passenger car tire production and maintenance as well as production-related test activities at Nokian Tyres’ factory in Finland . Employee cooperation negotiations concerned a total of 500 people . As a result, 41 employees were made redundant . Of these, 11 employments terminated through retirement and other agreed arrangements . Temporary lay-offs continued during the remainder of the year, and will continue for up to a maximum of 90 days in 2020 . We offer support to the persons who were made redundant through personalized outplacement coaching and training . Our way of working

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OUR WAY OF WORKING

Internal job rotation, on-the-job learning, The survey results show strong overall RESULTS OF THE DRIVE! PERSONNEL SURVEY (ENGAGEMENT INDEX) and training solutions are used to support improvement . The response rate was 87 .5% personnel development . Personal People (2018: 86 .2%) . Cooperation with other 2017 2018 2019 Reviews have a key role in personnel teams has improved significantly across all Nokian Tyres plc 75 .5 75 .5 76.9 development . The People Reviews focus on personnel groups and this also has a clear Passenger Car Tyre Production, Nokia 68 .8 70 .2 71.0 managing performance and personal goals positive correlation with engagement . 80% and development . In 2019, a total of 92 .2% of of employees are willing to recommend our Passenger Car Tyre Production, Dayton 89.3 our personnel took part in a People Review company as an employer, which is higher Nokian Tyres North America 80 .6 74 .8 78.1 (82 .2% in 2018) . than in companies in general . Nokian Tyres Central Europe 84 .5 82 .8 73.8 In 2019, we renewed our employee survey The feeling of fair rewarding has Nokian Tyres Russia & Asia 73 .9 73 .1 74.8 Drive! to make it more agile and focused . improved . However, it is still below the Nokian Heavy Tyres 68 .9 73 .3 72.7 Themes in the survey were energizing the external benchmark driven by production Vianor and Nordics 77 .6 79 .0 81.5 team, collaboration & participation, safety employees in Finland . Global Functions 78 .3 78 .0 77.3 and general leadership and company topics . Striving towards our company values and The results were discussed in renewed objectives has decreased; it is now 83% and PEOPLE REVIEWS (REALIZATION, %) participative workshops and managers were below the benchmark, which leaves room for trained to facilitate team discussions . improvement . Managerial work in our company is 2015 2016 2017 2018 2019 generally at a very good level . The closest Nokian Tyres Group, % 82 .8 86 .0 83 .4 82 .2 92.2 managerial topics, trust in staff and acknowledgement of good work, have strongly improved and are both clearly above the benchmark . In 2020, we continue to develop our operations in accordance with the results . 42

Pay for performance As short-term incentives, there are OUR REWARDING PHILOSOPHY The Global Total Rewards Philosophy and several different plans in use and all Guideline was created by our Management employees are eligible for some of them . At Nokian Tyres, we want to drive, recognize and reward high performance and Team and Board of Directors during 2018, These plans are designed to drive the value based behavior to ensure successful long-term execution of our strategy and it was communicated to all employees company’s strategy and reward for the in 2019 . The objective of the Guideline is to achievement of stretching performance Performance & Transparent & align and harmonize our rewarding practices goals . Plans are based on performance Strategic value based Competitive consistent globally . The Guideline is designed to criteria for the group, business area/unit, ensure the fair and equal treatment of our team and/or individual . One aspect of overall rewarding includes Ensure successful Drive and reward Attract, motivate Strive for employees, as well as to allow countries and execution of Nokian group, business unit, and retain talent by transparency units to provide locally competitive pay to non-monetary compensation, which has a Tyres strategy team and individual offering competitive and consistency attract, retain, and motivate the best talent . clear impact on employee engagement . We performance and total reward in reward It is based on work complexity assessments, are focusing on things such as managerial customer & value packages program design, based behavior implementation and consistent goal setting, and benchmarking work and leadership approach, competence communication of rewarding practices in relevant markets . development, career opportunities, and Along with the Total Rewards Guideline, working culture, as they are important we renewed our short and long-term elements contributing to commitment and incentive plans for 2019 and onwards . As long careers . long-term incentives, we have two share We have made a significant progress plans that are intended to align the goals during the past three years, and we will focus of our shareholders and key personnel on stabilizing our renewed rewarding process . in order to commit key personnel to the For instance, we are planning to start company and its strategic targets, as well auditing our benefits globally in order to as to increase the value of the company . We increase their transparency and consistency . have a profit-sharing plan for the employees not eligible to participate in the share plans . With these plans, all Nokian Tyres employees are rewarded for the company’s overall performance . 43

Developing on the job Energizing workspaces and Our people development philosophy flexible working time supports our employees’ development Flexible working time and dynamic with an internal job rotation, on-the-job workspaces are important in developing an learning, and various development solutions energizing work culture at Nokian Tyres . New following the 70–20–10 principle: 70% of the activity-based workspace pilot was taken into development through learning on the job, use in 2019 . Flexible working time pilots also 20% through learning from others, and 10% continued and were extended during 2019 . through training . Teams received coaching on the new working To bring the company’s strategy closer and leadership culture as well as new working to every employee, we have created an time practices . eLearning solution known as the “Strategy Pilots were followed up with surveys Learning Journey” . It gives an overview and received very positive feedback . The of Nokian Tyres’ strategy and the way we satisfaction in flexible working time was 4 4. operate to achieve our goals . It is followed by in scale 1–5 . Also, 97% felt that workspaces a Team Challenge game, which helps teams support their various needs during their discuss how to achieve our goals . working day (in 2018, the result was 32%) .

Global collaboration Developing our leadership wherever you are An energizing, inclusive and participating We launched our new digital collaboration working culture will demand continuous hub in October and organized multiple leadership development . We coach our trainings for all white collar employees . leaders to enable teams’ success, and We improved information and knowledge organized leadership workshops in 2019: sharing globally and started to organize • Leaders’ training was piloted in three regular Leaders calls & Check Point modules: enabling success, encouraging AMERICAN EMPLOYEES TRAINED IN RUSSIA information events . Leaders calls are online growth, and involving to inspire . info sessions targeted towards Nokian Tyres’ Opening the US factory was a state- The project helped with Nokian Tyres’ • The workshop ”Being a Global Leader” key leaders, arranged quarterly after our of-the-art project for Nokian Tyres aim at building one global team as gathered global function leaders results are published . These information on a global level . 48 US factory team friendships across borders were formed to discuss strategy, collaboration, members were sent to Russia and during the training . It was a valuable events cover key figures and strategy and agile working culture . Finland for intensive trainings organized learning experience on how to accumu- implementation status with focus areas for by the company’s Russian and Finnish late, manage and share knowledge and the forthcoming quarter . Check points are • Global Leading Change concept specialists . best practices . internal information sharing events arranged implementation was continued in quarterly online to discuss results, strategy 2019 with manager workshops . Extensive training project included The Drive! 2019 survey provided proof topics such as diversity management, for the project’s success: engagement and topical matters for all Nokian Tyres • More lean methods together with intercultural communications, and index at US factory was 89 .3, being on a people . digital collaboration tools were safety . A cross-cultural project like this very high level inside the Group . adapted in the Heavy Tyres unit . required preparing all materials in English and arranging courses, mentors, and interpreters . Products

