Fortum strives for balanced management of economic, social and environmental responsibility in the company’s operations. Fortum's sustainability targets consist of Group-level key indicators and division-level indicators.
The Group-level sustainability targets emphasise Fortum's role in society and measure not only environmental and safety targets, but also Fortum's reputation, customer satisfaction, and the security of supply of power and heat.
The achievement of the sustainability targets is monitored through monthly, quarterly and annual reporting. As of the beginning of 2013, results of the sustainability indicators have been regularly reported to Fortum's Board of Directors. In June 2013, the Board of Directors decided on a more systematic handling of sustainability issues and supplemented their working order with the approval of Fortum Corporation's Sustainability Policy, sustainability target setting as well as follow-up and the review of Fortum's Sustainability Report.
The company is listed on the STOXX Global ESG Leaders, the NASDAQ OMX and OMX GES Sustainability Finland indices. In October 2013, Fortum was awarded as the best Nordic company in the Nordic Climate Disclosure Leadership Index focusing on management and reporting of climate issues. Fortum received its all-time high score – a full 100/100. In December Fortum was listed in ECPI® Indices.
|Sustainability indicators at the Group level|
|Specific CO2 emission from power generation in the EU (g/kWh), 5-year average||< 80||70||66|
|Specific CO2 emission from total energy production (g/kWh), 5-year average||< 200||196||186|
|Overall efficiency of fuel use as a five-year average, %||> 70||61||66|
|Environmental incidents||< 40||51|
|Energy availability of CHP plants in the EU, %||> 92||94|
|SAIDI*, minutes in 2013||< 110||220|
|Lost workday injury frequency (LWIF) for own personnel||< 1.0||1.1|
|* System Average Interruption Duration Index|
Targets for reputation and customer satisfaction are monitored annually. In the One Fortum Survey for 2013 the result was 69.8 (target for 2013 was 69.6) and the company’s reputation among the key stakeholders was good. Customer satisfaction improved in all divisions.
In the area of economic responsibility, the focus is on competitiveness, performance excellence and market-driven production. The aim is to create long-term economic value and enable profitable growth and added value for shareholders, customers, employees, suppliers, and other key stakeholders in the company's operating areas. Fortum's goal is to achieve excellent financial performance in strategically selected core areas through strong competence and responsible ways of operating. The key figures by which Fortum measures its financial success include return on
capital employed (target: 12%), return on shareholders' equity (target: 14%) and capital structure (target: comparable net debt/EBITDA around 3). In addition, Fortum also uses the applicable Global Reporting Initiative (GRI) G3.1 indicators for reporting economic responsibility.
Fortum as a tax payer
Fortum supports social development and well-being of the areas of operations by e.g. paying taxes. The tax benefits Fortum produces to society include not only corporate income taxes EUR 220 million (2012: 74) but also several other taxes. In 2013, Fortum’s taxes borne were EUR 644 million (2012: 565). Taxes borne include corporate income taxes, production taxes, employment taxes, taxes on property and cost of indirect taxes. Production taxes include also production taxes and taxes on property paid through electricity purchased from associated companies.
Fortum's effective tax rate (ETR) was 14.7% (4.7% in 2012) and total tax rate (TTR) 33.8% (2012: 29.0%). See also note 14 Income tax expense.
In addition, Fortum administers and collects different taxes on behalf of governments and authorities. Such taxes include e.g. VAT, excise taxes on power consumed by customers, payroll taxes and withholding taxes. The amount of taxes collected by Fortum was EUR 834 million (2012: 749). In 2012 Fortum reported VAT as a gross amount for input and output VAT. The gross amount of taxes collected was EUR 3,918 million in 2012.
Total tax rate, %
Fortum's environmental responsibility emphasises mitigation of climate change, efficient use of resources as well as management of the impacts of our energy production, distribution and supply chain. Our know-how in CO2-free hydro and nuclear power production and in energy-efficient CHP production is highlighted in environmental responsibility. Fortum’s Group-level environmental targets are related to CO2 emissions, energy efficiency as well as environmental incidents and non-compliances. At the end of September 2013, ISO 14001 certification covered 96% of Fortum's power and heat production and distribution operations worldwide.
Fortum’s climate targets over the next five years are: specific CO2 emissions from power generation in the EU below 80 grams per kilowatt-hour (g/kWh) and total specific CO2
emissions from both electricity and heat production in all countries below 200 g/kWh. Both targets are calculated as a five-year average. At the end of December 2013, the five-year average for specific CO2 emissions from power generation in the EU was at 66 g/kWh (2012: 60) and the total specific CO2 emissions from energy production were at 186 g/kWh (2012: 179), both better than the target level.
Fortum's total CO2 emissions in 2013 amounted to 21.3 million tonnes (Mt) (2012: 20.7), of which 6.0 Mt (2012: 4.8) were within the EU's emissions trading scheme (EU ETS). Since 2013, electricity production does not receive free allowances in the EU ETS. The amount of free allowances for heat will gradually decrease during 2013-2020 as well. Plant-specific free allowances have not yet been confirmed for 2013. The preliminary estimate for Fortum is about 3.0 Mt, which is clearly less than the 5.4 Mt in 2012.
Fortum's energy efficiency target is to raise the overall efficiency of fuel use to 70% as a five-year average. In 2013, the overall efficiency of fuel use was 61% (2012: 64%) and the five-year average after September was 66% (2012: 67%), meaning the target level was not met.
Fortum's target is for fewer than 40 environmental incidents annually. In 2013, a total of 51 (2012: 36) environmental incidents took place in Fortum's operations. This includes 19 leaks or spills of oil into the environment, 12 fires, 14 environmental non-compliances, four explosions and two International Nuclear Event Scale 1 incidents (INES). None of these incidents had significant environmental or financial impacts.
|Fortum’s total CO2 emissions (million tonnes, Mt)||2013||2012||2011|| Change
|Emissions subject to ETS||6.0||4.8||8.0||25%|
|Free emission allocation||3.0 1)||5.4||6.8||-44%|
|Emissions in Russia||15.3||15.6||14.7||-2%|
|1) Pending approval of the European Commission|
In the area of social responsibility, Fortum's innovations and the secure supply of low-carbon power and heat support the development of society and increase well-being. Good corporate citizenship, reliable energy supply and ensuring a safe working environment for all employees and contractors at Fortum sites are emphasised. At the end of 2013, OHSAS 18001 certification covered 75% of Fortum's power and heat production and distribution operations worldwide.
In 2013, the average energy availability of Fortum's European CHP plants was 93.9 (2012: 90.9), which is above the annual target level of 92%. In electricity distribution, the cumulative SAIDI (System Average Interruption Duration Index) was 220 minutes (2012: 103) in 2013, while the annual target is less than 110 minutes. The high SAIDI was caused by severe storms in Finland and Sweden in December 2013.
In 2013, the Group-level lost workday injury frequency (LWIF) was 1.1 (2012: 1.5), which is close to the target level of less than one per million working hours for Fortum's own personnel. In contrast to the LWIF for Fortum's own employees, contractor safety has not developed as desired. The injury frequency is higher than in 2012. Safety improvements were implemented in 2013 and include more precise instructions and requirements and increased supervision of high-risk jobs. Fortum's categorical target is to avoid serious injuries.
Fortum wants to conduct business with viable companies that act responsibly and comply with the Fortum Code of Conduct and the Fortum Supplier Code of Conduct. In 2013, Fortum audited 13 suppliers, focusing on biomass suppliers and contractors.