EC1 Direct economic value generated and distributed
Fortum analyses the economic impacts and produced prosperity from its operations to different stakeholders in its operating countries and market areas. These include shareholders and investors, customers, employees, suppliers of services and goods, and the public sector. In terms of suppliers, Fortum analyses its impact also globally, paying special attention to risk countries.
In 2013, the difference between added value generated and distributed to stakeholders was EUR 1,136 million (2012: 746) for the development of own operations.
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|Monetary flows by stakeholder group in 2011-2013|
|Generation of added value|
|Income from customers||Income from customers on the basis of products and services sold, financial income and income from divestment of business activities or plants||6,539||6,398||7,192|
|Purchases from suppliers||Cash payments to suppliers of raw materials, goods and services||-3,067||-3,002||-3,272|
|Fortum produced added value||3,472||3,396||3,920|
|Distribution of added value|
|Employees compensation||Wages, salaries, remunerations and other indirect employee costs||-529||-5431)||-529|
|Funders compensation||Dividends, interest and financial expenses paid to investors||-1,216||-1,514||-1,431|
|Public sector||Income and production taxes paid, support for society and donations||-591||-593||-728|
|Distributed to stakeholders||-2,336||-2,650||-2,688|
|Retained in business||1,136||746||1,232|
|1) Comparative period information for 2012 has been restated due to the accounting change for pensions.|
|Breakdown of Fortum's added value by operating country in 2011-2013|
|Capital expenditure||Employee costs||Taxes1)||Total|
|1) Includes paid income taxes, production taxes and property taxes|
|2) Comparative period information for 2012 has been restated due to the accounting change for pensions.|
Investments are not recognised in the calculation of distributed added value in accordance with GRI, but
Fortum has included investments in its own assessment of economic impacts, as their annual volume and impact on the society is significant.
|Capital expenditure1) by country of operation in 2012-2013|
|District heat network||14||12||42||33||16||10||6||15||4||21||4||0||86||91|
|Total, excluding Russia Division||266||338||497||492||16||10||10||19||13||36||47||95||849||990|
|Total, including Russia Division||1,284||1,558|
|1) Includes capital expenditure to both intangible assets and property, plant and equipment.|
|Maintenance investments during 2013 in property, plant and equipment were EUR 239 million (2012: 247). Investments due to requirements of legislation were EUR 187 million (2012: 223). Investments increasing productivity were EUR 385 million (2012: 422) and growth investments were EUR 473 million (2012: 666).|
EC2 Financial implications and other risks and opportunities for the organisation's activities due to climate change
Climate change poses both financial, regulatory and physical risks as well as opportunities for Fortum. As energy production and use is the largest source of greenhouse gases, the energy sector has a central role in building a low-carbon future. The energy industry has established visions and roadmaps of the future energy system and is prepared to invest in new climate-benign production capacity, provided that the related policy framework and preconditions of society are in place.
The primary impact of climate regulation for Fortum is the price of carbon dioxide in the EU's emissions trading and the cost arising from it. This also determines the financial value for the reduction of emissions. The price of CO2 increases the
production cost of fossil-based energy, but it also raises the prices of energy products. The best way to reduce the risk related to the price of carbon dioxide is to increase CO2-free and low-carbon production capacity.
In 2013, about 88% of Fortum's electricity production in the EU was CO2-free. In 2013, Fortum had a total of 83 (2012: 79) plants in six member states within the EU's emissions trading scheme. About 98% of the CO2 emissions in the EU area were included in the emissions trading system. In 2013, Fortum was granted 3.0 million tonnes in free emissions allowances. The company's emissions in the EU emissions trading scheme were 6.0 million tonnes. Thus, in terms of emissions allowances, Fortum showed a deficit.
In the third, ongoing ETS period, 2013-2020, the volume of Fortum's free emissions allowances will decrease significantly, because electricity production has to purchase all allowances from the market or auctions.
Only in Poland and the Baltic countries, Fortum's CHP plants will receive free allowances also for electricity production on the basis of the derogation rules of the Emissions Trading Directive.
In Russia, Fortum's CO2 emissions are growing in upcoming years as a result of the increasing energy production capacity. In Russia, carbon dioxide emissions do not have economic value, so far. During the Kyoto period 2008-2012, the so-called Joint Implementation (JI) mechanism could be utilised. Fortum implemented several projects in this framework.
Fortum is participating in two international climate funds, the Prototype Carbon Fund (PCF) and the Testing Ground Facility (TGF). In 2013, Fortum received a total 325,000 emission reduction units from these funds. Of the emission reduction units received, 274,000 were CER units and 51,000
were ERU units. Fortum's emission reduction units received so far total 710,000 and we estimate that we will still receive about 300,000 units during the funds' operating period.
Fortum is exposed to physical risks of climate change, including changes in weather patterns that may change energy demand and supply from, e.g., hydropower plants. More frequent and intensive storms may impact the operation and maintenance of the distribution network. Higher precipitation may affect hydropower production, dam safety and bioenergy supply. In addition to climate change mitigation, Fortum is also taking measures to adapt its operations to climate change and to take impacts into consideration in e.g. production planning and in evaluating growth projects.
Concern about climate change is expected to result in an increasing demand for low-carbon and energy-efficient
energy products and solutions. Fortum's know-how in CO2-free hydro and nuclear power and in energy-efficient CHP as well as research and development in the future energy system and technologies, like wave and solar energy, can prove to be a competitive advantage. Fortum is investing in CO2-free production in Europe and sees business opportunities in providing climate-benign energy solutions for sustainable urban living and the electrification of transport.
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EC3 Coverage of the organisation's defined benefit plan obligations
Fortum's pension arrangements conform to the local regulations and practices in each country where Fortum companies operate; these are discussed in section 32 Pension obligations of the notes of the Financials 2013.