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PRODUCTS A tire needs to save fuel, be produced in an environmentally safe way, reduce road wear and noise – and look good. Improving road safety is a priority

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IMPROVING ROAD SAFETY IS A PRIORITY

Nokian Tyres improves the safety of its Tires are developed by combining the KEY MEASURES IN 2019 products through continuous product best raw materials, components best suited development and testing . We have improved for each purpose, durable, high-performance We reduced the rolling resistance of In 2019, Nordic winter tires that the eco-friendliness of our tires through structural solutions, and the best tread for our tires by on average 8 .3% when deliver high ice grip amounted to lowering their rolling resistance . This reduces the conditions of use . In terms of technical compared to 2013 (8 2%. in 2018) . 53% of our entire winter tire range the fuel consumption of the car and cuts characteristics, a car tire is an extremely (53% in 2018) . down on CO2 emissions . demanding product that needs to ensure Safety is our first priority, both on the that the driver retains control of the vehicle The proportion of tires that are in the Of our summer tire products, 100% road and in production . Nokian Tyres was under all conditions . At the same time, the rolling resistance category A, B, or C were in the wet grip category the first tire company to eliminate the use tire needs to save fuel, be produced was 92% (91% in 2018) . A, B, or C (100% in 2018) . of harmful oils in its tire compounds, and in an environmentally safe way, reduce road the world’s first tire manufacturer to have wear and noise – and look good . fully introduced low PAH content oils in its Our leadership and product development Our premium tires with low rolling resistance and high wet grip correspond to production . are guided by our ethical guidelines, the categories A, B, and C of the EU tyre label . The share of ABC tires was 65 1%. of Environmental, safety and quality policy, and all our tires with EU labeling (66 6%. in 2018) . Roughly speaking, tire development is testing policies . We also comply with several divided into three parts: requirements concerning noise, studs, TARGETS FOR 2020 • material and rubber compound chemicals, testing, and tire markings, among development other things . We are in the process of setting new Of our summer tire • structural development You can read more about managing sustainability targets for the years products, 100% will remain in • tread pattern development . sustainability in product development here . beyond 2020, and will be setting a new the wet grip category target for measuring the development A, B, or C . of the rolling resistance .

We are investigating the We increase bio-oil contents possibility of using recycled in our rubber compounds . carbon black in our tires . 46

Our tires go through strict testing straightaways . The tires are tested during As a tire manufacturer, we must ensure acceleration and braking, in aquaplaning that the tires that we develop, produce, and conditions, and on the handling track . The market are verifiably safe to use, and that handling test is probably the most important they meet the quality requirements and – an experienced driver remains the best expectations of our customers and end users . indicator of tire quality . We ensure the technical quality of our The testing for each product takes into products by testing and studying each account its purpose and market area . Safety raw material used in tire manufacturing is always the number one priority for Nokian and by continuously improving our rubber Tyres . However, depending on the market compounds . We also use process controls area, we also need to take into account the during production for ensuring the quality weather conditions, the driving surface, and of tires . Each finished tire passes through other factors . production quality control, which includes the Product responsibility includes product tire’s force variation, out-of-round and run-on safety, quality, and compliance . It covers measurement as well as a visual inspection . our processes from research and product When starting to ship a new product, development to testing, production, we use our strict quality requirements for and procurement, as well as all of the ensuring compliance . Safety is connected stages and functions of our supply chain . to understanding and managing the risks Our product responsibility also includes related to tires . We track the safety of our product marketing and communication to The Ivalo Testing Center “White Hell” in Finnish Lapland is where tires throughout the product life cycle . During consumers . Nokian Tyres tests its winter tires rigorously on snow, ice, and slush. product development, our tires go through Our group has not had any major product wear and performance testing, for example . recalls in more than 19 years . Furthermore, At Nokian Tyres’ test tracks in Nokia, Ivalo, Nokian Tyres has not been involved in any and soon also Spain, we test tire behavior legal proceedings regarding product liability . on wet and dry asphalt, ice, snow and slush, You can read more of our procedure in case uphills and downhills as well as corners and of fault here . Lower rolling resistance –

less CO2 emissions

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LOWER ROLLING RESISTANCE

– LESS CO2 EMISSIONS

The use of fossil fuels accounts for most The level of lower rolling resistance tires of human-generated carbon emissions . has settled to around a 90% share of the

Carbon dioxide, CO2, is the most significant class A, B, and C tires . The EU tyre label greenhouse gas generated by traffic . When reports fuel efficiency on a scale from A a tire rolls against the road surface, energy to G . At the moment, class C is the most is lost due mainly to heat build-up; this is common fuel economy rating for Nokian referred to as the rolling resistance . The Tyres’ passenger car tires according to the higher the rolling resistance is, the higher the EU tyre label . fuel consumption and CO2 emissions will be . We aim to further develop lowering Fuel consumption during driving is the single the rolling resistance of tires . In 2019, most significant environmental impact over a the Nokian Tyres research team started tire’s service life . working on a concept tire which helps us In 2015, we set a goal for 2020 to reduce better understand how to reduce the rolling the rolling resistance of our product range by resistance . The score of the best A-level 7% on average when compared to the 2013 tires is 6 .5 in the EU tyre label system . With baseline . We reached this goal clearly ahead the new solutions in compounding and of schedule in 2017 . In 2019, we reduced construction design, the rolling resistance of the rolling resistance further, reaching a the concept tire can be lowered close to a reduction of 8 .3% on average compared to score of 5 . 2013 . Tires with low rolling resistance may In the end, eco-friendliness in traffic save more than 0 6. liters of fuel per 100 comes down to a very simple fact: the kilometers, and thus reduce CO2 emissions . driver has all the power to make a positive As the auto industry is going through impact . Approximately 90% of a tire’s carbon a radical realignment, the design of tires footprint is created during its use . A wise A wise choice of tires, the right is also shifting towards the demands of choice of tires, the right tire pressure, and a electric vehicles or EV’s . The lower the rolling careful driving style significantly reduce the tire pressure, and a careful resistance, the further the EV can go without CO2 emissions from driving . recharging the battery . driving style significantly reduce the

