Responsible Business Practices

With responsible business practices we mean ethical behavior in all our relationships, compliance with regulations and laws, solid governance model and practices, as well as managing sustainability and risks. We aim to take economic, environmental and social responsibility into account in all our activities and relationships.

 

Responsible business practices at OutotecIn this section we focus on common values and business practices, compliance, sustainability governance and risk management. Our approach to economic responsibility is described in connection with value creation; environmental responsibility under ‘Sustainable offering for customers’ and ‘Environmental performance’ ; and social responsibility under ‘Safety’, ‘Development of our people’ and ‘An active dialogue’. The company’s corporate governance is described in more detail in our Corporate Governance Statement at www.outotec.com/cg.

 

Outotec has a Chief Compliance Officer (CCO) and a compliance helpline for anyone to raise any concerns or seek advice regarding ethical behavior or compliance. All compliance concerns raised at Outotec are reviewed in accordance with an established process. In matters related to compliance, the Chief Compliance Officer reports directly to the Board of Directors’ Audit and Risk Committee. We follow our performance by the number of filed, addressed and resolved grievances about possible labor practices or impacts on society.

 

Developing interactive governance
 

We have been developing a solid governance structure to ensure that our operations are guided by good governance, effective risk management, adequate controls and the internal audit principles supporting them. Possible conflicts of interest are avoided by following the most recent Finnish Corporate Governance Code for listed companies issued by the Securities Market Association.

 

Governance is often considered to be a matter of mere compliance. However, we believe that the way how sustainability is managed and governed makes a big difference. We have a clear hierarchy of ethics guidance and decision making on sustainability issues.

 

Everything we do is first and foremost based on our mission and values. Our everyday work is guided by our Code of Conduct and detailed policies. We are currently developing our governance to make it a more interactive process.

 

Outotec endorses ethical business practices and complies with national and international laws and regulations. Outotec did not encounter any competition-law or corruption-related suspicions in 2014 did not have to pay any fines and was not exposed to any non-monetary sanctions for non-compliance with these laws and regulations or any environmental laws. Nor did any issues emerge concerning the rights of indigenous people.

 

Outotec has not identified any significant negative impact of its operations or products to employees’ or suppliers’ health and safety or labor practices, neither to the local communities. In an internal workshop focusing on the supply chain we have identified three countries, China, India and Mexico, with potential risks amongst suppliers regarding child labor, hazard- ous work, or rights to exercise freedom of association or collective bargaining. Because Outotec has started to develop supply hubs in these countries, the follow-up of human rights issues will be a development area in 2015.

 

Outotec has a Product Compliance Management process (previously called Technology and Plant Safety Management) to ensure that the plants and products engineered and delivered by the company worldwide are reliable and meet all applied safety standards during all phases of the product life cycle. We follow the negative impacts and incidents through our QEHS management system and product compliance management system. However, if Outotec is no longer working with the customer, the information of the indirect negative impacts may be limited.

 

Board work
 

The Board of Directors of Outotec consists of eight members, seven of whom are independent. Eija Ailasmaa, who is Vice Chairman of the board of Outotec’s largest shareholder Solidium Oy, is specified as dependent of the owner and independent of the company. Two of the board members are female. One of the board members is Swedish citizen and the other members are Finnish.

 

The duties, composition and committees of the board as well as the board work are described in our Corporate Governance Statement 2014. The Board of Directors conducts an annual evaluation of its operations and working methods.

 

In 2014, the Board of Directors’ special focus was on Outotec’s long-term strategy, organizational structure and scalability, as well as challenges on the global macroeconomic environment. The Audit and Risk Committee of the Board focused on project-related risk reviews as well as on Outotec’s internal risk management systems and internal controls.

 

The remuneration of board members is described in Outotec’s Corporate Governance Statement on page 9. There is no linkage between the compensation for board members and Outotec’s social or environmental performance.

 

Our approach to risk management
 

Outotec has defined a risk as anything that might have a negative impact on the company’s business activities. Risks can be threats, uncertainties, or lost opportunities but also possibilities. Outotec’s strategic and operational risks have been described on www.outotec.com/investors and the company’s risk management policy, responsibilities and processes in Corporate Governance Statement 2014.

 

The management evaluates strategic enterprise risks in the annual strategy process and makes mitigation plans once a year. Outotec’s internal audit system safeguards that the company’s operations are efficiently managed and profitable, risk management and internal controls are at a sufficient level and that the information provided for external and internal purposes is accurate. The internal audit function reports administratively to the CFO and, in matters related to the internal audit reports, directly to the Board’s Audit and Risk Committee and the CEO.

 

Outotec’s internal and external audit processes take into account any corruption suspicions and fraudulent acts that may occur. Legal seminars and virtual training sessions are held on a regular basis to train employees in anti-corruption policies and procedures for the purpose of preventing misconduct and crimes.

 

In 2014, specific audits were conducted in the India market area, in the corporate ERP system and the purchasing office in Finland as well as in the management reporting process. Furthermore, several control audits were carried out in the Finance & Control function.