CO2 emissions from driving. Renewable raw materials

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RENEWABLE RAW MATERIALS

Alternative raw materials can be roughly are already using bio-oils in our rubber divided into recycled raw materials and compounds and we continue to research bio-based raw materials . The aim of both them and to work on increasing the amount categories is to replace fossil-based raw of bio-oil contents in our rubber compounds . materials and to enable more sustainable tire manufacturing . Guayule - a European source Renewable raw materials are used for of natural rubber? improving tires’ properties and performance Guayule-based natural rubber is one of the by modifying the compound property active initiatives that Nokian Tyres is working balance at varying temperatures . The use of on . We are currently testing the suitability of new raw materials requires a great deal of different guayule varieties to be cultivated in product development efforts and testing central Spain, near our new testing center in in order to find the best combination Santa Cruz de la Zarza . of properties for a tire . In materials As guayule originates from the desert, development, the use of renewable materials it can survive in very dry and poor soil must not alter a tire’s safety characteristics . conditions . It is a plant that does not exploit Fillers are one of the main raw material areas of any other vegetation or food groups in a tire . The amount of fillers is production, on the contrary, it makes use around 30% of the tire, meaning that, in of wastelands . Nokian Tyres is collaborating theory, it should be possible to increase the with local farmers, universities, research bio-based portion of the tire significantly institutes, and companies in Spain . Guayule is by substituting fossil-based fillers with ones an opportunity not only for Nokian Tyres but from renewable sources . There are several also for the local agriculture and industry . bio-filler research programs ongoing, but at Currently, natural rubber that is used rubber, it will shorten the transporting the cultivation . The majority of the rubber this time it is difficult to forecast which one in tires comes from rubber trees (Hevea distance and reduce the CO2 emissions . trees in Asia are clones of varieties highly of these will produce sustainable material Brasiliensis), which are growing in areas Conservation of natural vegetation vulnerable to this disease . solutions for the future . around the equator . This results in long in tropical areas would be another Guayule, however, grows in dry areas, The global research of bioelastomers logistics chains for tire manufacturers environmental benefit . The substantial use and no major plant diseases have thus far is active, but their commercial availability located in the north, which is bad for the of toxic pesticides on rubber plantations been identified as potential problems . It is is still limited in tire industry . Nokian Tyres environment and also costly . If guayule in Southeast Asia is a problem for the also hypoallergenic, unlike the normal Hevea has an active role in this constantly evolving succeeds as an alternative source for natural environment . Also, the South American leaf rubber . This is a relief for many people working research and industrialization process . We blight (Microcyclus Ulei) poses problems for in the rubber industry, logistics, and trade . Supply chain

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SUPPLY CHAIN Sourcing natural rubber in a sustainable way is considered the most critical stage in a tire company’s supply chain. We track the sustainability of our suppliers

50

WE TRACK THE SUSTAINABILITY OF OUR SUPPLIERS

The life cycle of our tires begins in a tropical management system in place . In addition, we KEY MEASURES IN 2019 forest, probably on a small farm in Malaysia prefer suppliers with an ISO 14001-certified environmental management system . or Indonesia, filled with natural rubber trees . We exceeded our target 89 6%. of our raw material Natural rubber is a renewable resource We track the sustainability of our raw for sustainability audits . suppliers have responded to and one of the main ingredients of tires . material suppliers by conducting third-party By the end of 2019, we the sustainability self-asses- Sourcing natural rubber in a sustainable way sustainability audits, and by requiring a had audited all our major ment survey . is considered to be the most critical stage in supplier sustainability self-assessment from rubber processors, covering a tire company’s supply chain . all our new suppliers that are critical in terms 90% of our natural rubber Our supply chain consists of of sustainability . approximately 2,000 suppliers, including Furthermore, our purchasing personnel purchasing volume . slightly more than 100 raw material suppliers . conduct smaller-scale supplier visits that Most of our supply chain suppliers are include an assessment of the working 73 .3% of our raw material We created a classification located around our factory areas (Nokia, conditions . suppliers have ISO 14001 model that helps us to Finland, Vsevolozhsk, Russia, and Dayton, certification . recognize suppliers that New tool for assessing supplier US) and raw material suppliers are located are critical in terms of globally . The monetary value of the In 2019, Nokian Tyres’ procurement team sustainability . payments made to suppliers in our supply developed a new classification model for chain is approximately MEUR 600–700 . assessing our suppliers globally, excluding The work of Nokian Tyres’ procurement the suppliers of sales companies and our unit is guided by the Group’s procurement own Vianor chain . The new model was TARGETS FOR 2020 policy, which establishes the general implemented in the fall of 2019 and it principles of sustainable procurement . As includes all the new suppliers . During 2020, a participant in the UN Global Compact the assessment model will be expanded The new classification We will extend our We will create a new initiative, we follow the UNGC’s ethical to also include existing suppliers . The model will be expanded sustainability audits to policy for sustainable principles as well as our own . We require that assessment has four different categories: to include existing include other raw material natural rubber all our raw material suppliers to adhere to quality, sustainability, business/strategic suppliers as well . categories of the supply procurement . our Supplier Code of Conduct, which expects criticality and safety at work . chain besides natural the suppliers to commit to human rights and All new critical suppliers must respond rubber procurement . prohibits discrimination and the use of child to the Sustainability Self-Assessment labor or forced labor, among other things . Questionnaire, and a risk mitigation plan is All raw material suppliers must, at a created according to the assessment result . minimum, have an ISO 9001-certified quality Sustainable sourcing of natural rubber

51

SUSTAINABLE SOURCING OF NATURAL RUBBER

Natural rubber is one of the main ingredients purchases rubber, which is being processed for tires . It is the livelihood of hundreds of in the plants our company has approved . thousands of families living in countries Nokian Tyres considers cooperation with where the local legislation and working the industry and other stakeholders to be conditions have not been fully developed . vital in improving these conditions . The tire Natural rubber is cultivated in forests, industry has made a joint effort to move often on small farms . Most of the natural towards sustainable natural rubber, also as rubber that we use comes from Malaysia and concerns labor rights . In 2019, Nokian Tyres Indonesia . joined the Global Platform for Sustainable Traceability remains problematic as Natural Rubber (GPSNR), which is a platform the supply chain is fragmented . There are established by WWF, several other nonprofit approximately 3–6 million farmers of natural organizations, rubber traders and processors, rubber who collect the milky latex or cup and large tire manufacturers . lumps and sell them to local dealers . They GPSNR strives to increase the supply and collect them from several farmers and then uptake of sustainable natural rubber in the sell the latex forward to processing plants . global marketplace . Members of the platform More than 85% of the world’s natural rubber will develop sustainable natural rubber is produced on farms smaller than two standards, mechanisms and guidance on the hectares in size whose daily output may be implementation, monitoring, and verification just a couple of kilograms of latex . of sustainable natural rubber commitments Processing plants purify the natural from companies . rubber, process it as specified, pack it for further use, and sell it to the global traders Teppo Huovila, VP, Quality & Sustainability, presents the batches of natural rubber or customers . Nokian Tyres exclusively imported to Nokian Tyres’ factories mainly from Malaysia and Indonesia. Nokian Tyres has conducted sustainability audits to the processing plants since 2016. Human rights in the supply chain

52

HUMAN RIGHTS IN THE SUPPLY CHAIN

what they sign . After the audit results NOKIAN TYRES HAS RECOGNIZED The human rights assessment has been same in most of the places: the recruitment TEN HUMAN RIGHTS-RELATED from Nokian Tyres, most suppliers have done to all 32 human rights listed in the of foreign workers . Foreign workers are RISKS IN THE SUPPLY CHAIN: introduced several different language UN’s document “Relationship between recruited through a recruitment agency versions of employment contracts . This businesses and human rights”, which was network, and the amount of recruitment shows that many things can be improved Right to privacy used as a normative . The rights to health, costs to the employee can be significant: up once an external party reviews the right to privacy and right to family life have to a year’s salary . As the agencies are often processes and indicates improvements . Right to a family life been defined as being exposed to the most approved by local governments, it is difficult evident risks . to improve the process . However, we require In order to improve supply chain our suppliers to improve also on this issue . In December 2019, we conducted two Right to health sustainability, we started a partnership with The suppliers keep requesting support from reaudits . The results showed improvements an external auditor already in 2016 . Our the local officials, but the progress is slow . in the following areas: Right to life separate sustainability auditing process has Another common problem is the • One company had organized training been developed together with a consulting language and contents of the employment Right not to be subjected to on discrimination, harassment, fair company, and it is based on Nokian Tyres’ contracts . The contract is not necessarily treatment and first aid . Previously slavery, servitude or forced Supplier Code of Conduct and principles that available in the employees’ mother tongue, none of the employees had received labor comply with the UN Global Compact goals . or the translated content differs from the training on any of the topics . We have set a goal to audit all of our original . • The other company had implemented Right to freedom of major rubber processor partners by 2020, hazardous waste management system and movement comprising at least 80% of our natural During 2019, we organized seven since 2018 organizes an environmental rubber purchasing volume . The audits enable sustainability audits . The most common performance monitoring twice a year . Right of protection of the the processing companies to improve their problems were: • The company had also installed a box family and the right to marry occupational safety and develop their • Supplier recruits foreign workers for feedback . Letters from 3 employees operations further . through recruitment agency network were received and reviewed by the Right to enjoy just and All the audits performed between 2016 and the amount of recruitment costs management . In 2019, management favorable conditions of work and the end of 2019 cover 90% of our natural is approximately 8 months to 1-year organized training on how to use rubber purchasing volume, which means we salary . Even though the suppliers use have exceeded our target . One supplier was the box to increase awareness . Right to an adequate local government approved recruitment banned because of non-compliance with standard of living agencies, the recruitment costs for Nokian Tyres’ requirements . the employee remain very high . After the audits, we always initiate • The employee contracts are only in local Right to education corrective programs to address the or English language . Especially immigrant shortcomings identified in the process . workers do not always understand The most common problem remains the Reporting principles

53

REPORTING PRINCIPLES

Stakeholder inclusiveness This report has been prepared in In the 2019 report, our material In order to achieve the goals outlined in accordance with the GRI Standards 2016: Nokian Tyres’ long-term business strategy Core option . This report is also Nokian topics have been identified and to determine our sustainability goals, Tyres’ Communication on Progress (CoP) we have conducted surveys among our five report, which complies with the UN Global to represent three current themes: stakeholder groups: customers, employees, Compact (UNGC) requirements . The ten subcontractors and suppliers, authorities, principles of the UNGC are bridged in the GRI sustainable natural rubber, road and the media . In 2018, Nokian Tyres Index and our value chain . The Sustainable conducted a sustainability survey, where the Development Goals (SDG’s) are combined safety, and climate change: reducing most important stakeholder groups defined with the Nokian Tyres sustainability goals for greenhouse gas emissions. their individual material topics and risks 2020 and their progress in 2019 . and opportunities in terms of Nokian Tyres’ sustainability . The survey was conducted Materiality in eight countries, online and as personal As a result of the sustainability survey in interviews . The surveys are usually conducted 2018, nine material topics were formed . In every three years . the 2019 report, these topics have been identified to represent three current themes: Sustainability context sustainable natural rubber, road safety, ”Leader in sustainability” is one of the six and climate change: reducing greenhouse differentiators in the Nokian Tyres’ strategy . gas emissions . As a result of our on-going When developing the functions that affect materiality analysis and an internal climate- our social, economic and environmental change workshop, this report covers responsibility, we want to go beyond the topics raised by peers, stakeholders, and minimum requirements of the legislation and competitors; these include items such as applicable standards . microplastics and the effects of climate change . 54

Completeness We report our impacts on a year-to-year The majority of the disclosures for Clarity and timeliness basis, but we also address impacts in the economic responsibility are based on our We publish our Corporate Sustainability Our nine material topics are: long term: we conducted a climate change company’s financial statements, which are Report annually on our website . In 2018, the Responsibility in material choices and workshop aligned with the recommendations prepared and presented in accordance stakeholders raised a proposition to simplify 1 promoting the circular economy of TCFD and included the results in this with the IFRS standards . The scope of GRI and compact the Corporate Sustainability report . environmental responsibility is divided Report . This has been our guideline for the Continuous development of between our factories in Finland and Russia . 2019 report, and we have clarified the topics 2 the road safety of tires Accuracy The disclosures of the new factory in Dayton, material to Nokian Tyres’ sustainability under Fighting global warming: reducing The majority of the reported environmental Tennessee, US, will be presented in the next the current themes and edited the content 3 the rolling resistance of tires data is based on measurements, with report, as the production begins in 2020 . The accordingly . the exception of VOC and CO emissions . scope of GRI social disclosures is Group-wide, Reducing greenhouse gas 2 VOC emissions are a combination of excluding the subcontractors . Comparability 4 emissions from all operations measurements provided by an external In the social responsibility disclosures, the As the disclosures for our Group’s – Use of renewable energy and consultancy and our calculations . CO figures for the Nokian Tyres’ equity-owned environmental responsibility are mainly improving energy efficiency 2 emissions calculations are based on energy Vianor chain are combined to cover all of the compiled and calculated according to the Human rights in the consumption measurements or estimations, entities in the chain, but the disclosures are same methods as in our earlier reports, this 5 supply chain and the calculations are made using general calculated according to the same principles year’s results are comparable to the previous emission factors . In 2019, the emission as in the previous reports . The reporting years’ . Nokian Tyres is currently setting up 6 Risk management and calculation of the location-based scope 2 covers all the functions of Nokian Tyres plc, new sustainability targets for the years good governance emission calculation is based on Finland’s excluding the environmental responsibility beyond 2020, which may affect the way we Responsible and ethical and Russian’s average emissions intensity of disclosures and supply chain disclosures of report on certain disclosures and topics in 7 purchasing policies grids . In Nokia, the market-based emission the Vianor service centers . the future . calculation is based on the suppliers 8 High level of safety and certificate of the actual energy sources Balance Reliability health at work used . In Russia, emission calculation is based In the report, we consistently follow The contents of the Corporate Sustainability Profitable growth and indirect on emission factors of purchased electricity . previously set indicators, be they favorable or Report for the 2019 reporting period have 9 economic impacts . Information regarding waste disposal unfavorable . The emphasis has been put on been verified by an independent third party . methods and quantities is provided by topics that are material to our business . The assurance was commissioned by the the waste disposal contactors . Social executive management of Nokian Tyres plc . data concerning our employees and top management is compiled via our HR system Workday . Safety data is compiled via our OHS system Keto . Performance in figures

55

PERFORMANCE IN FIGURES

CLIMATE AND ENVIRONMENT

2017 2018 2019 2017 2018 2019 Emissions into the air NOx and SOx emissions, Vsevolozhsk, t NOx 70 9. 66 6. Direct greenhouse gas emissions, Scope 1, CO2 eq t 42.1 Nokia 612 610 467 SOx 0 .8 0 .8 1.8 Vsevolozhsk 71,522 71,646 64,475 VOC emissions, t Indirect greenhouse gas emissions (market based), Nokia 53 .7 41 .0 60.5 Scope 2, CO eq t 2 Vsevolozhsk 63 .1 62 .2 80.4 Nokia 33,269 33,653 9,345 Energy use Vsevolozhsk 12,177 13,895 15,386 Energy consumption within the organisation, TJ Indirect greenhouse gas emissions (location based), Scope 2, CO eq t 2 Nokia 613 643 624 Nokia 18,144 19,157 12,026 Vsevolozhsk 1,563 1,605 1,510 Vsevolozhsk 27,569 30,863 34,280 Energy intensity, GJ/production t Others (own Vianor, warehouses, sales companies) 11,297 Nokia 11 8. 12 1. 12.1 Greenhouse gas emissions intensity ratio Scope 1 + Scope 2/production Vsevolozhsk 10 2. 10 0. 10.0 tonne, CO eq t/t 2 Water Nokia 0 .66 0 .63 0.19 Cooling water, Nokia, 1,000 m3 Vsevolozhsk 0 .55 0 .53 0.53 Withdrawal, Nokianvirta river 7,367 7,588 6,552 Indirect greenhouse gas emissions, Scope 3, t CO ekv. 2 Discharge, Nokianvirta river 7,271 7,548 6,530 Purchased good and servces 462,600 Total water withdrawal, municipal water, 1,000 m3 Capital goods n.a Nokia 62 8. 61 0. 67.4 Fuel and energy related activities 8,900 Vsevolozhsk 276 .5 303 .2 287.7 Upstream transportation and distribution 20,700 Water discharge, sewage, m3 Waste generated in operations 1,700 Nokia 158,866 100,921 89,020 Business Travel 1,500 Vsevolozhsk 242,678 272,089 280,998 Employee commuting 1,800 Raw materials Leased Assets 500 Renewable raw materials, kt Downstream transportation and distrubution 44,300 Nokia 11 1. 12 2. 12.0 Use of sold products 5,415,400 Vsevolozhsk 38 1. 38 8. 39.4 End-of-life treatment of sold products 3,200 Non-renewable raw materials, kt Franchises 60 Nokia 41 8. 44 9. 43.2 Investments n.a Vsevolozhsk 125 .2 131 .8 121.4 Total 5,960,660 Percentage of materials used that are recycled input materials, % n .a = not applicable Nokia 6 .8 6 .7 5.6 Vsevolozhsk 8 .0 8 .5 8.7 56

PERFORMANCE IN FIGURES

2017 2018 2019 2017 2018 2019 Waste Total waste by disposal method, Nokia + Vsevolozhsk* Hazardous wastes, kg/t Reuse Nokia 4 .2 3 .3 3.7 t 1,611 1,330 1,003 Vsevolozhsk 7 .8 7 .4 6.3 % 10 .8 8 .4 6.1 Hazardous wastes by disposal method, Nokia, % Recycling Recycling 21 .5 17 .5 17.5 t 10,884 11,898 12,435 Incineration (mass burn) 0 0 0 % 73 .1 75 .4 75.5 Recovery as energy 78 .5 82 .5 82.5 Composting Landfill 0 0 0 t 42 131 103 Hazardous wastes by disposal method, Vsevolozhsk, % % 0 .3 0 .8 0.6 Recycling 1 .2 2 .2 1.3 Recovery as energy Incineration (mass burn) 26 .4 10 .3 2.4 t 862 1,162 1,812 Recovery as energy 29 31 .1 25.1 % 5 .8 7 .4 11 Landfill 43 .4 56 .2 71.2 Incineration (mass burn) Wastes by disposal method, Nokia, % t 317 122 23 Reuse 8 .4 7 .9 8.2 % 2 .1 0 .8 0.1 Recycling 79 .1 74 .8 73.8 Landfill Composting 0 .9 2 .5 1.9 t 1,180 1,132 1,085 Recovery as energy 11 .6 14 .8 16.1 % 7 .9 7 .2 6.6 Landfill 0 0 0 * Information of waste disposal methods are provided by the waste disposal contractors . Wastes by disposal method, Vsevolozhsk, % Reuse 11 .8 8 .7 5.1 Recycling 70 .5 75 .7 76.4 Composting 0 0 0.0 Recovery as energy 3 .3 3 .5 8.5 Incineration (mass burn) 3 1 .2 0.2 Landfill 11 .3 10 .9 9.8 57

PERFORMANCE IN FIGURES

PEOPLE

RESULT OF DRIVE! PERSONNEL SURVEY (ENGAGEMENT INDEX) ACCIDENT FREQUENCY*

2017 2018 2019 2015 2016 2017 2018 2019 Nokian Tyres plc 75 .5 75 .5 76.9 Lost time incident frequency (LTIF) Passenger Car Tyre Production, Nokia 68 .8 70 .2 71.0 Nokian Tyres Finland 22 .3 20 .2 8 .6 5 .3 3.7 Passenger Car Tyre Production, Dayton 89.3 Nokian Tyres Russia 3 .0 3 .0 3 .2 5 .0 2.0 Nokian Tyres North America 80 .6 74 .8 78.1 Vianor 23 .9 15 .2 12 .6 15 .0 7.8 The ratio of all listed companies 13 .9 11 .2 7 .5 8 .3 Nokian Tyres Central Europe 84 .5 82 .8 73.8 4.3 Nokian Tyres Russia & Asia 73 .9 73 .1 74.8 Recordable accident frequency (rec. F) Nokian Heavy Tyres 68 .9 73 .3 72.7 Nokian Tyres Finland 24 .1 12 .6 8 .7 8.3 Vianor and Nordics 77 .6 79 .0 81.5 Nokian Tyres Russia 3 .0 3 .9 5 .3 4.0 Global Functions 78 .3 78 .0 77.3 Vianor 18 .7 19 .5 21 .6 13.9 The ratio of all listed companies 13 .2 11 .2 11 .6 8.2 PEOPLE REVIEWS (REALIZATION, %) Recordable accidents Nokian Tyres Finland 42 24 18 18 2015 2016 2017 2018 2019 Nokian Tyres Russia 8 11 16 12 Nokian Tyres Group, % 82 8. 86 .0 83 .4 82 .2 92.2 Vianor 59 62 72 48 The ratio of all listed companies 109 97 106 82

* Levypyörä (acquired in August 2019) will be included in the safety figures as of 2020 .

ABSENTEEISM BY COMPANY

Nokian Tyres Finland Nokian Tyres Russia Vianor Nordic Nokian NT Tyre OOO OOO Nordic Nokian Tyres (FI) Heavy Tyres Machinery Nokian Shina Nokian Tyres Wheels Vianor Holding Oy Vianor Oy Vianor AB Vianor AS

Sick absences % (total) 2 .6 4 .2 7 .7 3 .7 5 .5 1 .1 0 .8 6 .8 4 .2 5 .6 58

PERFORMANCE IN FIGURES

TOTAL NUMBER AND RATE OF NEW EMPLOYEE HIRES AND EMPLOYEE TOTAL WORKFORCE BY EMPLOYMENT TYPE, EMPLOYMENT TURNOVER BY GENDER, AGE GROUP, AND REGION CONTRACT AND REGION, BROKEN DOWN BY GENDER

Central and Central Russia Eastern North The rest of and Nordic and CIS Europe America the world Total Russia Eastern North The rest of Nordic and CIS Europe America the world Total Total number of new employees 330 109 32 127 1 599 Number of women 51 37 20 24 0 132 Total workforce on 31.12.2019 2,705 1,561 187 293 27 4,773 Number of men 279 72 12 103 1 467 Women 408 226 71 45 8 758 Number of under 30 years old 85 59 6 38 0 188 Men 2,297 1,335 116 248 19 4,015 Number of 30–50 years old 191 49 23 66 1 330 Number of over 50 years old 54 1 3 23 0 81 Total number of own employees 2,675 1,554 187 287 27 4,730 New employee hires rate (Total), % 7.0 2.3 0.7 2.7 0.0 12.7 Women 408 219 71 42 8 748 Percentage of women, % 1 1. 0 .8 0 .4 0 .5 0 .0 2.8 Men 2,267 1,335 116 245 19 3,982 Percentage of men, % 5 9. 1 .5 0 .3 2 .2 0 .0 9.9 Percentage of under 30 years old, % 1 8. 1 .3 0 .1 0 .8 0 .0 4.0 Number of supervised workers 30 7 0 6 0 43 Percentage of 30–50 years old, % 4 1. 1 .0 0 .5 1 .4 0 .0 7.0 Women 0 7 0 3 0 10 Percentage of over 50 years old, % 1 1. 0 .0 0 .1 0 .5 0 .0 1.7 Men 30 0 0 3 0 33

Central Total number of seasonal employments and in Vianor during 2019 1,170 0 0 0 0 1,170 Russia Eastern North The rest of Nordic and CIS Europe America the world Total Permanent 2,419 1,483 174 286 16 4,378 Total number of terminated employees Full-time, % 97 .9 100 .0 95 .1 97 .9 100 .0 98.5 (fixed terms not included) 247 111 27 52 0 437 Part-time, % 2 .1 0 .0 4 .9 2 .1 0 .0 1.5 Number of women 36 30 14 9 0 89 Women, % 15 .4 12 .2 34 .6 14 .4 25 .0 15.2 Number of men 211 81 13 43 0 348 Men, % 84 .6 87 .8 65 .4 85 .6 75 .0 84.2 Number of under 30 years old 54 50 4 20 0 128 Number of 30–50 years old 146 58 20 23 0 247 Number of over 50 years old 49 3 3 11 0 66 Turnover rate (Total), % 5.2 2.4 0.6 1.1 0.0 9.3 Percentage of women, % 0 8. 0 .6 0 .3 0 .2 0 .0 1.9 Percentage of men, % 4 5. 1 .7 0 .3 0 .9 0 .0 7.4 Percentage of under 30 years old, % 1 1. 1 .1 0 .1 0 .4 0 .0 2.7 Percentage of 30–50 years old, % 3 1. 1 .2 0 .4 0 .5 0 .0 5.2 Percentage of over 50 years old, % 1 0. 0 .1 0 .1 0 .2 0 .0 1.4 59

PERFORMANCE IN FIGURES

COMPOSITION OF GOVERNANCE BODIES AND BREAKDOWN OF EMPLOYEES PER EMPLOYEE CATEGORY ACCORDING TO GENDER AND AGE GROUP Central and Russia Eastern North The rest of Nordic and CIS Europe America the world Total Number of individuals within the top Composition of the Board 8 management 16 1 1 1 0 19 Number of women 2 Number of women 6 0 0 0 0 6 Number of men 6 Number of men 10 1 1 1 0 13 Percentage of women, % 25 .0 Percentage of women, % 37 5. 0 .0 0 .0 0 .0 0 .0 31.6 Percentage of men, % 75 .0 Percentage of men, % 62 5. 100 .0 100 .0 100 .0 0 .0 68.4 Number of under 30 years old 0 Number of under 30 years old 0 0 0 0 0 0 Number of 30–50 years old 2 Number of 30–50 years old 7 1 0 0 0 8 Number of over 50 years old 6 Number of over 50 years old 9 0 1 1 0 11 Percentage of under 30 years old, % 0 .0 Percentage of under 30 years old, % 0 0. 0 .0 0 .0 0 .0 0 .0 0.0 Percentage of 30–50 years old, % 25 .0 Percentage of 30–50 years old, % 43 8. 100 .0 0 .0 0 .0 0 .0 42.1 Percentage of over 50 years old, % 75 .0 Percentage of over 50 years old, % 56 2. 0 .0 100 .0 100 .0 0 .0 57.9 Number of white collars 1,087 454 183 123 23 1,870 Number of women 256 144 68 27 6 501 Number of men 831 310 115 96 17 1,369 PRODUCTS Percentage of women, % 23 6. 31 7. 37 .2 22 .0 26 .0 26.8 Percentage of men, % 76 4. 68 3. 62 .8 78 .0 74 .0 73.2 LOWERING OF ROLLING RESISTANCE COMPARED TO 2013, %, IN AVERAGE Number of under 30 years old 78 88 30 14 2 212 Number of 30–50 years old 688 344 127 69 17 1,245 2017 2018 2019 Number of over 50 years old 321 22 26 40 4 413 NT passenger car tires with EU labeling 7 .0 8 .2 8.3 Percentage of under 30 years old, % 7 2. 19 4. 16 .4 11 .4 8 .7 11.3 Percentage of 30–50 years old, % 63 3. 75 8. 69 .4 56 .1 74 .0 66.6 Percentage of over 50 years old, % 29 5. 4 8. 14 .2 32 .5 17 .3 22.1 Number of blue collars 1,572 1,099 3 163 4 2,841 SUPPLY CHAIN Number of women 147 75 3 16 2 243 2017 2018 2019 Number of men 1,425 1,024 0 147 2 2,598 Percentage of Nokian Tyres’ raw material Percentage of women, % 9 4. 6 8. 100 .0 9 .8 50 .0 8.6 suppliers with ISO 14001 certification 71 .0 72 .0 73.3 Percentage of men, % 90 6. 93 2. 0 .0 90 .2 50 .0 93.8 Percentage of Nokian Tyres’ raw material suppliers who answered Number of under 30 years old 416 348 0 50 2 816 the sustainability self-assessment survey 85 .0 86 .8 89.6 Number of 30–50 years old 805 714 2 78 2 1,601 Number of over 50 years old 351 37 1 35 0 424 Percentage of under 30 years old, % 26 5. 31 6. 0 .0 30 .6 50 .0 28.7 Percentage of 30–50 years old, % 51 2. 65 0. 75 .0 47 .9 50 .0 56.3 Percentage of over 50 years old, % 22 3. 3 4. 25 .0 21 .5 0 .0 15.0 GRI + UNGC content index

60

GRI + UNGC CONTENT INDEX

GRI Standard Location UNGC Disclosure

GRI 102: General disclosures

Organizational profile

102–1 Name of the organization 3 102–2 Activities, brands, products, and services 3 102–3 Location of headquarters Nokian Tyres plc Pirkkalaistie 7 37100 Nokia Finland 102–4 Location of operations 3 102–5 Ownership and legal form 3 102–6 Markets served 3 102–7 Scale of the organization 3 102–8 Information on employees and other workers 39–40 3, 6 102–9 Supply chain 50 1, 2, 4, 5, 10 102–10 Significant changes to the organization and its supply chain No significant changes . 102–11 Precautionary Principle or approach 20–21 7 102–12 External initiatives 14–15 102–13 Membership of associations www nokiantyres. com/company/sustainability/fundamentals/. our-stakeholders-and-memberships/

Strategy

102–14 Statement from senior decision-maker 4

Ethics

102–16 Values, principles, standards, and norms of behavior 7, 9–10, 12 10

Governance

102–18 Governance structure www nokiantyres. com/company/investors/. corporate-governance/ 102–20 Executive-level responsibility for economic, environmental, www nokiantyres. com/company/investors/. and social topics corporate-governance/the-groups-management-team/ 102–21 Consulting stakeholders on economic, environmental, and social topics www nokiantyres. com/company/sustainability/fundamentals/. Annual General Meeting materiality-analysis-of-nokian-tyres/ 102–22 Composition of the highest governance body and its committees www nokiantyres. com/company/investors/. corporate-governance/board-of-directors/ 102–23 Chair of the highest governance body www nokiantyres. com/company/investors/. corporate-governance/board-of-directors/ 61

GRI Standard Location UNGC Disclosure

102–24 Nominating and selecting the highest governance body www nokiantyres. com/company/investors/. corporate-governance/annual-general-meeting/ 102–25 Conflicts of interest Financial Review 2019 102–26 Role of the highest governance body in setting purpose, values and www nokiantyres. com/company/investors/. strategy corporate-governance/board-of-directors/board-cg/ 102–27 Collective knowledge of highest governance body Financial review 2019 102–30 Effectiveness of risk management processes www nokiantyres. com/company/investors/corporate-. governance/mechanisms-of-internal-control--internal-audit- and-risk-management/ 102–35 Remuneration policies www nokiantyres. com/company/investors/. salaries-and-remunerations/ 102–36 Process for determining remuneration www nokiantyres. com/company/investors/. salaries-and-remunerations/

Stakeholder engagement

102–40 List of stakeholder groups www nokiantyres. com/company/sustainability/fundamentals/. our-stakeholders-and-memberships/ 102–41 Collective bargaining agreements 39 102–42 Identifying and selecting stakeholders www nokiantyres. com/company/sustainability/fundamentals/. our-stakeholders-and-memberships/ 102–43 Approach to stakeholder engagement 9–10 102–44 Key topics and concerns raised www nokiantyres. com/company/sustainability/fundamentals/. our-stakeholders-and-memberships/ 102–45 Entitites included in the consolidated financial statements Financial review 2019 102–46 Defining report content and topic Boundaries 53–54 102–47 List of material topics 54 102–48 Restatements of information 39, 53–54 102–49 Changes in reporting No changes . 102–50 Reporting period January 1, 2019 - December 31, 2019 102–51 Date of the most recent report February 28, 2020 102–52 Reporting cycle Annually 102–53 Contact point for questions regarding the report media@nokiantyres com. 102–54 Claims of reporting in accordance with the GRI Standards 53–54 102–55 GRI content index 60 102–56 External assurance 64

Management approach

103–1 Explanation of the material topic and its Boundary 53–54 103–2 The management approach and its components 7, 9–10 103–3 Evaluation of the management approach www nokiantyres. com/company/sustainability/fundamentals/. managing-sustainability/ 62

GRI Standard Location UNGC Disclosure

GRI 200: Economic Standard Series

Economic performance

201–1 Direct economic value generated and distributed 14 201–2 Financial implications and other risks and opportunities due to climate 16, 29 change .

Anti-corruption

205–2 Communication and training about anti-corruption policies and procedures 7 10

GRI 300: Environmental Standard Series

Materials

301–1 Materials used by weight or volume 55 301–2 Recycled input materials used 27, 55

Energy

302–1 Energy consumption within the organization 22 302–3 Energy intensity 22

Water

303–1 Water withdrawal by source 22

Emissions

305–1 Direct (Scope 1) GHG emissions 23 7, 8 305–2 Energy indirect (Scope 2) GHG emissions 23 7, 8 305–3 Other indirect (Scope 3) GHG emissions 23 305–4 GHG emissions intensity 55 8 305–5 Reduction of GHG emissions 23 8, 9 305–7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air 55 7, 8 emissions

Effluents and Waste

306–1 Water discharge by quality and destination 26 8 306–2 Waste by type and disposal method 27 8

Environmental compliance

307–1 Non-compliance with environmental laws and regulations 20, 24 63

GRI Standard Location UNGC Disclosure

GRI 400: Social Standard Series

Employment

401–1 New employee hires and employee turnover 39, 58 6

Occupational Health and Safety

403–2 Types of injury and rates of injury, occupational diseases, lost days, and 38 absenteeism, and number of work-related fatalities

Training and Education

404–2 Programs for upgrading employee skills and transition assistance programs 41 404–3 Percentage of employees receiving regular performance and career 41 6 development reviews

Diversity and Equal Opportunity

405–1 Diversity of governance bodies and employees 59 6 www nokiantyres. com/company/investors/. corporate-governance/board-of-directors/ diversity-policy-for-the-board-of-directors/

Human Rights Assessment

412–1 Operations that have been subject to human rights reviews or impact 52 1, 2 assessments 412–2 Employee training on human rights policies or procedures 7 1, 2

Supplier Social Assessment

414–2 Negative social impacts in the supply chain and actions taken 51–52 1, 2

Public Policy

415–1 Political contributions 16 10

Customer Health and Safety

416–1 Assessment of the health and safety impacts of product and service 45–46 7 categories

Company and industry specific GRI

NT1 Extent of mitigation of the environmental impacts of products and services 45–48 New sustainability goals for beyond 2020 are under evaluation . They will determine also the company specific GRI's set in the report of 2018 . NT2 Reducing the rolling resistance of tires 47, 59 7, 8 New sustainability goals for beyond 2020 are under evaluation . They will determine also the company specific GRI's set in the report of 2018 . Independent assurance report

64

INDEPENDENT ASSURANCE REPORT

Translated from the original Report in Finnish language

To the Management of Nokian Tyres plc Assurance Provider’s independence e . Reviewing sustainability data from internal and external At the request of the Management of Nokian Tyres plc and quality assurance sources and checking the data to reporting information (hereafter Nokian Tyres) we have performed a limited We comply with the independence and other ethical on a sample basis, assurance engagement on the corporate responsibility requirements of the Code of Ethics for Professional f . Performing recalculation of information and reviewing the information for the reporting period 1 1. .–31 12. .2019 presented Accountants issued by the IESBA (International Ethics underlying data which is the basis of narrative disclosures in Nokian Tyres’ Corporate Sustainability Report 2019 Standards Board for Accountants) . We apply ISQC 1 related to the data, (hereafter sustainability information) . (International Standard on Quality Control) and accordingly g . Visited Nokia and Vsevolozhsk sites and reviewed maintain a comprehensive system of quality control including reporting practices . Management’s responsibility documented policies and procedures regarding compliance The Management of Nokian Tyres is responsible for the with ethical requirements, professional standards and Our assurance report should be read in conjunction preparation and presentation of the corporate responsibility applicable legal and regulatory requirements . with the inherent limitations of accuracy and completeness information in accordance with the GRI Sustainability for sustainability information . This independent assurance Reporting Standards, and Nokian Tyres’ internal reporting Limitations of the engagement report should not be used on its own as a basis for guidelines (hereafter the reporting principles) . In a limited assurance engagement, the evidence gathering interpreting Nokian Tyres’ performance in relation to its procedures are more limited than in a reasonable assurance principles of sustainability information . Assurance Provider’s responsibility engagement, and therefore less assurance is obtained than It is our responsibility to present an independent conclusion in a reasonable assurance engagement . The procedures Conclusion on the sustainability information based on our work selected depend on the Assurance Provider’s judgment, Based on our work described in this report, nothing has performed . We do not accept nor assume responsibility to including an assessment of the risks that the corporate come to our attention that causes us to believe that anyone else except to Nokian Tyres for our work, for the responsibility information would not, in all material respects, the sustainability information has not been prepared, in assurance report and for the conclusions that we have comply with the reporting principles . We have planned all material respects, in accordance with the reporting reached . and performed our engagement to obtain sufficient and principles, or that the information is not reliable, in all We have conducted the assurance engagement in appropriate evidence on which to base our conclusion . material respects, based on the reporting principles . accordance with the International Standard on Assurance Engagements (ISAE) 3000 ‘Assurance Engagements Other We have performed, among others, the following procedures: than Audits or Reviews of Historical Financial Information’ . a . An update of our knowledge and understanding of Nokian Helsinki, 24 February 2020 The ISAE 3000 standard requires compliance with ethical Tyres’ material sustainability reporting topics, organization requirements as well as planning and performing the and activities, Ernst & Young Oy assurance engagement to obtain limited assurance on b . An assessment of suitability and application of the whether the corporate responsibility information has been reporting principles regarding the stakeholders’ needs for Terhi Mäkinen Jani Alenius prepared, in all material respects, in accordance with the information, Partner, Authorized Leader of Climate Change reporting principles . c . Interviews with senior management to understand Nokian Public Accountant and Sustainability Services Tyres’ corporate responsibility leadership, d . Interviews with personnel responsible for gathering and consolidation of the corporate responsibility information to understand the systems, processes and controls related to gathering and consolidating the information, www nokiantyres. com.